Introduction
1.1
Agriculture is one of Australia’s most significant industries. It employs over 250,000 people and its farmers are responsible for managing just over half the Australian landmass.
1.2
Production in Australia’s farms is valued at over $60 billion per year with the fisheries and forestry sectors contributing a combined total of more than $5 billion per year. The National Farmers’ Federation (NFF) has set an ambitious target to increase agricultural production to an annual value of $100 billion by the year 2030.
1.3
Current trends suggest that, by 2030, Australian agriculture will reach a value of $84 billion — so business-as-usual practices are unlikely to be sufficient to reach the $100 billion goal. With appropriate reforms and carefully directed investments, however, the $100 billion is within the reach of the Australian agricultural sector. Achieving this target would result in significant benefits to farmers, food processors, agricultural service providers, as well as the broader regional communities where these businesses reside.
1.4
This report will investigate how Australian agriculture can achieve the target of $100 billion by 2030. The report will consider where the prospects for rapid growth lie and how Australian producers can ensure they are able to take full advantage of these opportunities. It will also look at where there are potential roadblocks that could prevent growth in the coming decade and how these barriers can be overcome.
Inquiry Conduct
1.5
On Thursday, 22 August 2019, the then Minister for Agriculture, Senator the Hon Bridget McKenzie referred to the Committee an inquiry into growing Australian agriculture to $100 billion by 2030.
1.6
The terms of reference for the inquiry were to ‘inquire into and report on, the opportunities and impediments to the primary production sectors realising their ambition to achieve a combined $100 billion value of production by 2030.’
1.7
The Committee received 113 submissions and three supplementary submissions to the inquiry and conducted 15 public hearings in Canberra, Mildura, Devonport, Sydney, Wagga Wagga, Toowoomba, Townsville, and Darwin. The Committee had planned public hearings in additional regional locations but these were unable to go ahead due to the outbreak of the coronavirus pandemic. Further details about the submissions and public hearings can be found in Appendices A and B.
Summary of the National Farmers Federation Roadmap
1.8
Released in October 2018, the National Farmers’ Federation’s (NFF) 2030 Roadmap: Australian Agriculture’s Plan for a $100 Billion Industry (the Roadmap) outlines the NFF’s vision to increase the farm gate value of Australian agricultural production to over $100 billion by 2030. The development of the Roadmap was informed by a discussion paper produced by KPMG as well as consultations with over 380 industry stakeholders.
1.9
The Roadmap is structured around five pillars which the NFF argues are the key factors in driving growth in Australian agriculture in the coming decade. The five pillars are:
1
Customers and the Value Chain
5
Capital and Risk Management
Pillar 1: Customers and the Value Chain
1.10
The Roadmap highlights the importance of increasing the efficiency of how agricultural products are delivered to markets. Specifically, the Roadmap calls for the mapping of strategic transport infrastructure, harmonisation of transport regulations, establishment of Regional Agriculture Deals to fund infrastructure, and the development of food manufacturing precincts. At the global level, the Roadmap aspires to maximise the benefits of markets access through reducing tariffs, the development of globally accepted certification processes, the use of technology platforms to increase value chain integrity, and a reinforced focus on biosecurity.
1.11
This pillar also emphasises the value of Australia’s reputation for delivering high-quality products that can attract a premium price. To ensure that the benefits of this reputation are fully realised the Roadmap calls for the establishment of a ‘consistent brand for Australian agricultural products’, consumer education around Australia’s agricultural practices, and improved traceability and labelling systems to make product provenance clearer.
Pillar 2: Growing Sustainably
1.12
The Roadmap advocates that Australian agriculture should be ‘trending towards carbon neutrality by 2030’. The Roadmap recommends that, by 2025, all major commodities should have plans in place to achieve carbon neutrality while maintaining productivity and profitability. The Roadmap also highlights the need for investment in research to deliver on-farm carbon abatement outcomes.
1.13
The Roadmap advocates for an ecosystem services approach to agriculture that uses a natural capital accounting system and remunerates farmers for positive environmental contributions. The Roadmap sets a target of 5% of farm revenue to be generated by ecosystem services. The Roadmap also recommends a target of a 20% increase in agricultural water efficiency by 2030 to be achieved through water policy reforms and improved infrastructure.
