Address to the Australian Farm Institute Roundtable on Cultivating ESG Capability

18 October 2022

Good afternoon.

I acknowledge that we come together today in the nation’s meeting place, Canberra, and pay my aspects to the Ngunnawal and Ngambri custodians who for thousands of years have cared for country, tended our waters and harnessed its produce.

Thank you for the opportunity to speak to this roundtable on Cultivating ESG Capability.

ESG is such an important topic for Australia’s primary producers, and I thank the Australian Farm Institute, presenters and others involved for their leadership on the issue.

As is said at the National Press Club a few weeks ago, sustainability is central to Labor’s agenda for agriculture. It is one of the biggest opportunities and challenges facing the sector and it’s past time our country had a government prepared to acknowledge that.

I’ve said before that addressing climate change and sustainability is one of my main priorities in the ag portfolio, alongside biosecurity and workforce shortages.

I’ve also said that the agriculture sector is crying out for government leadership to sustainably manage the impact of climate change.

Almost every farmer I’ve visited has raised it, usually within minutes of arriving on their property. That’s because so many in the industry have been forging a path and showing the way, in the absence of government leadership over the past decade.

I recognise and applaud the ag sector’s efforts on sustainability and I’m here to tell you that our new government wants to work with you, not pretend these issues don’t exist. We’ve had enough of that, over the last 10 years.

On sustainability, I want to be the Minister that works with industry, workers and rural communities to tackle climate change, to reduce emissions, to build resilience, to adapt practices, to develop new income streams, to ensure Australia’s long-term agricultural productivity and food and fibre security.

Why this interest in sustainability?

In short, because it’s key to the industry’s future.

I think of it as good succession planning - so agriculture is still a major export earner 50 years from now, so our country can still feed itself a hundred years from now, so our farms remain productive when they’re inherited by future generations.

“Sustainability” is an easy thing to say, but not so easy to define.

So what do I think about when I use the term?

First, I think about the fact that, for thousands of years the First Nations of Australia managed the land sustainably. It is important now that we ensure they are able to increase their economic participation, and that we learn how traditional knowledge can lead to more sustainable practices and increase our resilience in a changing climate.

You may have heard that the Australian National University has recently stated that proper development of the First Nations' estate could significantly boost the nation's agriculture output. Unfortunately, we have not made the most of these opportunities to date, so I look forward to engaging in discussions on how we can make this a reality.
Last week in Darwin, I held a First Nations Agribusiness Roundtable which was very informative, and emphasised that by partnering with First Nations peoples, we can harness the great potential of First Nations knowledge and capability to grow our ag sector.

Second, “sustainability” to me involves sustaining and maximising returns from the natural resources that underpin primary production.

Soil alone provides an estimated value of $930 million to the Australian economy. It is one of our most valuable resources.
There is evidence that farming that improves natural capital delivers greater on-farm profit and increased resilience to climate change, as well as environmental benefits.
Farmers are increasingly using land management practices that enhance the natural resource base. A 2021 survey conducted by ABARES shows that most Australian farms have adopted some form of sustainable land management – with the highest uptake being stubble retention (84% of farms) and optimised pesticide or fertiliser use (68% of farms).

Third, “sustainability” is about responding to changing consumer, market and trading partner expectations - so we not only maintain, but improve, market access.

Countries in Europe and elsewhere are increasingly seeking to impose their domestic sustainability practices as global standards.
Capital markets are increasingly considering the carbon and environmental footprint of what and who they invest in and loan money to.
Consumers are increasingly looking at the provenance and environmental footprint of their food and fibre.
And of course, social licence is a consideration too.
As leaders in the ag sector, we need to recognise these changing expectations, and the need to get ahead of them.

Fourth, “sustainability” is about being able to continue to produce food and fibre as the changing climate impacts what we can grow, where and how – and as the frequency and intensity of natural disasters and droughts increases.

In general – despite what we are seeing at the moment with flooding across many parts of Australia – rainfall is declining in the south of Australia and increasing in the north, and snow amounts are decreasing. Droughts and periods of extreme fire weather are expected to become more common, as are more intense rainfall events.
While farm adaptation has helped to offset the effects of hotter and drier conditions to date, ABARES modelling shows that recent seasonal conditions between 2001 and 2020 have affected the profitability of Australian farms, reducing annual average farm profits by 23%, or around $29,200 per farm. If there was ever a statistic that demonstrated the cost to our ag sector of years of climate inaction, that is it.
There is also already evidence of strong farm adaptation responses to the recent climate shifts with improvements in technology and management practices helping to increase farm productivity. I applaud these efforts and intend to work with industry to see they continue.

