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Looking to Australia's ag future

Looking to Australia's ag future

Opinion:

By Foundation Chief Executive Dr Lesley Fitzpatrick.

In the world of agriculture it is a matter of course that we predict, forecast, look ahead and otherwise try to determine the arsenal needed to meet our future battles, capitalise on developing opportunities, and foremost get ahead.

This year, there has been a particular treatise worth noting – Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand, a joint report by ANZ Bank and Port Jackson Partners – which holds up an insightful crystal ball for agriculture.

Reflecting on this report in an in-depth feature for the Australian Financial Review Magazine this year, Andrew Cornell describes the sector bluntly: “Australian mining is world class, Australian agriculture is not”. Cornell’s comment is a discordant cry amongst others that talk up the prospects for agriculture due to a global soft commodities/agriculture boom over the past few years.

A recent champion in terms of returns, Australian agribusiness is looking to the future through a veil of assumed advantages which are feeding its belief in significant opportunity: the widely touted certainty that souls to feed and clothe will multiply; and, that in developing countries diets will become more protein rich increasing demand for such foods. The assumption is that growing wealth and advancements in the developing world will increase demand and keep the boom … booming.

But Cornell makes a cogent argument that agricultural industries in Australia have lost momentum concurring with Greener Pastures’ call for a stronger focus on strengthening our competitive position.  The strategies suggested include addressing skills shortages, turning over assets as ageing farmers move out, beefing up R&D and ensuring we have the knowledge out in the field to drive improvements and to get supply chains right.

Beyond these strategies and cold, hard financial capital invested into improving agriculture’s competitive edge, investment in human capital is crucial if productivity and competitiveness is to improve. “Knowledge out in the field” is driven, enriched and bolstered by investment in the development of leaders who are crucial drivers of change and development.

It is within this framework that the Australian Rural Leadership Foundation (the Foundation) works, and with good reason. For more than 20 years it has used its expertise to improve the economic, social and environmental well-being of rural Australia —its industries and communities— through developing better rural leaders.  Ours is an investment in the potency of people and their ability to meet the kinds of challenges currently facing the agricultural sector.

The importance and effectiveness of an investment in leadership capacity for improving competitiveness should not be underestimated. Improving our competitiveness is a major undertaking, and one that won’t be realised if we don’t focus on developing our leaders as well as the other ‘inputs’ that drive agriculture. Quite frankly, Australian farmers can’t feasibly compete on price with low-cost producers in countries such as Brazil and India. Our ‘a fair go for all’ labour market, while seen by some as a costly albatross around Australia’s neck, is firmly ensconced in the nation’s social and cultural values and national identity. Along with an increasing focus on environmental stewardship, animal welfare concerns, and quality assurance requirements, it costs 2.4 times more to slaughter a cow in Australia versus the US.

So, it isn’t hard to understand why farmers struggle to get the price required to meet costs and advance their enterprise. And with food and fibre markets being acutely price sensitive, retailers respond by squeezing margins and pushing costs back onto the producer.

According to Cornell, the additional capital needed to generate growth and profitability in agriculture over the next four decades, is a staggering $600 billion.  And he notes that our geographic position neighbouring Asia’s growing population and expanding appetites will not save us. The lower transport costs to these markets do not offset the higher costs of production.

The upside of course, is that Australia’s approach to agricultural production does have a silver lining which is its inherent advantage: Quality. China’s appetite for Australian milk for example, is exceptionally robust due to our high health and safety standards which its local supply chain, very publicly, has failed to match.

Some Australian producers have built on this quality advantage crafting a model that challenges the supermarket’s approach of ‘cheaper is better’. As Cornell notes, the award winning Bruny Island Cheese Company has had great success in providing high quality niche products that consumers are willing to pay more for.

This type of power, by extension, could carve a strong, unique place for Australian agriculture within global markets. It is quality, not quantity that will see the sector take on the coming decades as a powerful batsman in the global food production test. Identifying and strengthening this market niche is a key to a better future. Cornell concludes,“ In the global agri-market, we need to be like Bruny Island cheese”.

To make this happen we need to develop and nurture those who are aware of the complex challenges we face and are actively seeking ways to lead change. And there are many of them. The Foundation has the privilege to work with some of the nation’s best and brightest rural leaders and gets an occasional glimpse of the commitment and innovation that is driving, and can continue to drive, Australian agriculture.

We know that Australia is home to farmers and agri-specialists who are taking food production to levels the pragmatic AFR article does not acknowledge fully. Tapping into the legendary Aussie ability to innovate and to find ways through complex challenges -- as well as leveraging the quality of our produce – are also likely to be the keys to the future.

Australia’s farmers have been -- and continue to be -- celebrated for their commitment, ingenuity, resilience and ‘can-do’ attitude; just the approach needed for transformational change. Australia’s rural leaders – good ones, creative ones, ethical ones -- are compelling sources of inspiration, wisdom and courage. They are willing to embrace risk, share knowledge and work collaboratively. They are fundamental to Australian agriculture’s evolution.  For example, leaders like Jeff Gooding, Chief Executive of the Kimberley Development Commission, who is a key driver of the Ord River Scheme expansion and pastoralist Miles Cockington, who recently launched a new breed of dual-purpose merino sheep. The Mastar Merino was created through collaboration with Leahcim stud master Andrew Michael and offers exceptionally fast growth for meat, good wool length and requires no mulesing. And Mildura’s Sarah Sammon who co-founded Australia's first rose petal farm, Simply Rose Petals, is an example of the plethora of young entrepreneurs with the innovation and ingenuity required to establish boutique, niche industries that will become increasingly important to the future of Australian agriculture.

Without doubt, good leaders create better primary industries, stronger links between sectors and regions, more dynamic networks and healthier, more capable businesses, services and communities. In turn, a stronger, more resilient rural sector enhances and strengthens the life and productivity of the nation.

As the nation embraces the future and the changes needed to meet its challenges, regional, rural and remote areas of Australia – the home of our primary producers – needs its voice to be heard every step of the way. It needs leaders who have the capacity to represent its interests and views in board rooms, around the policy table, in communities and in the public arena.

Steering agriculture’s future is a big challenge, but one that many of the rural leaders I have met are more than equipped to handle thanks to the investment of future-minded organisations and individuals who support their development. These investors in rural Australia’s future believe that the way it will – or will not – respond to opportunities is dependent not just on Cornell’s call to strengthen our competitive position through addressing skills shortage, managing assets transfers, improving R&D, and optimising supply chains.

They, like the Foundation, believe that a productive, sustainable future also depends on a cohort of future-focused and ethical  leaders who can reconceptualise Australia’s role in a changing global marketplaces through creative and insightful leadership: Leadership that is based on an intuitive grasp of relevant past events; the ability to work with diversity; an acute sensitivity to prevailing variables including the social, political, technological, and demographic contexts that define the environment; and a vision of a preferred, sustainable and resilient future.

I believe it is possible because I have met the rural leaders who have the talent and the commitment to make it happen.

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