February 18, 2016

Agricultural industry receives $4bn boost

The recent Agricultural Competitiveness White Paper committed $4 billion to the sector but is that enough to support potential growth? Simon Talbot, CEO of the National Farmers’ Federation, discusses the gains, the gaps and why the industry needs to revisit its image.

The recent Agricultural Competitiveness White Paper committed $4 billion to building a more profitable, resilient and sustainable agriculture sector.

“This is a great start – but what’s missing is the broader narrative around predicted growth,” says Simon Talbot, Chief Executive Office of the National Farmers’ Federation (NFF). “In 2014/15, farm gate income increased by 8 per cent to $57 billion, and this is expected to rise to about $105 billion by 2030. We need to establish the milestones that will enable agriculture to double in size over the next 15 years.”

A need for infrastructure

The industry as a whole needs more efficient links with Asia.

“We export around 81 per cent of what we grow, yet many of the routes to Asian markets are very circuitous,” Talbot continues. “The good news is that we see the green shoots of what we call direct air freight hubs to Asia. We’re hoping that, in 10 years’ time, there will be at least 10 regional airports designed for international air freight.”

Grain growers were particularly disappointed that the White Paper made no mention of inland rail.

“Domestic freight accounts for as much as 30 per cent of some growers’ costs,” says Talbot. “That wouldn’t be accepted in North America.”

More connectivity

The NFF welcomed the government’s equity investment of $29.5 billion towards constructing the National Broadband Network.

“We estimate that 75 per cent of Australia’s farmers are not adequately digital connected, but the new satellites due to come online in March 2016 should eliminate many of the black spots,” says Talbot. “We’re sending trainers and educators into rural communities to help farmers use the technology as soon as it’s available to improve productivity and minimise risk.”

Managing drought

Farm Management Deposits can help farmers to smooth out their income in a tax-effective way and, from 1 July 2016, the cap on investment will double to $800,000. This will give farmers moreopportunity to manage income fluctuations by setting aside funds for low-income years.

“This change is particularly important for farmers in drought-prone areas,” says Talbot. “There is a growing awareness among both farming and mainstream communities that agriculture operates on a five-to-seven-year business cycle. FMDs are all about preparedness and I think this makes them an important risk management tool to help farmers manage fluctuations during the cycle.”

A change of image

One of the biggest threats to future growth is the lack of human capital.

“If we don’t attract the best people we’re going to struggle to realise our potential and, to do that, we must make a shift from a drought mentality,” says Talbot. “Of course there are people who suffer terribly as a result of drought and our hearts go out to them. The reality is that the vast majority of professional farmers are engaged in highly productive, innovative agriculture and making good returns.

“People look at New Zealand and think how lucky they are to have such a benign climate but one thing the White Paper didn’t mention is that regarding prime agricultural land, Australia has the equivalent of three New Zealands. We need to rebrand the industry to reflect that.”

Talbot believes these highly-productive areas should be given priority.

“People have concerns about backing winners but it’s not about supporting one area or another, it’s about thinking of ourselves as an agricultural nation and focusing on the most productive land first. At the moment, we’re treating agriculture as if the needs are the same across the country and they’re clearly not. We’re very fortunate that Australia covers every climatic zone so we can grow every kind of produce, but the different regions need to be managed in different ways.”

Talbot would like to see a deeper national conversation about Australian agriculture.

“For a long time we’ve been considered the poor cousin of other economic sectors, but that’s no longer the case,” he says. “Agriculture has the greatest uplift regarding generating wealth for the country and I quite openly say we have some of the most productive farmers in the world. Now we need to listen to what the next generation of farmers wants and be ready to provide the education and support they need.”

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