Outlook 2018 opening address, Canberra​​

6 March 2018

E&OE

Ladies and gentlemen.

Welcome to the 2018 ABARES Outlook conference.

It is a pleasure to be at my first Outlook.

This conference is one of the top agricultural conferences in Australia, and I am proud of the efforts of my department to bring it all together.

It is one of the few times in the year we have so many farmers, industry leaders, economists and scientists from across Australian agriculture, fisheries and forestry in the one room, not to mention our international guests.

This is a true meeting of minds:

  • presenting the latest commodity statistics and economic outlook
  • discussing the challenges for Australian agriculture, and;
  • examining the opportunities that come next, to ensure they’re seized upon.
My rural banking background has given me a true appreciation of our agriculture sector—of how dedicated, resolute and innovative our farmers are.

I’ve seen the important role small business and agriculture plays in creating jobs and promoting economic growth in my electorate and this portfolio is highlighting the enormity of its role nationally.

Australian agriculture is a pillar of the Australian economy and an industry Australians should be proud of.

Australian farmers are feeding people the world over—and our premium produce is well sought after.

It’s a sector that continues to perform year on year and is one of the cornerstones of the Australian economy.

  • In 2016-17 the value of Australian agricultural production exceeded $60 billion for the first time.
  • The total value of Australian farm exports has increased from $38 billion in 2012-13 to $49 billion in 2016-17.
  • In the most recent National Accounts figures, nothing added more to our GDP growth in the last year than agriculture.
It is also the lifeblood of many rural and regional communities.

  • Agriculture employs more than 300,000 Australians directly and supports many more jobs in related industries. Agriculture supports other related industries—such as transport companies, rural supplies businesses, stock and station agents and the food processing sector.
  • Up to 10,000 people are directly and indirectly involved in the live export industry.
  • Agriculture provides the employment opportunities and supports the small businesses that keep our country towns ticking.
It is for these reasons and more that the government has been such a strong supporter of the sector.

And I will be doing everything in my powers to ensure its ongoing success.

The latest Agricultural Commodities report released today shows that while the sector continues to be a strong performer, we are not immune to fluctuations. In fact, variability is part and parcel of running a farm business.

ABARES has forecast a 5 per cent decline in the gross value of farm production in 2017–18 to $59 billion, largely due to crops coming down from record production in 2016–17. 

In 2017–18 the nominal value of farm exports is expected to decline by 4 per cent to $47 billion, in line with a return to more average winter crop production volumes. 

But after a forecast decline, both production and exports are forecast to trend upwards.

From 2018–19 to 2022–23 the gross value of farm production is forecast to increase by an average of around 1.2 per cent per year, reaching nearly $63 billion (in 2017–18 dollars). 

From 2019–20 to 2022–23 the value of exports is forecast to increase by an average of 1.2 per cent per year, reaching nearly $50 billion by 2022–23 (in 2017–18 dollars).

It shows we are headed in the right direction, despite forecast declines this year—which were probably to be expected after an astonishing 2016–17.

For our part, the government wants to build resilience in agriculture.

It is a sector that can have fluctuations year in, year out, depending on seasonal conditions, terms to trade or unexpected economic events that can impact production and exports.

We want to ensure farmers have the tools in place to manage through tough times—to build resilience through record years for the inevitable falls.

As the Minister for Agriculture and Water Resources I want to build on the good work of the government so far in building the policy settings for the agriculture sector to thrive.

Since it was launched almost three years’ ago, the Agricultural Competiveness White Paper continues to deliver.

This was an historic investment to build a more profitable, more resilient and more sustainable agriculture.

Backed up by a $4 billion dollar investment, its focus was rightly on the farm gate—rewarding farmers for their work with fairer returns.

It set about building a solid platform for the sector and removing impediments to growth—minimising red tape, improving the tax system to encourage investment and offering appropriate protection for smaller operators.

It included:

  • A 100 per cent write off on water infrastructure and fences—together with the write off over three years for fodder storage—to build drought resilience and profitability.
  • $11.4 million boost ACCC engagement with the agricultural sector, which has led to an examination of supply chain issues in the red meat sector and the dairy inquiry.
  • Enabling farmers to double their Farm Management Deposits from $400,000 to $800,000 and allowing them to withdraw their deposits during lean years without losing their taxation benefit—these have led to record FMD holdings in peak periods and delivered more.
  • A $2.5 billion commitment over ten years for concessional loans to help farm businesses cope with difficult periods.
  • $500 million in the National Water Infrastructure Development Fund to deliver our farmers water security into the future. 
  • A $30.8 million investment to give Australian producers better access to premium overseas markets, tackle technical barriers to trade and expand into emerging markets.
This plan has set the foundation for the sector, enabling us to build on this and take our sector to the next level.

You can’t talk next level without talking about furthering our access to international markets.