Fifth, sustainability is about managing the transition to net zero and realising the opportunities it presents.

The sector accounts for around 16% of Australia’s annual emissions.
It’s looked to as a source of offsets for other sectors, and we have only begun to tap those possibilities.
And, as the broader economy transitions, there will be impacts on the sector – e.g. input costs such as fertiliser, and broader regional transformations.
We need to manage these things, while also sustaining our food and fibre production and security.
That includes understanding how emission mitigation activities might change land uses, agricultural production, water use and regional communities – for the better, not worse.

These are the things I think about when I hear the term “sustainable agriculture” - and hopefully they also help explain why the topic is front-and-centre for me as Agriculture Minister.

One of the things I’ve been really heartened by since taking on this role is how keen the agriculture industry is to manage its resources sustainably. There’s lots of good examples and action underway.

But there’s plenty more to be done, and as the Prime Minister often says, “you can shape the future or you can have the future shape you”.

I know the roundtable session just before this was titled “Leading or Lagging?”.

We need to be leading.

We need to join what farmers and industry are already doing – to lean into the issue of sustainability so we can realise the opportunities for Australia’s primary producers and communities – otherwise, the world is going to change around us, and it’s unlikely to be of benefit for our industry.

So what needs to be done?

Well this is something you are all here today to discuss, and I’m keen to hear from a broad range of stakeholders about the best ways to realise the opportunities of sustainable agriculture.
I suspect a lot of the task is about ensuring Australia’s primary producers are able to capture the benefits of sustainable practices.

It needs to be something that makes sense, and is understood, as a part of a good business model - not an additional thing to do or a “nice to have”. If we get these incentives right, a lot of the rest should follow.

There’s a range of work underway that supports this – and I’m keen to refine and build on it, in collaboration with others.

Firstly, the Government is committed to supporting the agriculture sector develop consistent sustainability credentials so the sector can access and grow export markets, and capture rewards for sustainable practice.

Effective, data-enabled, traceability systems to support credentials can create transparency and provide ongoing evidence for market access and economic growth for farmers, regions, and industry overall.

A part of this is the work being led by the National Farmers Federation to establish consistent sustainability credentials through an Australian Agricultural Sustainability Framework – and I know the Australian Farm Institute and others here today have contributed to that work too.

And all of this, of course, connects to the work of agricultural industry bodies on sustainability and Best Management Practice frameworks – and I know that’s also been a topic of discussion in this roundtable.

Relatedly, we’re engaging internationally on the issue of sustainability and trade. We want to ensure the norms and rules developing internationally around sustainable agriculture recognise the Australian context and approach, and support our market access objectives.

At home, carbon and biodiversity markets – a focus for the Government - are a growing source of opportunity for primary producers to capture the benefits of sustainable practices.

I’m working with my colleagues – especially Ministers Bowen and Plibersek - to ensure those markets work for farmers.

This is in part about market design. But it’s also an issue of capacity.

I’ve heard from a number of people about the need for independent and effective advice to farmers to support their engagement with these environmental markets. As a government, we’re looking at this issue.

Related to this is the issue of practice change.

There’s a role for government and industry in helping primary producers to understand and act on opportunities to improve their sustainability through practice change.

There’s a range of work underway through our agricultural innovation system, and government programs such as the National Landcare Program and Future Drought Fund.

We’ve also just released the National Soil Action Plan 2022-2027 for public consultation. This Action Plan suggests priorities for the next five years that will help build a strong foundation for a nationally coordinated but locally adaptive approach to managing soil sustainably - as a critical national asset.

We’re continuing work under the National Landcare Program and Future Drought Fund, but will also review that work in consultation with stakeholders. This will consider how best to target the future phases of investment to include a stronger focus on climate-smart sustainable agriculture.

Underlying all of this work is the necessity for evidence-based decision making. This needs to be robust and repeatable as well as cost-effective at a farm scale. This is where we need to be smart and innovative, using the latest technologies available. Therefore we need to invest in and leverage off the work of the Rural Research and Development Corporations, CSIRO and other research and development providers to enable the adoption of climate-smart sustainable agriculture best practices.

So there’s a fair bit going on to support sustainable agriculture, but certainly more to be done.

I am keen to hear the outcomes of your roundtable, and continue the conversation with a broad range of stakeholders, to ensure we’re doing all we can to realise the opportunities of the transition to net zero, manage the impacts of the changing climate, and improve environmental outcomes.

I want to ensure that this collaboration is inclusive and the voices in the discussion are broader than they have been in the past. It is important to include First Nations, young people, women and practitioners of sustainable agriculture to ensure we can all find common ground to develop evidence-based decisions. This means looking to the future by listening to experts and investing in research and development.

Thank you.