Speech - National Farmers' Federation Congress - Focusing on our customers and our resource base - The key to sustainable profitability

It’s a pleasure to once again address the National Farmers’ Federation’s National Congress.

I begin by acknowledging the Traditional Owners of the land on which we meet, and pay my respects to Elders past, present and emerging.
I’ve been in the agriculture portfolio for five years.
People often ask me, why?  The tone of their query too often suggests there are more important responsibilities.  I reject that assertion.
There is no more important a sector than the one which feeds us, creates so much economic wealth, and makes such a valuable contribution to global food security and therefore,  security and stability more generally.
I love my portfolio: it’s interesting, and it’s full of interesting, innovative and energetic people. 
The sector is diverse, and it’s full of opportunity.  Opportunities to create even more wealth, and to do things even better. It’s also full of challenges, and I love a challenge. 
After all, what’s the point of being in politics if you’re not prepared to look at the big picture, tackle the big challenges and work with others to make the most of the opportunities on offer?
Two years ago I was here talking about the rapidly changing political environment and its implications for policy making and policy advocacy.
I believe it’s fair to say the pace of change since 2016 has not slowed.
I congratulate President Fiona Simson who in recent days, weeks and months has demonstrated she’s determined to lead a representative organisation which recognises and responds to the issues which challenge the farm sector.
Issues like climate variability and changing community attitudes.
And in a recent address to the National Press Club - and again this week - Fiona rightly sent the clear message: that if we want the food and fibre sectors to reach their full potential we need an overarching strategic plan to get there.
I welcome the NFF’s Road Map 2030, it’s a quality document with sensible ambitions and I’m right on board for the $100 billion target.  In fact I believe we can do better.
But Fiona – and I say this is in the nicest possible way – that’s enough reports now.  At least for a while. 
It’s time to act, not just talk.  We don’t have a moment to lose and I’d love the opportunity to drive that over-arching strategic plan for the sector.
I now have enough reports in my office to cover more than one very large desk.
Most of them are of high quality; including

  • the NFF’s February 2013 “Blueprint for Australian Agriculture” ;
  • the former Labor Government’s 2013 National Food Plan;
  • the NFF’s 2018 “Talking 2030” and,
  • RIRDC ‘Rural Industry Futures” report of  2013.

You won’t be surprised to hear me say, the 2015 Agriculture White Paper falls into another category.  In my office it’s filed under “F” for failed.
The better reports vary in focus, volume and quality.
But most say basically the same thing: that the sector faces both opportunities and challenges and if we’re smart about it, the future can be bright.
Each of them has some focus on at least eight common themes:-

  1. New and improved export market opportunities;
  2. Research, innovation and technology;
  3. Sustainable profitability;
  4. Competitiveness;
  5. Workforce
  6. Branding
  7. Capital requirements; and,
  8. Biosecurity and traceability

