Agriculture Minister Barnaby Joyce claims high beef cattle prices as his great achievement.
It is true our beef producers are enjoying excellent prices and that is a welcome thing. But as hard as he tries, Joyce can take no credit. Rather, the higher prices are mainly a function of drought. Unable to feed their herd, producers are “turning off” their cattle early.
Indeed, 2017 will see a further reduction in Australia’s beef cattle herd which will fall to its lowest level in twenty years. Slaughter rates over the last two years have not been seen since the late 1970s. Meat & Livestock Australia predicts numbers will continue to fall for the next five years.
This is why producers are receiving better prices; demand is simply out-stripping supply. Rather than sitting back and apparently celebrating the consequences of market imbalance, Joyce should be working out how he might deliver long-term sustainable outcomes for Australia’s cattle producers.
While he is at it, the Minister might consider how other participants in the supply chain and consumers could be better served. Drought-induced beef price rises are having detrimental effects elsewhere. In the supermarkets consumers are paying higher prices. Our abattoirs are laying off meat workers because they can’t secure enough cattle. These are problems Joyce never mentions during his rhetorical flushes at the House of Representatives dispatch box.
Nor does the Minister seem to be alarmed that there is no relief in sight with an already low national herd number expected to continue to fall over the next couple of years. And as the processing jobs disappear and the supermarket prices continue to rise, Asia is demanding more live slaughter weight cattle, further exacerbating the impact on workers and consumers alike.
The path to sustainable higher profitability for producers is not a supply shock but a plan for higher farm productivity. Improved productivity allows farmers to produce more with less; increasing profitability without pushing the costs on to processers and consumers.
Productivity in Australia’s agriculture sector has stalled but it hardly rates a mention in the Government’s agriculture white paper. Another word not mentioned in the white paper is biotechnology, yet its potential contribution to future productivity growth is significant.
But success will require a suite of policies; both economy-wide and specific to the sector. We need to attract more foreign investment, but the Turnbull Government is intent upon sending it elsewhere with unnecessary and irrational foreign investment rule changes. We need to raise the productive capacity of our soils, a term which dare not speak its name.
We need to properly examine the sector’s structure and natural resource allocation. No sector in a modern and rapidly evolving global economy can flourish without on-going structural reform like those which former Labor Governments so successfully pursued: the reform of central monopolistic marketing authorities to focus on their central marketing and promotion tasks; the removal of sector-destroying subsidies; and the reform of the regulation of the Murray Darling Basin’s water resources.
The sector was left deflated last year when the white paper completely failed to address the sector’s structural issues. This is despite the fact eighty percent of the sector’s output is produced by the top twenty percent of farm firms; while the lowest 50 percent of Australian farm enterprises, as a group, made no profit in any year in the two decades to 2008.
While Joyce continues to claim credit for every commodity price rise (but notably none of the falls), the sector’s businesses and leadership are doing their best to press on regardless. But a bit of strategic guidance and direction from government would be helpful for farmers, consumers, processors, meatworkers and all entities along the supply chain.
Sadly, after almost three years and a white paper full of platitudes, no one is holding their breath.
This article was first published in the Newcastle Herald on Tuesday, 16 February 2016.