GUARDING OUR NATURAL RESOURCE BASE - THE PATH TO SUSTAINABLE PROFITABILTY

ROMA - WEDNESDAY, 2 SEPTEMBER 2015
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This is my first visit to Roma, an admission I make reluctantly given my portfolio responsibilities.

I acknowledge my friend Bruce Scott, there is no more respected member of the National Parliament and he will be missed. I wish him and Joan the very best.

I thank Australian Land Management Group and Maranoa Landcare Group for convening this forum.

I’m a great fan of Landcare and indeed, I believe there is scope to extend its work - a point I’ll return to.

When I look at Australia’s agriculture sector is see many things. Five in particular stand out:-

1. The opportunities are enormous

2. The challenges are many

3. Our greatest opportunity lays more in value than volume

4. Our greatest competitive advantage is not our proximity to the markets of Asia – as important as that is – but in our reputation as a provider of clean, green and safe product.

5. Our greatest assets are our human and natural resources.

I believe we have paid too little attention to the health and productivity of our natural resources.

Our soils are barely part of the public debate, even in this, the International Year of Soil.

Of course, no one in this room is guilty of such inattention but there are too few of you and you are under-valued.

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

Of course, most of the innovation, planning and risk-taking will come from the private sector.

But government must also play a role; providing strategic guidance, encouraging best-practice, and addressing market failure.

While the challenges we face are wide and varied, seven issues stand out:

1. We need to understand that our future must be about pushing our product up the value curve - competing in higher priced/higher margin markets rather than acting as price-taker in commodity markets;

2. We must improve our traceability and verification systems;

3. We need to properly allocate our natural resources and place them on a more productive and sustainable footing;

4. Our capacity to attract foreign capital will be critical as will be the monitoring of price transfer and similar issues;

5. On the biosecurity front, we must leave nothing to chance;

6. Our research and development and extension efforts must be world’s best; and

7. We must be mindful that agriculture’s future in Australia will largely be determined by the quality of its leaders and workforce.

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 but 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 improve natural resource productivity and 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.

In the future, it will all be about brand and reputation.

We certainly don’t lack evidence that high wealth consumers – both here and in Asia – are willing to pay a premium for goods grown in an environmentally sustainable way, and with animal welfare issues in mind.

Here in Australia, “organically grown” carrots and “free range” eggs spring to mind. In China, the high prices recently paid for our dairy products make the case.

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.

This is a reality which will increasingly weigh on the minds of our younger farmers.

Our farmers know the climate is changing, including those here in Maranoa who have been battling a terrible drought.

While there may still be debate about the causes, there is no doubt our continent is becoming hotter and drier.

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

Landcare is now 25 years old and the first COAG agreed framework for an Environmental Management System in agriculture was struck in 2002.

But 13 years on our progress is just not good enough.

The reality is, the work has been largely left to a limited number of farmers and groups – many here today – who have been racing ahead of public policy.

Better land management on a broad scale needs co-ordination and wide implementation. The questions for me are, is there a greater role for government and if so, what form should it take.

I have come to the conclusion there is a greater role for governments. There are three reasons:-

1. Better land management on a broad scale needs coordination and wide implementation platform.

2. The non-immediate return for the investing farmer is a disincentive to participation.

3. There are positive externalities – in other words – the benefit goes well beyond the farmer and the farm-gate.

All of these are a form of market failure which warrants government intervention.

The question then becomes, what role can government play in improving participation?

Again, I’m here today to assist in my quest to answer that question.

While I don’t yet have the final answer, there is an entity with us today that could potentially be the vehicle for greater participation.

It’s called Landcare – the farmers and volunteers who are one quarter of the century ahead of many public policy leaders.

I’ll leave you with that thought.


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