Australia is a nation built on trade and exporting our goods.

When we talk about Creating value in an increasingly connected world, getting our produce to overseas markets is a large part of this.

Around 70 per cent of our agricultural production is exported.

Market access will be key to Australian agriculture taking the next step—especially considering growing global food demand. 

Since coming into government, we have placed a special emphasis on gaining better access to high-value global markets, new markets and maintaining existing markets and boosting trade.

Already this year we have secured the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and signed the Peru-Australia Free Trade Agreement.

And we signed import protocol for South Australian and Victorian seed potatoes to be exported to Indonesia—delivering on a longstanding market access request.

The government stands by the quality of our produce—it continues to be highly sought after overseas.

We back our farmers to compete with the best the world has to offer.

Exports are key to delivering farm gate returns and reward for effort—not to mention the fact our farmers are bettering the lives of millions of people across the globe.

The opportunities presented by global food demand are unquestionable.

Global food demand will require a 75 per cent increase in global food production by 2050, compared with 2007 levels.

Already we have seen that Australian agriculture and food producers have benefited from rising food demand in Asia. 

Over the 10 years to 2016–17 the share of Australia’s total farm exports shipped to Asia increased from 52 per cent to 69 per cent.

And the prospects for growing this are strong.

The government continues to work to ensure our produce can make it to local and international markets.

The Australian Government has secured free-trade agreements with Korea, Japan, China—and we have Andrew Robb, who will speaking on day two, to thank for much of this.

Our Free Trade Agreements have led to reduced import tariffs on many Australian products, with further tariff reductions scheduled over the coming years.

For example, on full implementation of the Korea-Australia Free Trade Agreement, 98 per cent of Australia’s agricultural exports to Korea will face no tariff.

The Peru-Australia Free Trade Agreement is another step forward.

While it is not a country we export a great deal to currently—there is immense potential now Australian farmers have their foot in the door of the Latin American market.  

On top of trade deals, we have negotiated new and improved technical market access to maximise their benefits.

In the agriculture portfolio since 1 January 2016, we have had 65 key market access gains or restorations, along with 62 key market access improvements or actions to maintain market access.

We are a trading nation—that is our future.

As other Australian sectors have stalled, our agricultural exports have continued to grow, and further growth has been forecast in the coming years.

But we can’t afford to take our foot off the pedal.

Beyond the White Paper

​We can’t talk about connectivity without talking about infrastructure.

The key to trade starts at home and ensuring we have the right infrastructure in place to get our produce to markets, here and across the world.

Following the White Paper, the government has continued to build on our infrastructure investment.

Our $8.4 billion investment in the Inland Rail will help get product to market and connect regional Australia.

It builds on our vision of moving large quantities of freight and steel from Sydney to Perth; and now crossing from Melbourne to Brisbane; crossing over at Parkes.

This is a plan not just for a budget or a government; but a vision for a nation, invigorating new areas for growth.

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.

As part of our vision for more water infrastructure to build a stronger agricultural sector we have now made available $2.5 billion in loans and grants to start building vital water infrastructure.

In addition, in the Murray Darling Basin we have invested over $1.9 billion in irrigation infrastructure upgrades since 2013. 

This investment not only provides water savings for the environment, but improves the productivity of our irrigated agricultural industries.

Murray Darling Basin Plan

​It is a great honour and responsibility to be entrusted with Australia’s water resources. 

Water is one of this country’s most precious assets and I am committed to working collaboratively and with the facts to ensure it is managed for the benefit of all Australians and the environment.

One of the most pressing challenges I face as Water Minister is delivering the Murray-Darling Basin Plan on time and in full. 

Agricultural production in the Murray-Darling Basin is worth more than $20 billion—around $7 billion of this is from irrigated agriculture.

The Murray-Darling Basin Plan is long-term policy that is delivering for Basin communities and the environment. The Plan is founded on strong science, evidence and extensive consultation. 

It was agreed by a hard-won consensus among all Basin governments and the Commonwealth, born of an urgent need to save our nation’s most important and iconic river system.
We cannot lose sight of this task.

While the Senate’s recent decision to disallow the northern Basin Plan amendment is a setback, the government is determined to continue working with Basin state governments on an agreed way forward.

Successful implementation of the Plan depends on the continuing cooperation of all Basin state governments.

We will get the Basin Plan back on track – I have no doubt about that.

Real progress is being made with the Commonwealth Government having now achieved a substantial amount of the water recovery required under the Plan. 

The water recovered to date is equivalent to more than four times the volume of Sydney Harbour–that is 2100 GL of water that will be delivered back to the environment every year, on average.

My message to Basin communities is that the Coalition Government remains fully committed to delivering the Basin Plan, including the outcomes of the northern Basin review, in full and on time.

We are also establishing the Regional Investment Corporation, or RIC, to administer $2 billion in farm business concessional loans and the $2 billion National Water Infrastructure Loan Facility.