1.14
The Roadmap highlights a decline of almost 100 million hectares of land under agriculture in Australia since the 1970s and recommends a target of maintaining Australia’s total farmed area at 2018 levels. The Roadmap also recommends research into methods of reducing on‑farm food waste and providing tax incentives to encourage charitable donations of food with the aim of halving food waste by 2030.
Pillar 3: Unlocking Innovation
1.15
The Roadmap advocates for Australia to become a ‘world leader in cutting edge science and technology’ and calls for Australia to improve its innovation efficiency. The Roadmap recommends extending existing cross-sectoral research and development as this will reduce duplication of research and lead to a ‘greater return on public investment’.
1.16
In this pillar the NFF set a target for ‘every Australian farm to have access to infrastructure and skills to connect to the Internet of Things’. To achieve this the Roadmap recommends increased investment to improve the access and affordability of internet connections on farms, as well as frameworks for data exchange while maintaining farmers’ ownership of ‘their data and the value derived from it.’
1.17
The Roadmap also aims for 50 per cent of farm energy to be sourced from renewable energy by 2030. To enable this, the Roadmap supports reforms including piloting ‘off-grid renewable energy precincts based on Regional Agriculture Deals’ and investing in energy producing crop varieties and waste to energy opportunities.
Pillar 4: People and Communities
1.18
The Roadmap aims to increase the available agricultural workforce by 25 per cent including a doubling of tertiary and vocational graduates. To achieve this goal the Roadmap recommends not only improvements in agricultural education and training but also broader investment in rural and regional Australia to make these areas more attractive to potential workers.
1.19
To attract more young people into careers in agriculture the Roadmap recommends increased exposure to agriculture in school curriculum, greater marketing of the benefits of a career in agriculture, and the establishment of an ‘Ag Gap Year’.
1.20
Growing the agricultural workforce requires not only bringing more young people into agriculture but also keeping people in the sector by ensuring there are opportunities for long-term career development. To this end, the Roadmap recommends that skilled farm work becomes a ‘trade-equivalent’ occupation with greater clarity around skilled farm roles. In addition, the Roadmap advocates for increased ‘professional development, leadership and mentoring opportunities for employees and business owners.’ The Roadmap also aims to reduce deaths in agriculture and ‘tackle depression and other mental health problems.’
1.21
The Roadmap also aims to increase the available workforce through agricultural and regional visas and ‘pathways for unemployed Australians to find on-farm work’. In addition, the Roadmaps aims for gender parity in the agriculture workforce and to ‘double the number of women in management roles.’ The Roadmap also aims to increase the number of Aboriginal and Torres Strait Islander people in industry leadership and to undertake initiatives to increase participation by ‘underrepresented communities in the agriculture industry.’
1.22
The Roadmap acknowledges that the development of regional communities where most agricultural jobs are situated is a key part of increasing the available workforce. The Roadmap recommends the rollout of Regional Agriculture Deals and the provision of ‘urban‑equivalent infrastructure’ such as schools, internet, transport links, and health services.
Pillar 5: Capital and Risk Management
1.23
The Roadmap calls for farm businesses to become ‘increasingly sophisticated in their approach to governance, risk management, and planning for the future’. To enable this, the Roadmap supports ‘capacity building initiatives for financial literacy, leadership and corporate governance.’
1.24
As ‘agriculture is more volatile than any other sector of the Australian economy’, the Roadmap highlights the need to assist agricultural businesses to be prepared for the inherent risks of farming. The Roadmap calls for education around risk management options such as insurance, swaps, and futures. Additionally, the Roadmap recommends agreements to share risk along the value chain and ‘well administered government risk management policies’.
1.25
The Roadmap also states that there is a need for increased investment in agriculture to fund growth. The Roadmap advocates the use of ‘alternative ownership models’ such as greater use of equity partnerships, as well as the need to enhance investment from overseas capital and institutional investors. In addition, the Roadmap recommends ‘proactive succession planning’ to avoid capital withdrawal from farms.
