Agricultural Competitiveness White Paper address at National Press Club, Canberra
In Government you need a reason to have a passion, the competence to articulate it in a plan and the collegiate astuteness and forbearance of colleagues and forbearers to give purpose to this by delivery.
My earliest memories are of and around life on the land.
Calling out to my father and older brothers as they rode out to muster ... Chris on Polly, Dad on Blondie and Pat on the bay mare.
It was a partnership. Mum ran the house and Anna helped while Mike was away at high school. In the mornings Dad would milk the cow and I would sit on the rail and watch and talk. For this to happen the calf had to be locked up last thing the night before.
Your clothes were old but had been good. They were not bought to be work clothes, they had been bought to be good and now were wearing out at work before being cut into tractor rags. They wore out doing sheep work, drenching, crutching, shearing, treating for fly strike, mustering, cattle work, fencing, spraying weeds, ringing out country.
To keep people working meant Mum ran the books, paid the bills, fed the family, cleaned the house, went to town for supplies along a winding dirt road down the hill. On Friday we would kill a sheep to keep the family in meat supplies. Probably the main social outing was to go to Mass on Sundays at Walcha which did not really hit the high notes for sullen youths who had been wheeled up to worship in a Toyota tray back and a Ford as we did not fit in one car.
We had men who worked for us, in reality they worked with us, and we had a vegetable garden on the creek from which we shared the vegetables.
When the family borrowed money Dad drove forensic prudential control till the the money was repaid. Banks were there to lend money for substantial purchases such as property, not to buy cars.
Living on the land like this had supplied our nation with far more than just an income.
Living on the land like this had taken Australia to one of the wealthiest nations on earth on the sheep's back.
Living on the land like this had given an iconography, delivered troops to defend it, tempered it to hard work and resilience.
Our family was not unusual. The land was made of these families and these families had counterparts running stores and businesses in the towns and cities and together they made a nation.
I hear from some quarters that the day of the family farm is over, possibly walking out the door with the family business and the family house.
Like journalism without grammar the land without the family farm is meaningless, soulless, it goes to the core fabric of our nation.
Of course many family farms today are much different to what I experienced when I was growing up: the natural advancement in technology has been applied across all facets of agriculture.
While farmers are modernising, one of the larger roadblocks to serious advancement has been policy settings such as excessive environmental regulation and unco-ordinated state, territory and Commonwealth regulations holding the farm back.
This Agriculture White Paper re-emphasises the mission statement that agriculture should stand behind—fairer returns through the farm gate to secure the future of families on the land. That sacred connection that has someone say: I will die for this because it is the most pronounced aspect of what I am: the land I stand on.
I borrowed this from my father when he would reprimand me on my complaints about shooters coming up from the mines in the Hunter Valley to camp on our land to go shooting with their sons. Back then I found them an inconvenience and an eyesore. But my father would say: how can someone love their country if you never let them set foot on it?
With family farms the centre of Australian agriculture our White Paper maps out a competitive future in which they can thrive, and of course ipso facto, larger corporate farms as well.
So what have the actions of this government done for those on the land?
What have we achieved thus far and what is our vision that respects the fundamental role of this core portfolio?
When the Coalition returned to government in 2013 the Agriculture budget had been more than halved from the time we left in 2007. As a portfolio it had been cast adrift with issues such as the cessation of the live cattle trade rocking it to its foundations in key sectors.
No definitive capital plan was in place for the expansion of infrastructure such as dams, and the drought policy had been substantially removed.
The major discussion around agriculture had been the Murray Darling Basin Plan and that was quickly running out of control. The Greens were pushing for over 7,000 gigalitres of water to be taken away from agriculture which would have decimated not only farming, but regional towns as well.
The previous government's focus on buybacks instead of water from efficiency gains has reduced production and damaged confidence in the farm sector.
At that time, in September 2013 a 400 kg feed on steer at Gunnedah would have got you $680; a 20 kg lamb would have returned $85; a bale of cotton $460; and a tonne of wheat out of Port Kembla was $285. The average contract price for milk for Norco was 53.25 cents a litre. Feed barley averaged $245 a tonne. The Eastern Market Indicator price for wool was around $1,955 for a 180 kg bale, and the Western Market Indicator price around $1,980.
Since the change of government the prices of soft commodities have now had one of the greatest turnarounds in our nation's history not just by the Government of the country, but also by reason of demand from Asia and other markets including the Middle East, a low dollar and good management by government with three new free trade agreements, six new live export destinations and a Department of Agriculture that makes it its business to do the business that gets that better return through the farm gate. I am proud of our Department that makes their job a passion more than an occupation.
