Ag’s future needs big boys’ spending power says Labor

The Opposition’s agriculture spokesman said the billionaire mining magnate and Kidman bidder Gina Rinehart, and Top End pastoral leader, Sterling Buntine, who led a counter offer for the outback beef business, may have farm family backgrounds, “but few would describe their operations as traditional family farms”.

Like another prominent mining millionaire and expanding beef producer, Andrew Forrest, their corporate operations were both “profitable and critical to our success”, Mr Fitzgibbon said.

As a comparison, he told this week’s National Farmers Federation (NFF) Congress 50 per cent of Australian broadacre farms generated just 7pc of agriculture’s total value last decade, according to Productivity Commission figures.

The smallest-sized 5pc of family farms had not made a profit in 30 years.

It was therefore left to the largest 30pc farming enterprises to generate 82pc of the value of agricultural operations.

Mr Fitzgibbon said if Australian agriculture required about $600 billion of capital investment by 2050 and another $400b to support demographic-driven farm turnover, as forecast by ANZ’s landmark Greener Pastures report, the sector would need annual investment spending of $42b.

In the next decade that would amount to $420b, or three times the investment achieved in the 10 years to June 2014.

“To put this in context Australian agriculture needs about $26b/year more than it now receives to achieve the production targets needed to satisfy demand and the cost of acquiring additional farm assets,” he said.

“As important as the family farm is, its contribution to that investment will be modest.”

To highlight the sort of money the ag sector needed Mr Fitzgibbon noted aggregate investment in the mining sector’s boom decade to June 2014 totalled $632b.

Agricultural investment had been worth just $141b during the same decade.

“The opportunities for Australian agriculture are huge, but so too are the challenges,” he said.

“We all love our farming families, but I’m not content with their losses and low profitability.

“I believe they can do better so their sons and daughters will return to farming when there is good money in it.

“Overcoming those challenges and capitalising on the opportunities will take new thinking, hard work and co-operation.”

Mr Fitzgibbon emphasised the importance of foreign investment as a source of agricultural funding and the need to send the right signals to overseas investors.

He also used his address to the Canberra conference to highlight a need for better business risk management incentives for Australia’s drought-prone farm sector, particularly a more effective national crop insurance safety net.

“Lifting farm productivity will require significant additional capital investment,” he said.

With a population of only 23 million, we have a limited savings pool and by necessity, much of the investment will come from foreign sources.

“What are our aspirations for Northern Australia’s development all about if not for some increased foreign investment?

“Everything we do and say as industry and political leaders must be designed to help people understand why foreign investment is so important and to build community confidence in it.”

He said NFF deserved praise for persisting with a “positive, clear and consistent” message on foreign investment.

Farming also needed more market-based mechanisms to guide government resource allocation to lift farm productivity and farm business sustainability.

Income protection strategies to buffer farmers from extreme weather risks including drought, or extreme frost and flood events, deserved more market-based solutions.

“Insurance risk mitigation seems the obvious model,” Mr Fitzgibbon said.

“This is an initiative in the government’s Agriculture White Paper which I welcome.

“If we can establish a successful scheme and bring it to maturity, it will  offer income protection for farmers, but also help drive both productivity and sustainability.”

But he said the federal government appeared to have limited enthusiasm for drought policy reform to help farmers deal with climate change.

Despite NFF support for the former Labor Government’s drought reform plans, that process now sat incomplete.