Delivering Ag2030
1.26
On 7 October 2020, the Australian Government released its plan to support the agriculture sector reach the target of $100 billion in farm gate value by 2030. The Government’s plan, Delivering Ag2030, is structured around seven themes of action, which are described as:
Trade and Exports - strengthening agricultural ties with major and emerging export markets. This will deliver new trade and market access for producers, while also reducing red tape.
Biosecurity – safeguarding Australia from exotic pests and diseases means lower costs for our producers and is critical to our market access.
Stewardship – ensuring Australian farmers are rewarded for their stewardship of land and water.
Supply chains – ensuring that we have fair, strong and resilient supply chains where everyone is treated fairly and pays their share.
Water and infrastructure – supporting Australian farmers, rural and regional communities with infrastructure when and where it is needed.
Innovation and research – modernising Australia’s agricultural innovation system to drive improvements in collaboration, commercialisation and uptake to grow their productivity and competitiveness.
Human capital – enabling people and their communities right across the agriculture supply chain with the support, infrastructure and skills to do their jobs.
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The measures that comprise the Delivering Ag2030 plan are outlined in the relevant sections of this report.
Breakdown of Australian Agriculture
1.28
At the time of the development of the NFFs 2030 Roadmap agriculture was one of the fastest growing industries in Australia, and in 2016-17, farm gate production was valued at $63 billion. The past few years, however, have been challenging for Australian farmers with the impact of drought resulting in three consecutive years of contraction in farm output. In 2019-20, ABARES estimate the total value of farm production to be $60 billion. This figure is for farm production only, additional production value for fisheries was estimated at $2.7 billion and for forestry $2.8 billion. In 2019-20 the total agricultural production (farm, fisheries, and forestry) is forecast to be $65.7 billion. Table 1 provides a further breakdown of national production figures.
1.29
The easing of the drought across much of eastern Australia is expected to result in overall farm production rising by 7 per cent in 2020-21. Improved conditions in NSW and Queensland have already resulted in a 90 per cent increase in the area planted for winter crops. Unfortunately, the improved conditions have coincided with the impact of the global coronavirus pandemic, which may slow the economic recovery from drought. Nevertheless, in 2020-21 overall production in the farm sector is forecast to return to growth and be valued at $61 billion, an increase of $1 billion over the previous year.
Table 1.1: Agricultural Production 2017-18 to 2020-21 ($000s)
|
|
|
|
|
|
|
|
Crops
|
29,885
|
30,061
|
26,737
|
30,828
|
15.3
|
|
Livestock
|
29,726
|
31,048
|
33,570
|
30,321
|
- 9.7
|
|
Fisheries
|
3,178
|
3,104
|
2,654
|
3,309
|
24.7
|
|
Forestry
|
2,677
|
2,765
|
2,786
|
2,857
|
2.5
|
|
Total
|
65,436
|
66,978
|
65,747
|
67,315
|
2.4
|
* Figures for 2019-20 and 2020-21 are forecast; Source: ABARES, Agricultural Commodities June quarter 2020 – Commodities – data tables XLS.
Growth needed to reach $100 billion by 2030
1.30
The NFF employed ACIL Allen to ‘evaluate the current growth trajectory of Australia’s agriculture … and then identify where the growth opportunities are going to come from.’ ACIL Allen found that based on existing trends Australian agriculture could be expected to grow from $67.7 billion in 2016‑17 to $84.2 billion in 2029-30. Therefore, to reach the $100 billion target additional growth of almost $16 billion would be required.
1.31
ACIL Allen stated existing trends suggested an average agricultural growth rate of 1.7 per cent but that reaching the $100 billion by 2030 will require an average growth rate of 3 per cent. ACIL Allen added that ‘this requirement to almost double the average growth rate over an extended term emphasises the extent of challenge in realising the NFF’s vision.’ As noted above, in the years since 2016-17 there has been a slight reduction in the overall agricultural output which increases the growth needed to reach the $100 billion target.