Now a 400 kg steer at Gunnedah will get you around $1265—an 85% increase; a 20 kg lamb now will return $125–a 43% increase; a bale of cotton $485—a 5% increase; and a tonne of wheat out of Port Kembla will bring $315—a 10% increase. The average contract price for milk for Norco is now 55.85 cents a litre–up 5%. Feed barley is currently at around $295 a tonne–up 21%. In the east, a 180 kg bale of wool fetched $2,190—up 12%—and in the west a bale will get you $2,235, up 13%.
Of course not all soft commodities have experienced an upturn but overall the numbers tell the story, agriculture is doing a substantial job in providing for our nation's economic future as it always has, and its contribution to the national economy is on the rise, forecast to hit nearly $54 billion in 2015–16. This is why agriculture deserves the title of the fifth pillar of the Australian economy.
We must see that continue and I have every confidence that our farmers will deliver.
Government should always ask the question—is their involvement to assist farmers who remain on the land or to placate other vested interest groups?
But there are some things that only government can do.
We have brought groups formerly at loggerheads together in the Grass Fed beef sector and are tackling the challenges that are facing that industry head on.
We have refurbished the Australian Grape and Wine Authority with a board focused on the marketing required to see a turnaround from what were some of the toughest conditions on record to the current hope in new contracts and better prices.
The establishment of Horticulture Innovation Australia Limited in November 2014 and the bringing together of diverse industries through the Voice of Horticulture is another good example of modernising industry structures and getting industry to work better together toward a common goal.
Now on the weekend the combination of diligent policy development in Opposition, and considered policy vision in Government has seen the main body of the Agricultural Competitiveness White Paper delivered.
The White Paper is a $4 billion dollar investment in the future of agriculture. The substantial items include: up to $250 million in Drought Concessional Loans each year for the next 11 years, the $500 million National Water Infrastructure Fund; $200 million to improve biosecurity surveillance; and a $100 million extension of the Rural R&D for Profit Programme.
The biggest amounts do not necessarily have the greatest effect. Other initiatives that cost far less, such as the new ACCC Agricultural Enforcement and Engagement Unit, allowing farmers to use larger Farm Management Deposits as a loan offset and revised accelerated depreciation regimes for water, fodder storage and fencing have been overwhelmingly welcomed.
A fairer go for farm businesses
We will work with the farming soft commodity sector to bring about the best opportunity so that all our farming families and other businesses can be part of a global resurgence.
This means healthier market competition, less and better-targeted regulation and an improved tax system to encourage on-farm investment and increase returns at the farm gate.
Already we are delivering reform to Australia's country of origin labelling regime so that it is simple, proportional, diagrammatic and mandatory to let consumers know once and for all how much of the food in the package they buy comes from our nation, giving consumers a more honest appraisal of how their grocery dollars are spent.
People want to know whether they are supporting our farms or someone else.
A component of the White Paper was announced in the May Budget that is designed to boost new investment on the farm – the 100 per cent write off on water infrastructure, and the 100 per cent write off on fences (though, I must admit in all my time as an accountant I never depreciated a new fence, always repairs apparently), together with the write off over three years for silos, haysheds and other structures to store fodder and grain that help prepare for drought.
Those measures represent $142 million that will stay in farmers' pockets over the next four years alone—money they can use to refurbish their investment for future agricultural returns and build on their already vital contribution to the national economy.
A new ACCC agriculture commissioner will add to the corporate knowledge of agriculture in a market where centralisation has reduced market forces in many industries. To do this, we are investing $11.4 million to boost ACCC engagement with the agricultural sector.
A more farm-savvy and proactive ACCC will strengthen competition and address any misuse of market power through fair trading investigations that are enforced and undertaken by those with a real understanding of how farms and agricultural markets operate.
This investment is to give farmers a fair go and a fair price. In a perfect market there are multiple buyers, multiple sellers, ease of entry and ease of exit and transparency in transactions. In so many instances in agriculture this is not the case. That is why proper diligence is required to get a genuine and free market price back to the farm gate.
In addition to assist farmers in this market place imbalance we are investing $13.8 million in a two-year pilot programme to provide farmers with knowledge and materials on cooperatives, collective bargaining and innovative business models.
That includes contract negotiation—because what we are doing is making sure that farmers have the skills to protect their interests and maximise their profits. Our two biggest farming enterprises are both co-operatives, Murray-Goulburn and CBH, and these have been very successful. Only recently I turned the sod on a new dairy co-operative processing facility in Nowra which allows farmers to reach further down the supply chain and get a better return for their product.
