AG’S FUTURE LIES IN COURAGEOUS CHANGE

No area of our economy, I would argue, is more important to our future wellbeing than the Agriculture sector, but how do we transition to clean, green and ethical?

No sector has so much opportunity on offer, and no sector faces so many challenges in fully capitalising on those opportunities.

Reaping the full benefits of the Dining Boom will require plenty of strategic planning and intellectual grunt.

We need continued productivity gains but with a stronger emphasis on profitability. So where do we go from here?

Throughout the 30 years to the beginning of this decade, most of our productivity gains came from our capacity to produce more with less.  This was a largely successful strategy except that while we greatly increased the volume of production and world trade increased dramatically, profitability actually declined. 

There is more we can do on the cost front – infrastructure, transport, reducing red-tape, better management, and skilled labour being the stand-outs.

But future gains in profitability will increasingly come from our capacity to authenticate, verify, consolidate and sustain our clean, green and safe image.  Along with animal welfare assurance, these are the areas which will deliver our capacity to secure premium prices for our products.

On the sustainability front, it is obvious that our long-term prospects will be determined by our climate, the availability of water, and the on-going quality and productive capacity of our soils.

Our farmers know the climate is changing.  While there may still be debate about the causes, there is no doubt our continent is growing hotter and drier.

So we should strive to quickly find a political settlement on carbon mitigation and get on with the challenge which most interests me – adaptation and the application of continuous improvement management systems.

That will be a good thing for profitability, a good thing for resource management, and a good thing for marketing because if well designed, these systems will verify our clean and green credentials.

Together they will bring more efficient use of scarce water supplies, healthier soils, less fertiliser costs, carbon income, and certify our clean, green safe image.

Both adaptation and environment management systems – EMS - have been with us for some time.  Landcare is now 25 years old and the first COAG agreed framework for an environmental management system in agriculture was struck in 2002.

But we are at risk of dropping the ball - EMS seems to have lost political favour and adaptation is at best, in a state of flux.

On the latter, recent programs including Caring for Country and Carbon Futures offered real and meaningful incentives. But there is much to learn from those programs.

Environmental Management Systems have been left to the limited number racing ahead of public policy, often guided by non-government initiatives like Certified Land Management.

Those who believe we can meet with success without a greater commitment to adaption and the adoption of better management and certification systems are not yet facing reality.

Not only are consumers - here and abroad - voting with their feet, so too are investors.

Fund managers for example, are becoming more discerning about where they put their money.  Top amongst the unfashionable are the fossil fuel, nuclear and tobacco sectors.

But agriculture will not be immune.  Like consumers, investors will continue to show preference for environmentally friendly products and those who respect the welfare of animals.

The ANZ Bank – Port Jackson Partners “Greener Pastures” suggested that to fully capitalise on the opportunities posed by growing global food demand, we would need $500 billion in infrastructure investment between now and 2050.

Given our population and capacity for savings much of that investment by definition, must come from foreign sources.

Rather than put in place more barriers to investment, we need to find better ways of building public confidence.

The real problem is not who or what goes to the Foreign Investment Review Board.  Rather, that no one knows what the FIRB is or what national interest test it applies.

It’s all too opaque.

Rather than set varying and arbitrary investment thresholds based on country of origin which only serve to create road-blocks, maybe it's time to more clearly articulate our expectations.

For example, I'm keen for a conversation about a link between foreign investment and environmental outcomes.  Does the investment proposal include a commitment to a credible environmental management plan - a plan to improve water efficiency, soil quality and animal welfare outcomes?

It need not be to be a regulatory burden.  Some sectors including dairy are well advanced in the development of their own sustainability plans.  In this case, a formal commitment to the industry-wide system would suffice.

This in turn would encourage the development and adoption of more commodity-wide systems - at least amongst those welcoming of much needed foreign capital - and make us more attractive to investors who place an emphasis on ethics.

All of these thoughts are challenging but I believe it is the right time for us to be thinking outside the square.

This article was first published in the FARMONLINE on Monday the 23rd of February 2015.


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