1.32
ACIL Allen noted that that whether Australian agriculture can reach the $100 billion target is partially dependent on external conditions, therefore ‘a plausible combination of high international prices and a weakening exchange rate could make a $100 billion outcome for agriculture highlight likely’ even with business-as-usual farm practices. Similarly, the Department of Agriculture noted that in recent years agricultural revenue growth has primarily come through price increases and ‘the thing about price increases is that they’re largely out of our control’.
1.33
Equally, these external conditions could also negatively impact the agricultural sector, for instance a rising dollar and slumping prices could put the $100 billion target out of reach even with improved production and productivity. Therefore ACIL Allen based their analysis on average trend figures for external factors in order to align with the ‘overarching intent’ of the NFF Roadmap which is to identify how agriculture could improve performance to a point where it would achieve the $100 billion target in a context of typical external conditions.
1.34
This report will also take this approach, focussing on policy and productivity improvements that will most likely result in benefits regardless of the impact of external conditions such as currency fluctuations.
Impact of Covid-19
1.35
The outbreak of the global coronavirus pandemic has taken place during the period that this inquiry has taken place. The long-term impact of the pandemic on the global economy, and how that will affect Australian agriculture, is uncertain at this time. Nevertheless, initial analysis by the Department of Agriculture has found that, with some exceptions, ‘COVID-19 has not had a severe impact on most of Australia’s agricultural industries.’ Lockdown measures have moved food consumption from restaurants and cafes to the home. This has had a minimal impact on industries focussed on food staples but had a greater impact on sectors that supply domestic restaurants such as wine and specialist horticulture, or overseas restaurants such as seafood, wine, horticulture, and high-value livestock and dairy products.
1.36
Similarly, the wool industry has been affected by global lockdowns in the retail clothing sales industry and ‘wool exports were also affected by measures to contain the spread of COVID-19 in the yarn, textile and clothing manufacturing industries in importing nations such as China.’ The cotton industry has been less affected by COVID-19 because the 2019-20 crop was already ‘dramatically reduced by drought.’
1.37
The need for social distancing has increased labour costs for industries such as wine, horticulture, and wool (mainly shearing costs). The livestock sector has also been impacted due to COVID-19 outbreaks in meat processing plants and in live animal shipping. The Department of Foreign Affairs and Trade (DFAT) reported that due to COVID-19 more than 2800 workers involved in the Pacific workers had been redeployed to work in the agricultural sector, for example in assisting with the citrus harvest.
1.38
In most cases, Australian exports have not been interrupted, with DFAT stating that ‘despite the pandemic most agricultural exports have continued to leave Australia and reach consumers in international markets.’ DFAT noted, however, that there has been a collapse in the availability of air freight and so the Government has implemented the International Freight Assistance Mechanism, a ‘temporary emergency measure that supported maintaining vital domestic and global supply chains by helping to restore key air freight routes.’
1.39
The Department of Agriculture (DoA) stated that COVID-19 was also having an indirect, but significant, impact on Australian agriculture due to the reduction in the price of oil. The DoA explained:
Wool prices are down because the price of oil has come down and synthetics are much more competitive. It’s the same for sugar. The price of oil comes down; Brazil diverts cane from ethanol production back to sugar production; so the price of sugar is going to be down a fair way. It’s the same for oilseeds.
Structure of the Report
1.40
This report is structured as follows:
Chapter 2 will look at agricultural productivity and the potential for growth in existing larger agricultural industries.
Chapter 3 will consider the importance of export growth to Australian agriculture, looking at market access and barriers to trade, export support and regulation, changing demand, and marketing and branding.
Chapter 4 will look at Australia’s agricultural research and development system including the adoption of agricultural technology on farms.
Chapter 5 will focus on and the opportunities for the expansion of agriculture in northern Australia and emerging industries with the potential for significant growth.
Chapter 6 will examine finance and investment in agriculture including credit availability, risk management tools, foreign investment, and farm ownership and succession.
Chapter 7 will consider workforce and training issues, including opportunities to increase the number of young people in agriculture, career development pathways, and visas for agricultural workers.
Chapter 8 will look at biosecurity, freight and transport infrastructure.
Chapter 9 will consider a range of environment issues including water access, climate adaptation, land availability, and soil health.