Access to capital is huge for farmers, something I saw firsthand throughout my rural banking career.

The RIC will deliver loans directly to farmers, offering a new, expanded farm loans program and applying a nationally-consistent approval process.

The RIC will help spur investment and growth in regional Australia.

The RIC will also administer the National Water Infrastructure Loan Facility to help fast-track the construction of priority water infrastructure projects.

Rural R&D will also play a significant role in unlocking the potential of Australian agriculture.

It’s an investment in the future of our agriculture industries, with strong returns.

ABARES has previously found that for every dollar the government invests in agricultural R&D, farmers generate a $12 return within 10 years.

We have also supported the innovation and farming smarter practices required for our farmers to remain competitive and build productivity.

The government and industry invest over $600 million annually in research and development and extension through our rural research and development corporations.

The government’s $180.5 million Rural R&D for Profit program is on top of this, aiming to improve farm gate productivity and profitability and deliver real outcomes for Australian farmers.

This funds practical projects that are accessible for farmers, including managing pests, better use of nitrogen to improve soil quality and improving access to premium markets.

Research released by ABARES earlier this year indicates that most of the productivity wins that can be gained from removing market distortions have already been achieved.

Instead, effective and efficient R&D investment will be one of the key drivers of productivity gains in the future
.
There is a strong link between R&D and agricultural productivity growth, with R&D investment delivering productivity returns that far exceed the cost of the investment.

The point is that, if we keep doing the same thing, we’ll keep getting the same result.

And if we keep doing the same thing while our competitors improve – then we’re going backwards.

Today I’m pleased to launch some resources from the through the Accelerating Precision to Decision Agriculture project, funded under the R&D for Profit program.

It received a government grant of almost $1.4 million, leveraged with more than $2.1 million of cash and in-kind contributions from the Cotton Research Development Corporation and partners.

This is one of the jewels of the program, bringing together an entire industry sector—including all 15 Research and Development Corporations, universities, industry and agribusiness—to drive digital transformation across the farm sector.

The summary report that’s available from today shows that better support for digital agriculture could unlock opportunities for production growth to the value of $20.3 billion for Australian agriculture.

It shows there is tremendous potential return on investment from connectivity infrastructure.

While the report shows that we have much work to do, it is uniting our industries to deliver the benefits of digital agriculture. 

Also available today are three digital agriculture and big data web-based tools developed by the project:

  • A Big Data Reference Architecture for Digital Agriculture - Incorporating example decision trees defining the data needs for an agricultural data system with full consideration of data systems existing in the broader economy.
  • A register of cross-sectoral agricultural and environmental datasets and decision support tools. 
  • An online grower toolbox - best practice guidance material for growers and industry. 
I encourage farmers to access these tools.

I thank the Cotton RDC as the lead, and all our RDCs for their work on this project, and look forward to further developments once it concludes this year.

Decentralisation

Along with research and development, decentralisation remains a priority.

We need to ensure regional communities get their fair share. Regional people deserve public sector jobs as much as capital city people do.

I am passionate about the future prosperity of rural and regional Australia and am excited by the opportunities for economic growth and broader social benefits. 

This government has a vision for Australia to ensure that we have the right policies in place to deliver for all Australians, from the cities to the bush.  

A key feature of this vision is our decentralisation policy.

We are establishing Centres of Agricultural Excellence in regional Australia to boost jobs and invest in regional communities.

Like AgriFutures in Wagga Wagga and the APVMA in Armidale.

A robust process to identify non-policy entities or business units that may be suitable for decentralisation is underway, and we should have more to say on this in the coming months.

The relocation of the APVMA is progressing well. 

  • The APVMA is planning to incrementally transition to Armidale by mid-2019 and is in the process of increasing the number of staff working there. Fifteen staff now operate from the Armidale interim office, and at least 40 new and existing staff are expected to be based in Armidale by the end of this year. 
  • The APVMA is also continuing to receive considerable interest from highly qualified people wanting to work in Armidale—450 applications were received in a recent recruitment round.
​This is relocation represents a real opportunity to build a world class regulator in Armidale and deliver the much-needed reforms to Agvet chemicals.

Conclusion

The government is fulfilling our vision of a better return through the farm gate and, as such, a better return to the nation.

We set about building the foundations for the sector to grow—measures to ensure regional Australia can continue to build a more profitable, more resilient and more sustainable agriculture sector in this country.

We have created an environment for agriculture to succeed—and it’s doing that.

This is a sector we can all be proud of.

Profitable and productive farm business underpin thriving regional communities, the national economy and a better way of life for all.

We are here to ensure your hard work translates into real returns at the farm gate.

That will ensure regional Australia can continue to build a more profitable, more resilient and more sustainable agriculture sector in this country.

I wish you all the best for a productive and informative conference.​