RURAL AFFAIRS by Barnaby JoyceNews Weekly
What future is there for Australian farming?
, November 8, 2014
Australian farmers receive only 10 to 15 per cent of the final sale price for their produce, even when they have done most of the work, Agriculture Minister Barnaby Joyce told the National Farmers’ Federation’s recent national congress, which was held in Canberra. Here is part of the opening speech he delivered to the congress on October 20.
Agriculture is one of the top of the five pillars of the Australian economy. Agriculture, for a variety of serendipitous reasons, has re-emerged in public policy thinking and is now recognised as a fundamental plank of our economy.
Minister for Agriculture Barnaby Joyce
The land is an inherently noble and good occupation. Your endeavours feed and clothe people. You are on the land if you farm, if you work in an abattoir, if you transport produce in logistics, if you are a vet or a farm worker and if you are the family that owns the farm.
Why is it good to have the Australian people as the primary and overwhelming owner of the primary asset? Because that is what makes a nation, and that is why I left accountancy and risked all, twice, to do this job.
A people that bind together around intangible principles, but emphatic as to who they are, is deeper and wider than a group who hold to quantifiable tangibles that are guided merely by pecuniary value. When the pressure descends on a nation the call is made to those who love this land, and what value do we put on love?
Now that the government owes well in excess of $350 billion, and mining is slipping, it is not just farming families that need this trend reversed. What New Zealand has done offers some guidance on how government and the farming sector can and must work together.
In commerce Kerry Packer, Rupert Murdoch and Gina Rinehart all had the formative experience of the land as part of their DNA. While in China recently, I had dinner with the then richest individual, Zong Qing Hou, chairman of the Wahaha Group.
And where did he come from? The land. Andrew “Twiggy” Forest and Liu Yonghao, chairman of the New Hope Group, are also from the land.
It is the human experience from, and the product grown on, the land that are essential for the growth and sustenance of the nation. Farming families are not only the cornerstone of the rural community, but are also the litmus test of our political system.
The agricultural competitiveness white paper that this current government has carriage of is seminal to who we are, where we came from, and is a vital part of the puzzle of how we get out of our current financial bind.
So what is the price we offer those who tend the land? In today’s value, a 450 kg beast was worth 350 cents a kg in 1970 — that is over $1,500 a head. If you sent in 200 of those today, you could buy a reasonable house in a reasonable regional town.
Of course, a 450 kg beast today is not worth $1,500, but we should make it our goal that it is. We have expanded the live cattle trade, and we are opening markets to put upward pressure on prices.
For the purpose of this speech, let me state that the aspiration for a better price in cattle is the metaphor for a better price for all agricultural products.
In the Senate we are inquiring of processors as to what is a fair price. The current situation of a farmer who gets between 10 to 15 per cent of the final price, when he’s done most of the work, is inherently unfair.
There is still a lot of money in agriculture today; it’s just that different people get it. The farmer gets far less (and, to be honest, so does the taxation department).
In Asia we have in excess of four billion people, and they are making their way by the hundreds of millions into the middle class.
If we were to produce just food, then we must remember that India is a net food exporter and China has four times as many cattle as we do. The ramifications of threatening the livelihoods of hundreds of millions of farmers are politically untenable for these respective countries, and impossible for us as we account for only about one per cent of global agricultural production.
So we need to produce a premium product for a premium price, and that premium must flow back through the farm gate if we are to get a reinvestment in our farm land by entities most likely to give the best tax return to the Treasury to assist in paying our bills from elsewhere.
The greater the reach down the production chain, the greater the prospective return. The beast that is sold lightweight returns less than the beast finished on grain. A further greater return is there if you can process the beast into particular cuts of meat, and the world is your oyster if you can effectively retail it.
It is reality, however, that few individual landholders can secure the capital required to do this, so cooperatives are a great mechanism for combining the capital to access the benefits of reaching down this production chain. It is little wonder that our two biggest rural Australian-owned organisations are the CBH Group and Murray Goulburn — both cooperatives.
Government lives more on the cost side of enterprises in both creating costs through such things as water-pricing and tree-clearing regulations and building the capital for external costs such as rail and road.
Canada’s rail freight for grain is already half the price of Australia’s. It takes 16 trains in Australia to haul 60,000 tonnes to port, compared to Canada’s six trains.
