Chapter 3.2

Value-adding in Agricultural Production

Chapter 3.2

Suggested strategies and initiatives to be undertaken by the Commonwealth Government to support value-adding activities

3.79 A number of suggested strategies, or possible initiatives by the Commonwealth Government to support value-adding activities, were put forward during the inquiry. These initiatives included:

  • export support;
  • research and education;
  • provision of market intelligence;
  • improving the performance of Commonwealth agencies;
  • incentives to industry;
  • regional development;
  • landcare programs;
  • coordination, cooperation and facilitation;
  • attracting foreign value-adding enterprises to Australia;
  • control of the dumping of food products onto the Australian market;
  • protection of health and maintenance of labelling standards; and
  • support of cooperatives.

3.80 Possible actions or activities to support each of the initiatives are set out below, largely in point form.Although the following suggested strategies and initiatives fall within the area of Commonwealth responsibility the Committee has not made any specific recommendations in relation to them with the exception of that dealing with cooperatives. The Committee has set out a number of conclusions and recommendations throughout the report, particularly relevant to some of the issues raised in the suggested strategies. Although the strategies and initiatives are largely of a very general nature the Committee would encourage relevant Commonwealth authorities to examine and consider acting on those that come within their area of responsibility and have the potential of contributing value-adding to Australia's agricultural production.

Export support

  • increasing access to overseas markets; [88]
  • the provision of greater incentives for Australian businesses to enter export markets; and
  • assisting exports by negotiating market access on a government to government level and through bilateral and multilateral arrangements. [89]

Value-added index

3.82 In its submission to the inquiry the Professional Resource Group proposed that a value-added index be created that would measure “the labour, raw material and technological components of current and prospective exports.” [90] It was claimed the index would improve the means of identifying those exports with the greatest potential both in economic and commercial terms. [91] According to the Managing Director of the Professional Resource Group, Mr Anthony Botsman, the index:

Would provide for careful evaluation of both export and import replacement opportunities, specifically it would be possible to establish clear priorities for pursuit of such opportunities. [92]

Research and education

  • supporting agricultural research and development (R&D) and encouraging industries to display innovation in their value-adding activities;
  • supporting education and training; [93]
  • cooperating with the wheat industry to invest funds in wheat related research and development; [94] and
  • improving government support programs for the horticultural industry, including greater support for research and development. [95]

3.83 The report of a horticultural task force, established in May 1993, strongly supported the maintenance of Commonwealth matching funding for research and development through the Horticultural Research and Development Corporation. The report stated:

The HRDC needs to develop a clear strategy for the increased adoption and commercialisation of horticultural research findings. There is also a need for increased commitment to funding research and development to overcome quarantine barriers to enable market access for Australian products to be expanded. [96]

Provision of market intelligence

  • the provision of upgraded market intelligence and trade development opportunities through Austrade. [97]

Improving the performance of Commonwealth agencies

  • reform of the Australian Quarantine and Inspection Service leading to improved service and reduced costs; [98] and
  • the Commonwealth Government to streamline the guidelines and application procedures for the Overseas Assembly Provision Scheme so that all clothing companies in Australia using Australian wool have access to the scheme. [99]

Incentives to industry

  • providing incentives to industry to participate in value-adding activities; [100]and
  • reintroduction of an investment allowance to encourage investment in modern equipment and enhance competition. [101]

Regional development

  • increased in depth examination of the opportunities for enhancing the role played by Regional Development Boards in economic development; [102]
  • Landcare programs;
  • increased commitment to landcare programs to ensure the improvement of water quality and the countering of land degradation that would contribute to improved agricultural production which should in turn contribute to an increased level of value-adding; [103]and
  • rationalising water and land use policies. [104]

Coordination, cooperation and facilitation

  • the creation of uniform standards between the States in areas such as labelling and health requirements; [105]and
  • increasing cooperation with the States in the establishment of policies and programs designed to support value-adding activities to ensure the better targeting of resources, and increased use of the States in the delivery of these programs. [106]

3.84 The Australian Cotton Foundation Limited stressed the facilitating role of the Commonwealth Government when it stated that “more important than any direct financial concessions, is the facilitating role which can be played by the Federal Government in assisting private investment in value adding.” [107]It has been argued that government should be involved in facilitating joint venture arrangements between Australian and overseas companies as well as providing, or underwriting, venture capital for value-adding enterprises involved in export activities. [108]