In our quest to update and remove regulations the White Paper allocates $20.4 million to further streamline AgVet chemical approvals. We want to deliver clear benefits for the agriculture sector while maintaining robust review mechanisms so that Australia can have confidence in the safety of these chemicals.
We are introducing Productivity Commission reviews into regulation across the sector—because reduced regulation at all levels of government reduces costs and lets primary producers get on with their business.
We know that equity in the farm itself tempers the vagaries of agricultural commodity prices; therefore, we are giving farmers the capacity to double their Farm Management Deposits from $400,000 to $800,000.
As well as doubling the limit of Farm Management Deposits, we are lifting the restrictions on the banks to permit these deposit accounts to be used as loan offsets.
If all Farm Management Deposit holdings were to be used to offset farm business loans, the benefit to the farm sector in interest savings alone could be up to $150 million a year.
I urge banks to get on board because if there is one thing I encourage farmers to do it is to pay off debt. As an accountant I never saw a farm go broke if they had no debt, but I saw an awful lot of good farms go broke because they had too much.
At the same time we are currently offering concessional loans to help farm businesses cope with drought at 4.34%, 3.84% and 3.21% and these will be reduced further soon. Of course these loans do provide real competition with the commercial banking sector so rates remain low as possible.
I would also like to announce today that following a recent review, from August 1 interest rates for all three concessional loans programmes will be reduced. The Drought Concessional Loans programme will see its interest rate reduced from 3.84 per cent to 3.05 per cent and the Drought Recovery Concessional Loans interest rate will drop from 3.21 per cent to 2.71 per cent.
That would have to be some of the cheapest money in town.
We have made provision of $250 million a year for the next 11 years to give farmers surety that there will continue to be low interest loans they can access during difficult periods.
Our concessional rates now are lower than those rates paid by farmers even after they had received the 50 per cent Exceptional Circumstances Interest Rate Subsidy in the past—because of course at that point in time interest rates were higher.
So what I am encouraging is cheaper debt that goes hand in glove with our changes to Farm Management Deposits.
We must refurbish on-farm capital for this century, investing in things like fences, sheds, pumps and irrigation infrastructure and the major source of this is the price we get for the product we produce—the wool price, cattle price, grain price, carrot price or banana price.
So farming smarter and growing productivity is essential.
We know that farmers generate a $12 return within 10 years for each dollar invested in agricultural R&D. Think of the benefit Australia received from research and development into rabbit control through myxomatosis and the calicivirus.
A stronger Research and Development system will give our farmers access to the latest innovations, new technologies and best management knowledge available to seize the opportunities for better productivity growth into the future.
To do that successfully requires a long-term investment, so through the White Paper we are delivering a further $100 million extension to the Rural R&D for Profit Programme, to enable this programme to run continually until the 2021–22 financial year. This funding is on top of $700 million already delivered by the Government each year for agricultural research and development through the CSIRO's agriculture program and $250 million in matched funding to the Research and Development Corporations.
This programme is a practical investment in the future of Australia that is funding nationally coordinated, strategic research that delivers real returns at the farmgate. The delivery of the first round of the Coalition's $100 million election commitment to R&D has already seen investments being made in the control of six major weeds including Parthenium weed, blackberry and silver nightshade, and control of other commercially devastating pests in a commercial sense such as Queensland fruit fly and Medfly.
As part of smarter farming initiatives in the White Paper, we have also committed $50 million to boost Australia's emergency pest and disease eradication capability—for example banana freckle, chestnut blight and citrus canker - to protect the productivity of our farmers and our global reputation for clean, green produce that ensures continued access to the widest possible range of international markets.
We will also provide $50 million to give farmers better tools and control methods against pest animals and weeds—including wild dogs. We are about to start building fences in western New South Wales and Queensland that begin and end in the same spot creating the enclosure within which we will eradicate and keep out wild dogs.
It is essential for our clean green image and savings from low disease and pest pressure that we have the adroitness to move quickly to address pest and disease problems when they arise. And we are determined at every step to deliver pragmatic outcomes from this research on-farm, because unless it's applied—and applied consistently—at the local level, our producers will never see the benefits at the farmgate.
We are focused on not languishing in the theoretical but delivering practical outcomes on the farm, such as dog fences. We may be accused of dot points but they are points that make a difference, that mean something to the farmer that reads them. Sometimes I felt my detractors wanted an agricultural Gettysburg Address with lots of glossy pictures.
Family farms over history have done their job. They've played an important role in applying research and development. From John and Elizabeth Macarthur's Merinos to William Farrer's wheat to Mary Penfold, the doctor's wife who oversaw the planting of what was to become one of the world's greatest wines, Australian farmers have been at the forefront of research that brings improved product and higher productivity.