These are all critically important issues for the food and fibre sectors and they are all priorities for me.
But I’d like to touch on three issues which I believe warrant greater attention.
The first is changing community attitudes and consumer preferences. The second is climate change and sustainable profitability. The third is the quest for premium markets.
Consumer Preferences
We are all familiar with the way innovation is disrupting traditional markets everywhere - ride sharing, Airbnb, and the media landscape to name just a few.
But innovation is not the only disrupter, changing consumer attitudes and preferences are impacting too.  Indeed the two go hand-in-hand.
More than ever before, people are becoming more discerning about the products they eat.  They’ve always sought high quality, clean and safe product.  And over recent years they’ve focused more and more on the health benefits of their food.
But increasingly, consumers want to know that their food has been grown in a sustainable way,  and in a manner respectful of animal welfare.
So on the first point, if the production of the product involved large-scale land-clearing and threats to native species, used excessive amounts of water, or left our limited soil resources depleted, then for them, it doesn’t cut the mustard
And if it relies on animal cruelty for its profitability, then increasingly, they’ll reject it.
The bar is being lifted even higher by the retailers. The fast-food chains are increasingly producing vegetarian and vegan menus.  Just this week Richard Branson revealed that his Virgin group were experimenting with in-flight menus with lesser quantities of beef.
These are trends not unique to the Australian market.  So those operating in the various meat sectors face a particular challenge and the best response to it is to further build upon the sector’s reputation on the sustainability and animal welfare fronts.
And we have to build upon and maintain public confidence in our regulatory regimes.
Politicians and industry leaders alike have a role to play in maintaining and promoting that confidence and at the risk of sounding a bit too partisan, I have to say the current government is not doing much of a job of it.
The worse response from politicians is one which attacks and demonises those who raise environmental and animal welfare concerns, and seeks to defend the status-quo no matter what that looks like.
Because the fact is the status-quo does not always look that great and consumers are voting with their feet where ever their expectations aren’t met.
Rather, the Government of the day - hopefully with the support of Her Majesty’s Opposition – must both anticipate change and work with those parts the sector which may not be moving sufficiently quickly to accommodate growing opposition to what are seen as out-dated practices.
That’s the best approach for the sector because it helps those who might be lagging, and it prevents those lagging dragging down the many who are already accommodating changing community attitudes and expectations.
That’s the great lesson to be taken from the debacle in the live sheep export trade where a few bad eggs destroyed any chance the industry had to maintain its social licence.
But there is another message to be learned from the live sheep export trade.  Often those purporting to be your best friend can be your worst enemy.  When a Minister gives an unqualified green light to an industry he eventually becomes not the industry’s friend but rather, its worst enemy.
An unqualified green light approach promotes the wrong culture within industry and breeds risk-taking or worse, contempt for reasonable community expectations and regulatory standards.  It’s a story that can’t ever end well.
Climate Change and Sustainable Profitability
We are seven years into a terrible drought.  The impact on many farming families has been devastating and my thoughts remain with them. 
The severity and length of the current drought must be both a wake-up call and a call to arms for all of us.
And if our recent experiences do not put an end to complacency and policy inertia I do not know what will.
We must stop treating drought as an abnormal event and we must immediately get serious about both carbon mitigation and adaptation.  They are prerequisites for the development of good drought policy.
Five years into Government, and after abolishing the COAG Committee charged with drought policy reform, the Prime Minister is about to hold a Drought Summit.
To be meaningful and to be taken seriously, the Summit must focus on our natural resource base.
We need to find better ways of ensuring we are using those limited resources sustainably and efficiently.  We need market-based mechanisms designed to ensure they are being allocated to the production systems where they’ll produce the greatest return for our farmers and the economy.
No farm enterprise can succeed without adequate water and healthy soil resources.
Of course the two go hand-in-hand because healthy soils are great absorbers and holders of moisture. Higher levels of carbon and other organic matter result in greater water retention and higher productivity.
The summit should not spend a disproportionate amount of time talking about dams.
We know where the viable water infrastructure opportunities are and we have a political settlement on the rules around balancing water consumption and environmental flows. We should not be wasting precious time revisiting these issues.
There is no shortage of successful land management systems designed to rejuvenate our landscapes and many farmers are embracing them. But many are not.
The Summit must answer the key question: how do we improve the uptake of these practices? Government surely has a role to play.
Extension is a disappearing function of government. We have the vehicles to turn that around: our agriculture-based research & development corporations, our natural resource management groups, and state-based land services authorities. 
We just need some leadership and determination to mobilise them.  It will take some money too, but every dollar invested should provide a greater return than that spent on crisis-driven drought assistance.
The Summit should spend some time reflecting on the tax incentives that help farmers put money away and good times and to build feed storage, efficient water systems and other drought adaptation infrastructure. We need to better understand which are working best and which are best targeted.
Finally, if there aren't at least as many non-farmers - including economists and scientists - as farmers and farm industry leaders sitting in and contributing to the Summit it will descend into a political talk-fest.
So we'll know the likelihood of the Summit's success well before it begins; when we see the invitation list and the agenda.
Premium Markets
I’ve spoken about the health and allocation of our natural resource base.
But no matter how we care for them and allocate them, our capacity to grow and produce more will be limited in the short to medium run by the finite nature of our natural resources. 
In any case, a business model based primarily on greater volumes into increasingly competitive markets in which we are increasingly price-takers offers limited success.
So how we earn more without growing a lot more? 
The answer of course is a greater and more energetic pursuit of premium markets.
We have an excellent value proposition. We can’t be the food bowl of Asia but we can be its Deli.
Our collective efforts - government, industry, and research institutions = should focus more on adding greater value to, and securing greater margins on our products.
Now I’m not suggesting none of this is happening already.  What I am saying is that if I were given the opportunity to be your Minister again, anticipating and adapting to changing consumer attitudes, climate adaptation, the management of our natural resource base, the pursuit of premium markets and the science and innovation which will deliver those outcomes would be key priorities for me.
So too would be biosecurity and the protection of our key competitive advantage: our reputation as a provider of clean green, high quality and ethically produced food.
But in keeping with the theme of your Congress, a diversity of ideas will be critical to the success of the food and fibre sectors.
My view is but one.  It’s no more or less important than that of other key stakeholders. 
Over the past five years I believe I’ve been a pretty good listener and I’ll continue to both listen and learn.
But in the end, you are the investors and the risk takers. It is the private sector, not government, which produces wealth in our country.
But government has an important role too: in the provision of strategic guidance, building the right investment environment, producing an efficient regularity regime, providing the infrastructure support you need, and laying the foundations for a fair and rewarding trading environment, including on export markets.
So we need to work together, and I look forward to working with you all as we pursue our joint aspirations for the food and fibre sectors.

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