Ag can't afford complacency

11 Mar, 2014 03:00 AM
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Australian Bureau of Agricultural Resource Economics and Sciences executive director Karen Schneider.
We must increase productivity growth to remain competitive in growing markets
Australian Bureau of Agricultural Resource Economics and Sciences executive director Karen Schneider.

AUSTRALIA'S market growth opportunities in China look almost too good to be true, and that may well be the reality if producers and exporters are not alert to other big food producers lining up to service Asia's emerging consumption needs.

Our farm sector must respond to new market pressures, including supply chain inefficiencies and investment needs at home, according to Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) executive director Karen Schneider.

She said 71 per cent of the world's 75pc rise in food demand by 2050 would come from Asia - and almost half from China alone.

But at the same time new generation food exporters would provide "serious global competition to the powerful opportunities being offered to Australian agriculture".

While Australia was celebrating its ranking as the largest supplier of beef to China, Beijing had just negotiated a memorandum of understanding with India to import buffalo meat.

Ms Schneider said India had swiftly grown in the past few years to become the world's biggest beef exporter and its meat trade to China was likely to have already begun, unofficially.

Competition was also set to be strong from Brazil, which was ramping up its own government-backed herd improvement programs, while the US had just begun talks to restore Chinese access for its beef following the mad cow disease bans of a decade ago.

Meanwhile, rapid expansion in grain exports from the Black Sea region (Russia, the Ukraine and Kazakhstan) and Latin America would also place pressure on Australia, particularly if our competitors invested strongly transport and export infrastructure.

"So, while we're not small players in these Asian markets the competition is real and it isn't a foregone conclusion that Australia will always be the winner," she told the ABARES Outlook 2014 conference last week.

"One of the key things we'll need to do to make the most of opportunities in global food markets is to maintain and lift our competitiveness through productivity improvements."

Ms Schneider noted that pressures on Australia's road and port infrastructure supporting agriculture were a big drain on productivity, the dairy industry needed improved irrigation infrastructure, and more private investment was generally needed across the industry.

Regulatory pressures were also mounting against farmers.

A world Economic Forum report showed Australia had slipped from being third on a list of least-regulated agricultural players to 20th in just four years.

Brazil, a major farm export competitor had improved its ranking to 23rd since 2009.

"We must increase productivity growth to remain competitive in growing markets. That will define the future success of Australian agriculture," Ms Schneider said.

In the five decades to 2000, productivity growth in Australian agriculture averaged 2.5 per cent a year.

"However, in the most recent decade productivity growth declined to average around 0.8pc.

"We need to think carefully about the costs and benefits of regulation and how we might do it better."

The current government focus on reducing regulatory burdens was a good opportunity to reflect on how Australia regulated its rural industries.

Agriculture Minister Barnaby Joyce, who opened the conference, also criticised the "red and green tape" binding more and more agricultural operations and development projects.

"It's almost a case of pick a box and we'll find a new program to apply to regional areas," he said noting that in many cases commonsense management was being smothered by new health and safety or land management regulations.

"Green legislation is basically divesting the ownership of assets from farmers - they're finding big areas of their land are becoming impossible to make a living from."

On a bigger scale he said "green tape" was so time consuming, costly and difficult to negotiate, the 1950s and '60s Snowy Mountains Scheme and all its benefits to Australian agriculture and national development would never be allowed to go ahead today.

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

Tigerdicky
11/03/2014 4:37:27 AM

But Luv, these ain't level playing fields we are playing on , Luv!
Dairy End
11/03/2014 8:00:02 AM

One of the biggest issues in agriculture is lack of confidence that farmers can continue to make good stable profits into the future. The end result of this lack of confidence is that farm infrastructure is being barely maintained and not renewed. Any profits that might be available are being invested in more lucrative assets off farm.
wtf
11/03/2014 8:32:19 AM

Level playing field eh! Think I sore one of them a few years ago at school
The Serf
11/03/2014 8:36:40 AM

Because ABARES is a statutory authority it will not tell the true story; the fact is our cost of production with extremely high taxation, levies, NLIS,LPA, MLA, RMAC plus wages, fuel and transport; our “compliance”; we can never compete. We need deregulation and tax cuts and the right to employ from Asia on our terms, the right to import diesel for farm use and not be forced to use "special" diesel at twice the price of the fuel used in our competitors. If the Government wants Agriculture then it needs to make changes and the deregulation should include ABARES being axed.
Mug
11/03/2014 9:06:51 AM

It seems to me that the suggestion is to produce more for the same miserable margin of profit. If we produced less at a higher price would be more rewarding. It is called supply and demand. I certainly have no obligation to feed my fellow man by competing with subsidized food from other nations.
ando
11/03/2014 9:22:57 AM

Oh dear The glorified atmosphere these people (economists) live in. Simple just keep increasing production to stay in business as successive governments increase red tape, allow infrastructure to decline and input costs to increase to the highest in the world (our competitors). So Barnaby, what are you going to do about the red and green tape other than continuing to state the obvious?
Simon
11/03/2014 10:14:09 AM

PRODUCTIVITY????? Australian agribusiness has been on the productivity treadmill for at least 30 years. Unless something is done about PROFITABILITY we're on a hiding to nothing!
Archibald
11/03/2014 10:50:21 AM

Again the experts talk of productivity gains. Forget it, without profit for farmers there will be production reductions. Get used to it. The government supports social engineering and price control at the farm gate while continuing to introduce more and more red and green tape pushing costs up!!
Kev
11/03/2014 11:53:56 AM

Coles and Woolies profit seems to increase each year, the gap between farm gate and retail needs to be reviewed. That's where the profit is going
Bushie Bill
11/03/2014 8:09:58 PM

You been smoking some of the stuff your serfy mates crave, Serfy Boy?
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