Even in my own electorate in Inverell an Australian company, Boss Engineering, supplies parts and technical assistance to support the operation of the largest air seeder planter in the world.
Building water, transport and IT infrastructure
If productivity on the land is to continue to grow into the future, we also need to ensure the right infrastructure is in place to support growth.
That's an essential principle wherever you farm, but nowhere more so than in Australia, where water is wealth and water storage is the bank.
Managing water resources sensibly and sustainably to ensure the competitiveness of our farmers into the future is a fundamental role for the Australian Commonwealth's leadership in the nation's water reform agenda.
To expand agriculture and grow productivity we need to use the water we have more efficiently and provide additional access to it in areas where it's needed.
That is why we are investing $500 million in the National Water Infrastructure Fund to deliver our farmers water security into the future.
This is real money for real projects that will directly benefit primary production—with up to $200 million of these funds allocated to Northern Australia through its White Paper announced in June.
There is a long and growing list of suggested sites and projects that could benefit from funding right across this country from groundwater development in the Pilbara to the Nathan Dam in Queensland and from Gippsland's Macalister Irrigation District Southern Pipeline in Victoria to Dungowan Dam in my own electorate of New England.
To ensure that we are building the right infrastructure for farmers to get their produce to market, we are investing $1 million in CSIRO's Transport Network Strategic Investment Tool (TRANSIT), which will be expanded to cover more agricultural industries across the whole of Australia. TRANSIT will analyse freight flows, routes and costs and identify bottlenecks and last mile issues for 25 agricultural industries such as cotton, dairy, carrots, melons and chicken meat. This information will help Government optimise infrastructure investment so that agricultural supply chains have a voice of their own.
This policy incentive buys greater access to the Government's investment of $50 billion in the critical transport infrastructure that will progress projects such as the Inland Rail between Brisbane and Melbourne.
The Government also recently announced that it will invest an additional $60 million on top of the $100 million Mobile Black Spot programme to improve mobile coverage across regional Australia. So much of agriculture today relies on mobile phone coverage, from farming to transport to farm security.
During six years of the Labor Government not one cent was spent to address mobile phone black spots, and yet all of us know that outside of the big cities the biggest complaint about telecommunications is 'I have no mobile phone coverage.'
When I'm in Drake, Urbenville, Dungowan or Walcha Road, locals' first request is for mobile phone coverage. These towns will now have towers and we have delivered 500 new or upgraded mobile base stations across our nation.
In the Howard Government there was a mobile phone black spot program, and now again under the Coalition Government there is one too.
The Coalition Government's recently announced $100 million investment in mobile blackspots has leveraged another $385 million in external investment. Two new satellites worth $400 million each will be in orbit, the first launch occurring later this year, to bring broadband coverage to our remotest agricultural precincts and the kids doing school of the air.
It is the most significant one-time increase in mobile network coverage to outer metropolitan, regional and remote Australia delivered by a single public funding programme in the history of mobile communications in Australia.
Drought and risk management
The start of our term of government saw one of the most tenacious droughts on the Eastern Inland. From Walgett to Longreach areas of our nation's agricultural precinct were and are in drought for three seasons. How would you last without money for three years in your job? Especially if you had to stay at work. If you try to keep stock in a drought you will work harder, not easier.
Over the next four years, we have budgeted over $220 million for drought programmes in addition to $2.75 billion in drought concessional loans over the next 11 years—a total package of almost $3 billion. This is on top of the $614 million for the Farm Household Allowance forecast—that's a direct payment to people on the land—this year and over the forward estimates.
When I was a child the weather was predicted by the radio and by looking down the gully to see if a storm was coming. If it was dry we prayed a lot.
The White Paper will provide $3.3 million to give farmers more accurate, more local and more frequent seasonal forecasts—the information they need to better plan for and manage weather risk on the land.
With the expanding Australian market for insurance products to help farmers manage risk, such as multi-peril crop insurance, we are providing $29.9 million over four years for farm risk advice and risk assessment grants and I am encouraged by conversations I have had with state agriculture Ministers to assist with this.
As previously mentioned in drought the Government will provide up to $250 million for concessional loans each year over 11 years and the White Paper provides a $22.8 million to increase Farm Household Allowance case management in a recipient's third year of the entitlement. This will also ensure that they don't 'fall off the cliff'We will also allow farmers in drought to access Farm Management Deposits within 12 months of deposit, without losing tax concessions in the year of deposit if in prior financial year.
Since coming to government we have seen more than 5,000 people granted the Farm Household Allowance, up from 367 who were receiving the Transitional Farm Family Payment under the previous government. Nearly 600 farm businesses have been approved for concessional loans, up from the mere eight approved under the previous government.
