ADDRESS TO RABOBANK FARM2FORK SUMMIT

THE HON. JOEL FITZGIBBON MP.
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4 months ago
ADDRESS TO RABOBANK FARM2FORK SUMMIT
THE HON. JOEL FITZGIBBON MP
Introduction
I receive many invitations each week, too many to accept every time.
 
But I wasn’t going to miss Rabobank’s Farm2Fork Summit.
 
Because this gathering - to quote the promo:
 
“brings together leading producers and industry trailblazers from around the globe to help us explore thought provoking ideas and innovative solutions essential for the vitality and sustainability of the food and agri sector”.
 
I’ve just been meeting with some of those trailblazers and I thank Rabobank for the opportunity.
 
The talk here is positive, realistic and exciting.  People here are asking:  how will we do more with less?  How can we use technology to deliver sustainable profitability in the agribusiness sector?
 
Being Honest With Ourselves
 
Too often I attend conferences where the participants are basically talking to themselves; telling one another how well things are going and too often congratulating one another on their efforts and success.
 
But the reality is somewhat different.
 
Australia’s agriculture sector has more challenges than any other I’ve been intimately involved in.
 
  • Its productivity has been flat-lining for a decade.
 
  • Eighty per cent of its output by value comes from just 20 per cent of its farms.
 
  • According to the ABS, 59 per cent of farm businesses have a turnover of less than $200,000 annually.
 
  • It is losing global market share.
 
  • Its natural resource base is in decline.
 
  • Droughts are coming more regular, they’re lasting longer and they are hotter.
 
  • Weather events more generally – storms, dust storms and floods – are becoming less predictable.
 
  • The sector can’t secure the workforce it needs and the existing workforce is ageing.
 
  • Its performance on the innovation front is sub-optimal.
 
  • It has heavy exposure to the vagaries of global commodity markets.
 
  • Product development and production methods are falling behind consumer expectations and preferences.
 
  • The sector’s costs are high by international standards.
 
  • A traditional competitive advantage – our proximity to Asia – is being diminished by falling freight costs.
 
  • As a country of only 25 million potential savers, we don’t have the capital to overcome these challenges.
 
It’s a little dated now but the ANZ Bank’s 2012 Greener Pastures report told us that fulfilling our aspirations out to 2050 would require $600 billion in capital investment.  Axiomatically that means we’ll require a huge amount of foreign investment.
 
But this last challenge has been made more difficult in recent years by counter-productive Government policy and pronouncements.
 
Let us not forget, according to the ABS, in the December Quarter of 2018 agriculture contracted by five per cent.
 
Of course the dramatic fall was largely a function of drought.  But again, the result underscores the sector’s vulnerability to climate change.
 
A Positive Outlook

Now despite all of this, I do believe Australia’s agriculture sector can have a bright future. This gathering alone is cause for great optimism.

But we won’t fix our problems and overcome our challenges if we’re not willing to acknowledge them.

To meet our aspirations we need to be more honest with ourselves and be more open to change.  We must bring the whole sector into the 21st Century.

And we won’t do that without strong government guidance and strong partnerships between industry and government.

Bipartisanship

There were two good developments on that front just this week.

First, after years of climate change denial and a refusal to tackle land management practices and the deterioration in the health of our soils, native vegetation and biodiversity, Australia’s conservative Government announced a pilot program to incentivise better and more sustainable farming practices, along with the certification of food produced in a sustainable way. 

The second was the announcement of the establishment of a Future Food Systems Cooperative Research Centre.

I want to briefly say something about each of these initiatives.

The announcement on biodiversity-building is a modest one which goes nowhere near getting us excited.  And it’s not the model Labor would have adopted.  But it’s a start and it may be something the major political parties can build on, on a bipartisan basis.

When I became the Shadow Minister for Agriculture, more than five years ago, I made both public and private offers to the new Government to work on agriculture policy on a bipartisan basis.  Sadly the offer was declined.  But it still stands.

Innovation & Our Natural Resource Base

Our soil and water resources are the foundation of our industry.  Without them there is no industry.  Without a healthier landscape and the greater adoption of water efficiency practices including moisture retention, there can be no productivity gain.  There can be no sustainable profitability.

And we can do none of these things without an accelerated embrace of innovation.  It is often said that Australia’s agriculture sector is good at research but poor at innovation and commercialisation.  I beg to differ: our research effort is also sub-optimal.

Our research work is fragmented, siloed and inefficient.  We have great researchers but our research architecture is dated and is letting them down.

So too do data gaps.  If given the opportunity, a Labor Government will reform the research system and improve data availability.  If we want to develop good evidenced-based policy we need more and better data.  Of course we also need better connectivity.

Innovation will be key to our future international competitiveness.  Automation, robotics and mechanisation will replace the expensive unskilled working holiday makers we rely so heavily on.  It will also produce meaningful, fulfilling and well paid jobs for Australian workers.  But while we are catching up, government must find smarter ways of filling the unskilled labour gap. 

We can look to our friends in both the Netherlands and New Zealand for inspiration.  In fact we can look to New Zealand on a number of fronts where they are kicking goals on export markets.  Dairy and forestry research are cases in point. Not to mention the rugby.

Chasing Premium Markets

For five years I’ve been talking about the need to focus more on product value and less on volume.  For the same period the Coalition Government has shown zero interest in the subject.  Hopefully the CRC announcement is a sign that has changed.

Australia is the driest inhabited continent in the world.  Our soil resources will remain limited no matter how well we restore them to health.  It is critical that a share of those resources be allocated to areas of production which provide high returns:  premium, high quality and niche products.

Australia cannot afford to be too exposed to increasingly competitive commodity markets in which we are increasingly price takers.  Market access is important but it doesn’t and can’t guarantee competitiveness.

We begin from a sound base. We boast some of the best and most innovative farmers in the world and our reputation as a provider of clean, green, safe and high quality food is well known. But we need to give our farmers more tools and further build on that reputation.

A large slice of our research effort must be directed towards product development.  Whether it be a marbled wagyu containing relatively healthy fat or an piece of fruit with a unique colour or taste, we need to build a competitive edge.

Our branding effort needs work too.  Again, the Kiwis make us look like amateurs.

Understanding the Customer

We’ve all become very familiar with the term “disruption”.  Most of the conversation about disruption has been focused on the impacts of technology: Uber and Airbnb are the obvious examples.  Technology will also impact on the agriculture sector but happily, in many positive ways.

But two other significant forms of disruption will continue to challenge us:  changing community attitudes and changing consumer preferences.

We should see these changes not just as a challenge, but as an opportunity.  We need to harness changing community attitudes and food preferences and turn them to our advantage.  Let us be in no doubt, consumer preferences will continue to evolve.

More and more, they’ll want our producers to respect the welfare of animals, and they’ll want our product produced in a sustainable and ethical way.  They are also growing more health conscious and each day face waves of advice on what they should or should not be eating.  They are voting with their feet and will continue to do so in increasing numbers – both here and in export markets.

As a wealthy and innovative nation, Australia is well placed to give consumers what they want.  Just as our savvy fast-food retailers have responded to their changing consumer ask.

Closing Remarks

Finally I want to say that the Farm2Fork Summit is quite obviously about the whole agribusiness value chain.  For policy makers and industry alike, this is the only approach.

The strength of the value chain is only as strong as its weakest link.

To meet our aspirations we need a whole of Government and whole of industry approach.

It’s time to get on with it:  we don’t have a moment to lose.

Best wishes for the balance of the conference and exhibition.

ENDS
 
Agriculture and Water Resources