Attracting foreign value-adding enterprises to Australia

  • development of an integrated strategy to attract foreign food processing firms to locate their Asia-Pacific activities in Australia including the removal of regulatory and cost impediments to attracting foreign investment to Australia. [109]

Control of the dumping of food products onto the Australian market

  • implementation of anti-dumping regulations. [110]

Protection of health and maintenance of labelling standards

  • ensuring that imported food products meet the same health and labelling standards as local products; [111]

Support of cooperatives

3.86 Mr James Kennedy, General Manager of the Ricegrowers' Co-operative Limited explained to the Committee the difficulties experienced by cooperatives in having to operate under state legislation with all their “little quirks” and the fact that cooperatives could not function in other States without specific authorisation. Mr Kennedy pointed out to the inquiry that “the formation of a cooperative, including what it stands for, is in many ways directly in conflict with the working of the national competition legislation.” [112]The Ricegrowers' Co-operative was of the view that cooperatives are necessary to “raise the critical mass to be internationally competitive with value added processed products”. The capital required to be internationally competitive was well beyond the resources of an individual producer. [113] Mr Kennedy called for the Commonwealth Government to implement legislation that would facilitate the growth of cooperatives. [114]

Conclusion and recommendations

3.87 The Committee is swayed by the arguments presented by the Ricegrowers' Co-operative to the extent that it believes there is a need for a review of legislation in relation to co-operatives. The Committee therefore recommends that Commonwealth authorities, in co-operation with relevant state authorities conduct, a review of legislation affecting the ability of co-operatives to expand their operations. It is further recommended that if existing legislation is found to inhibit the ability of co-operatives to make themselves internationally competitive the relevant legislation be amended to remove these constraints.

Footnotes

[88] Evidence, DPIE, p. 884; see also Submission, Queensland Fruit and Vegetable Growers, p. 4.

[89] Evidence, AWB, p. 65.

[90] Evidence, Professional Resource Group, p. 198.

[91] Evidence, Professional Resource Group, p. 198.

[92] Evidence, Professional Resource Group, pp. 198, 210.

[93] Evidence, DPIE, pp. 884-885. For calls to support education and training in the horticultural industry see Submission, Queensland Fruit and Vegetable Growers, p. 4.

[94] Evidence, AWB, p. 65.

[95] Submission, Queensland Fruit and Vegetable Growers, p. 4.

[96] Horticultural Task Force, Strategies for Growth in Australian Horticulture, Canberra, February 1994, p. iv.

[97] Evidence, South Australian Government, p. 551.

[98] Evidence, South Australian Government, p. 552 and Horticultural Task Force, Strategies for Growth in Australian Horticulture, Canberra, February 1994, p. iii.

[99] Wool: Structuring for Global Realities: Overview and Recommendations, Report of the Wool Industry Review Committee, Canberra, August 1993, p. 28; see also Wool: Structuring for Global Realities Report of the Wool Industry Review Committee, Canberra, August 1993, p. 71.

[100] Evidence, DPIE, pp. 885.

[101] John Pendrigh, Wider Horticultural Policy Issues, Outlook 94, Vol. 3, Agriculture: collection of papers delivered at the Outlook 94 Conference held in Canberra 1-3 February 1994, organised by ABARE, p. 158.

[102] Evidence, South Australian Government, pp. 550-551.

[103] Evidence, Victorian Government, p. 32.

[104] John Pendrigh, Wider Horticultural Policy Issues, Outlook 94, Vol. 3, Agriculture: collection of papers delivered at the Outlook 94 Conference held in Canberra 1-3 February 1994, organised by ABARE, p. 159.

[105] Evidence, AMLC, p. 315.

[106] Evidence, Victorian Government, p. 32.

[107] Submission, Australian Cotton Foundation Ltd., p. 2.

[108] S.G Coffey and W.J. Taylor, New Agricultural Enterprises-Leaning from Practice, Outlook 94, Vol. 3, Agriculture: collection of papers delivered at the Outlook 94 Conference held in Canberra 1-3 February 1994, organised by ABARE, p. 80.

[109] Evidence, South Australian Government, p. 542.

[110] Evidence, AWB, p. 65.

[111] Submission, Queensland Fruit and Vegetable Growers, p. 4.

[112] Evidence, Ricegrowers' Co-operative Ltd, pp. 965, 966

[113] Evidence, Ricegrowers' Co-operative Ltd, pp. 965.

[114] Evidence, Ricegrowers' Co-operative Ltd, pp. 966.