Contrary to the hapless attempts to degrade this government's commitment to drought-affected producers these numbers again tell the story—we have worked hard to fill yet another policy vacuum left to us by our predecessors.
To deal with the realities of regional towns in the direct path of the drought we have also rolled out a stimulus package worth $35 million to bring money into communities. Additionally we have given a further $25 million to help farmers in drought manage pests, the most topical of late being wild dogs. As I mentioned earlier we are putting in place fencing to assist farmers manage the scourge of wild dogs so that we can repopulate the areas with sheep and attract associated commerce—to support shearers, small towns and farmers and to get income back into the Western Districts.
Accessing premium markets
Australia's population just recently exceeded 24 million people. This is a decent domestic market but Australian agriculture has long produced for not only the domestic market but also global markets. This is our strength.
Year in, year out, in addition to supplying our domestic food needs, Australian agriculture produces food and fibre for a global market, exporting around two-thirds of production which regularly contributes around $40 billion a year in export earnings to this country.
The dilemma for the world is that it now has seven and a half billion people, heading for nine billion by 2050, but this is inherently an advantage for Australia.
To meet the demand for growing global food and fibre, the UN Food and Agriculture Organisation (FAO) estimates that a 60 per cent increase in production on 2005/07 levels will be required by 2050.
That means producing an extra 1 billion tonnes of grain and 200 million tonnes of meat alone by 2050.
It is said that there are 12 billion productive hectares worldwide but humans are consuming as if there 18 billion hectares. We have to raise productivity on these 12 billion productive hectares. Cotton yield in Australia is an example of how we lead the world in doing precisely this with the highest yields in the world.
What Australia has to do is produce a premium product for a premium market that does not threaten the social cohesion of our trading partners' agricultural constituents.
Overwhelmingly the Chinese, Indian, Indonesian, and Vietnamese people will feed their own nations but we will supply to a select premium constituency.
And it is just as important to the nations we export to as it is to our own domestic markets that we have unambiguous indicators of what is Australian.
Dairy and horticulture in particular have highlighted the important work our Agriculture Counsellors can do in-market, and that is why I have decided to put on five new Agriculture Counsellors in key markets to further drive our market access agenda.
One of our single greatest assets in this nation is our clean, green, pest and disease free status – this gives us our competitive edge in a global market where quality and safety brings a premium. In that space we have delivered the single biggest reform to our nation's biosecurity system since the introduction of the Quarantine Act in 1908. We picked up the threads and have delivered one of the largest legislative packages in the history of this Parliament by securing the passage of the 634 page Biosecurity Act 2015.
To complement this new legislative framework we are also committing $200 million to improve all Australia's ability to understand, detect and respond to pests and diseases that could hurt our farmers, rural communities, agricultural productivity and the economy more broadly.
It will build intelligence and scientific expertise and put more boots on the ground to find and manage biosecurity risks such as that which we have faced with the recent Panama Tropical Race 4 outbreak in bananas.
This funding will include increased investment in the north to support future development and ensure the northern barrier remains intact.
Our vision is to build a more profitable, more resilient and more sustainable agriculture sector to help drive a stronger Australian economy.
This White Paper has been widely commended because it brings the connection between the wishes of the people, with over 1000 submissions, to definitive policy changes and investment. It dove tails into other government programs to accentuate delivery for Agriculture. It is premised on a philosophy of a better and fairer return through the farm gate. It has been supported by a diligent department and ever patient staff.
With the appropriate governance and continued passion of the agricultural sector it will bring benefit to all Australian agriculture: from the kitchen table of the smallest family farm to the boardroom of the largest corporate enterprise. And the nation's ability to create the opportunity for one to grow into the other.
I acknowledge that it is unlikely that a child will sit on the rail and talk to their Dad while he hand milks a cow before work on a frosty morning.
Today maybe the child sits with Dad in the GPS auto steer tractor pulling a precision seeder as the technology of billions in global positioning systems converses with yield, weather and soil data to apply variable rates of seed and fertiliser to maximise yield and minimise input costs.
But I suspect they still have a kitchen table and after their son or daughter has done the quarterly GST they discuss their dreams for their family and our nation.
I would not be surprised if they watch the local team play on the weekend and work with the local P and C to improve their local school.
I am absolutely certain that if they are not there our nation is a lesser place.
These people who make a living not by exploiting others but by feeding and clothing them in what is inherently a truly noble endeavour.
One of this government's, and this nation's greatest opportunities is to stand once more behind these people as they sell a premium product to a premium market, feeding our nation and earning export dollars – and in turn bettering the lives of millions of people all around the world.