Interview: Technology, innovation leads Aussie farmers to high production, says federation chief
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E-mail Xinhua, November 9, 2015
Australia's agriculture is currently on the cusp of a boom as one of the most productive in the world, exporting just over 80 percent of produce, yet with little assistance from government authorities.
National Farmers Federation Chief Executive Simon Talbot told Xinhua that despite being the most productive agriculture nation among OECD nations, Australian farms are the least subsided in the world even with a highly variable climate.
"We're really good adopters of technology because when you have subsidies and a major revenue stream coming in from a government support package, it doesn't make you be innovative or challenge the status quo or be more productive," Talbot said.
However unlike other OECD nations, Aussie farms are penalized for overproducing, which has led to the rapid growth of Australia's export market with high quality produce, constituting 81 percent of production.
"If the domestic market prices aren't right, particularly in the protein, they are exported out relatively quickly," Talbot said, adding major exporters are engaging cross-border marketing and sales teams looking at price fluctuations and direct shipments.
"The days of the single desk are largely over."
Australia's agriculture sector is expected to increase their global market share, growing to 110 billion Australian dollars at the farm gate by 2030 largely due to the appetite of Asia's rapidly growing middle class and the wide uptake of digital technology, despite having one of the most variable climates.
The current "Godzilla" El Nino weather pattern and associated drought in Australia has forced one of Australia's largest cotton farmer to not plant a summer crop due to a lack of water resources.
However farmers in similar situations have support mechanisms, insurance options and key management plans in place to turn bad years into good.
Talbot said the key is making sure farming is not just a one-year cycle, but a five or seven year management cycles where bad years are balanced with good while having the right savings structures.
Government authorities have implemented capital structures that allow a monetary deposit during "good years" to not be charged tax, then allowing those savings to be drawn down as income during "bad years".
"That's really important," Talbot said.
"In that point in time you can start paying the appropriate tax, but there is a nest egg to get you through."
The major recent breakthrough however has been government support in facilitating the multi-peril insurance market.
One Queensland farmer has already received a 944,000 Australian dollar (664,550 U.S. dollar) payout from his multi-peril insurance policy after a failed season, which generally covers the full cost of running a farm over the course of a year.
The catch, of course, has been the cost as only four unsubsidised multi-peril crop insurance products have been on the market, which led to widespread calls for government subsidies.
Premiums cost local farmers over 30,000 Australian dollars (21,120 U.S. dollars) per year, however there is also an upfront cost of up to 5,000 Australian dollars (3519 U.S. dollars) to audit farm production and finances.
"We will not insure dud farmers," Latevo chief executive Andrew Trotter told Australia's national broadcaster earlier this year.
"We are about insuring good farmers that mitigate the vast majority of the risk in their farm with their farm management and then we mitigate the catastrophic risk (of) the things that they can't do themselves."
After lobbying Australia's government, the recent Agriculture White Paper provides up to 2,500 Australian dollars in matched funds for advice and assessment on insurance options, which includes multi-peril insurance.
"Rather than having a perceived drought handout, the government is supporting drought resilience mechanisms, which we're very passionate about," Talbot said.
Farm continuous plans that look at partner arrangements, share farms or cooperatives reduce the risk of putting farmers into difficulty, while also providing a succession plan at the age of retirement.
Talbot however stresses the best defence is a good offence, increasing efforts to embrace technology and go digital, heralded as the impetus to Australia's coming boom in agriculture.
"The use of information technology in farming has evolved rapidly; moving from basic GPS applications to the use of cloud-based systems to manage and draw insights form volumes of data to inform management decisions," Talbot said.
Good financial and stock management records are also essential, allowing the farmer to look at the various structures open to them in the event an incident occurs or when they wish to move off the land or seek more capital.
"Don't wait for it to happen, plan before hand," Talbot said. "And there are many willing investors seeking to work with farmers on a variety of structures."
Australia's business council says one trillion dollars of foreign investment is needed by 2050 for Australia's agriculture sector to reach its potential, though Talbot isn't worried about the increasing foreign ownership.
"What we're seeing is really good joint ventures, really good collaborative farming investments across the country," Talbot said, noting 30 percent of Australia's farming is predicted to be foreign owned within five years.
"The thing that will stifle it will be lack of digital technology acceptance and lack of capital. So digital and capital are two vital components," Talbot said.
"It is the brightest part of Australia's economy, it is the fastest growing segment in our economy. We need to make sure it is strong and vibrant so it can continue to grow." Endit
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