In Canada you can move a tonne of grain from central Alberta to Vancouver, a distance of 688km, for $9 per tonne. In Australia, to move grain from Walgett, in north-west New South Wales, to Newcastle, a distance of 594km, is $46 per tonne. But to ship it from Newcastle to Egypt costs only $20.
We have to build a vastly more efficient inter-modal rail platform, and I congratulate Warren Truss, the Minister for Infrastructure and Regional Development, for allocating $300 million to start the inland rail between Melbourne and Brisbane and, hopefully, later to Gladstone.
We must work with the mining industry to see the transport capital and water capital built that is in both our interests as bulk commodity producers and movers.
In the last month we have started the construction of the Chaffey Dam upgrade, and allocated $15.9 million for the continuation of the piping and capping of the Great Artesian Basin bores. Water is wealth, and stored water is a bank.
If we are to be honest, what are the biggest impediments to our returning to the vision and purpose that built the Snowy Mountains Scheme? The answer is our self-imposed caveats, not least of which are the sacred invertebrates, amphibians and molluscs.
Chaffey Dam was almost stopped by the Booroolong frog. Nathan Dam was stopped by the Boggomoss snail.
My previous experience in the western Queensland town of St George showed how a piece of water infrastructure built for one industry can quickly morph to underpin new industries. A district of around 5,000 people generates over half a billion dollars’ worth in agricultural production. If this were replicated across the nation, it would by theory make us the richest nation on earth.
Prudence is to invest where you make money and to spend less where there is no return. It is a very worthwhile approach to those considering staying in business.
The Department of Agriculture’s budget is 0.47 per cent of federal government spending, and, with the removal of levies that are merely collected and paid straight back out on behalf of rural research and development corporations (RDCs), it is only 0.12 per cent. So there is no fat in our department.
But more important is the investment and protection of the vital assets of land and water. If a forest is cut down, it will grow back; but when the land is lost or its productive capacity is irreparably changed, then the world is made permanently poorer.
If we need more gold, we can dig deeper and refine better. But all the prime agricultural land that is known in the universe is known to us now. It is the ultimate finite resource. Likewise, aquifers and waterways, once destroyed, cannot be made good.
Agriculture can work with mining, but mining’s call must be subordinate to the protection of these vital assets. The cash-flow of a 40-year lifespan of a mine will never match the 40,000 years of the land if the agricultural asset is compromised.
Reckless inattention must not be the hallmark of the government. Likewise the property rights of the land-owner must be respected, lest the fundamentals of a free enterprise society become a cynical hypocrisy, a word bandied around for tribal effect, but not alive in the actions and legislation of the government.
But no one makes a return at the farm gate if the mechanisms of commerce downstream are controlled by monopolies or oligopolies that can detect and absorb all margins beyond the basic one required to motivate supply, otherwise known as survival.
Competition law may be the clumsy mimic of market conditions, but it is better than none and essential where excessive market power is present. There are far more stringent controls of this monopolistic problem in other countries — countries which celebrate a greater heritage in market conditions than those that exist in our nation.
Ultimately, the greatest threat to Australian agriculture is not misuses of market power but breaches of biosecurity. Australia has an enviable track record in ridding the country of diseases, such as brucellosis and tuberculosis in cattle, and of papaya fruit fly in northern Australian fruit, and in keeping out foot-and-mouth, screw fly and rabies.
This investment in our biosecurity should never be compromised, as the cost of incursion of certain diseases would be in the tens of billions of dollars, and our main marketing advantage would be lost.
As land is the essence of what designates a nation on a map, then its ownership is a highly sensitive issue. This sensitivity is not unique to Australia, as we remain the most liberal in allowing others to buy it.
An area nearly 2.5 times the size of Victoria is now foreign-owned, and the question has to be asked: what proportion of the better land is now foreign-owned?
Other nations cannot take the land with them, but they don’t have to be the sole beneficiary of it to the exclusion of Australia.
If Australians want younger farmers, then we need farms that attract the human capital away from the accountancy office, from the solicitor’s office and the tradesman and back onto the land.
If we are to create the market signals to put Australian farms in a more formidable position for future years, then we must be prepared to make the changes to do it.
The unabridged version of Agriculture Minister Barnaby Joyce’s opening address to the National Farmers’ Federation (NFF) national congress on October 20, 2014, may be accessed at: