Chapter 7.4
Suggested strategies applicable to particular industries to support
value-adding activities
7.185 As noted in chapter 1 of the report during the inquiry the
Committee was presented with, or became aware of, a large number of suggested strategies,
initiatives and recommendations designed to promote and increase value-adding activities
in relation to Australia's agricultural production. In the following section suggested
strategies or initiatives to promote value-adding activities are noted in relation to
several specific agricultural industries. These industries are wool, cotton, grain, meat
and horticulture.
Wool industry
7.186 A number of submissions to the inquiry, as well as other
publications, have suggested strategies to increase value-adding to wool as it is
processed, such as:
- processors to re-equip and modernise their plants to overcome the
competitive disadvantage created by the labour intensive nature of the LSP sector;
- Australia to market its investment attractiveness as an integrated
package rather than seeking to meet the cost advantages enjoyed by some competitors;
- demand for Australian processed wool products to be stimulated
through promotion, the capture of premium niche markets and the enhancement of the quality
of all grades of Australian wool products;
- reducing costs along the wool production and processing chain;
- the establishment of total quality management in all sector of the
wool industry;
- development of a targeted trade strategy for wool;
- development of greater labour flexibly and efficiency in the wool
industry;
- the development of a more formal system of national accreditation
for companies involved in wool processing; [212]
- joint participation between wool and textile processors to produce
high quality wool blend products; [213]
and
- educating wool growers on how they can tailor their wool to specific
end products. [214]
Cotton industry
7.187 It has been alleged that the lack of promotion of cotton outside
the United States has resulted in a world wide loss in cotton's share
of the international fibre market. It has been further alleged that Australia
is losing market share to the United States as a result of that country's
aggressive marketing efforts and subsidised marketing activities. [215]
7.188 The Committee is in agreement with the views of Ms Mary Scott
Gilbert of the Colly Farms Cotton group of companies who claimed that:
An opportunity exists to increase the profitability of the Australian
cotton industry through a coordinated, national approach to building
brand equity and marketing Australian cotton in overseas markets. [216]
7.189 The Committee understands that currently industry marketing and
promotion is targeted at the end user of cotton in Australia which is
only about 10 per cent of the market not the “quantifiable consumer
of Australian cotton - the overseas textile mills.” [217]
As a result of this situation there is no generic promotion in overseas
markets of the Australian cotton brand.
7.190 A strategy to promote Australian cotton overseas under a
generic label appears to offer significant advantages to the Australian industry in its
attempt to increase the sale of Australian cotton in overseas markets. As stated by Ms
Gilbert:
A national coordinated approach to the marketing and promotion of Australian
cotton will provide an opportunity for Australian cotton exporters to
use precious capital more efficiently. [218]
Grain industry
7.191 According to the Grains Research and Development Corporation
(GRDC) there are many strategies to potentially add value to grain products. These
strategies may involve:
- a change in management practises, such as in the handling of grains
to avoid contamination;
- additional processing of grains to improve the value of the end
product to the final consumer;
- better marketing to achieve a more timely delivery of products;
- better packaging; and
- the use of new technology resulting in new products for consumers.
[219]
Wheat industry
7.192 The Australian Wheat Board was of the view that for
substantial value-adding to occur in agriculture Australia needs to be competitive at both
the “upstream, on farm, primary stage, and at the downstream value adding
stage.” The Board went on to state:
However, Australia's comparative advantage to date has been mainly
in producing and exporting bulk commodities or raw materials. We have
less advantage in processing, and even less in manufacturing. Thus,
we have been competitive at the upstream stage but less so at the downstream
stage. [220]
7.193 In the area of breeding and genetics the wheat industry has supported
trials associated with the breeding of higher yielding wheats that will
lower the costs of production. Varieties of wheats are also being grown
for specific purposes such as the feedlot industry and for high value-added
processed food products. [221]The AWB's operating plan for 1993-94 stated
that one of its major goals for the year was to be a “world class
strategic marketeer of Australian grains and value added grain products.”
To achieve this goal the Board was intent on extracting the highest premiums
practicable for Australian wheat by marketing a “branded product”
specifically tailored to each customer. [222]An example of such a product is high protein
noddles.
7.194 According to the AWB it “is striving to add value to the wheat
crop by repositioning wheat so it is perceived as a product rather than
a commodity.” [223] In its evidence
to the Committee the Board advised that an entity, such as itself, that
was only involved in the marketing and trading of grain “is really
not going to survive”. According to the AWB other multinational grain
traders are involved in diversified activities including “value adding
areas such as feedlots and processing of foods”. [224]
7.195 The Australian Wheat Board considered that for Australia to
benefit in any substantial way from value-adding in the wheat industry it must:
- develop new, or modify existing technology, to provide Australia with
a competitive marketing advantage;
- identify marketing opportunities ahead of competitors for both bulk
wheat and processed wheat products;
- exploit Australia's advantages in producing wheat and processed wheat
processed products;
- position Australian what and processed wheat products in the premium
segment of the market; and
- enter into joint arrangements with international customers so as to
ensure that profits earned on value-adding to raw wheat offshore are
returned to Australia. [225]
Meat industry
7.196 The Australian Meat and Livestock Corporation saw individual firms
within the meat industry being responsible for identifying and evaluating
value-adding opportunities and implementing business practices to capitalise
on these opportunities. [226]
7.197 The Australian Meat and Livestock Corporation suggested that the
promotion of the generic qualities of Australian meat was an important
approach to add-value to the product. By its nature, the attributes of
meat, such as taste and nutritional content, are generic to meat and not
specific to the product of a particular processor. It is considered that
generic promotion increases demand for Australian meat in both domestic
and export markets. According to the Corporation “there is likely
to be a premium obtainable if consumers identify a particular country's
product as having desirable characteristics, such as consistency of quality,
safety and reliability, taste etc.” [227]
7.198 Since individual Australian processors and marketers have little
or no incentive to conduct generic promotions industry bodies, such as
the AMLC, have to take responsibility for such promotions, as it did in
Japan. The Corporation's “Aussie Beef” campaign in that country
resulted in high brand recognition for Australian fresh beef products.
This campaign provided a means of adding-value to the raw commodity without
requiring further processing. The “Aussie Beef” campaign resulted
in a premium being paid for Australian beef in Japan. [228]
7.199 The Australian Meat and Livestock Corporation has conducted other
generic promotional campaigns to increase the consumption of Australian
meat, including, the “Fresh Australian Range Lamb” program in
North America and the “Trim Lamb” program in the Australian
domestic market. [229]
Pork industry
7.200 The Australian Pork Corporation saw the establishment of networking
operations involving groups of farmers, abattoirs and processors linked
together as leading to value-adding in regional areas. The Corporation
asserted that groups in Western Australia, Central Queensland and South
Western New South Wales were either involved in, or investigating, value-adding
in the pig industry. [230]
7.201 In its submission to the inquiry DPIE stated that one
opportunity for value-adding in the pork industry involved the:
Implementation of a product classification system for pigmeat in order
to develop procedures to control meat leanness, quality and consistency
of product and to improve consumer confidence in pork and pigmeat products.
[231]
7.202 The Australian Pork Corporation agreed with this view and went
on to state “you are going to have to give guarantees to customers
that the product is safe and does not contain residues, because the production
is outside their span of control.” [232]
7.203 The Corporation told the inquiry that it was “absolutely vital”
to value-adding in the pork industry for consumers to see from a label
that the pork or pork product they are purchasing is “manufactured
in Australia” or is a “product of Australia”. [233]
Horticultural industries
7.204 Mr Brian Carroll, Chairman of the Australian Vegetable and
Potato Growers Federation claimed in February 1996 that if Australian horticultural
producers are to remain viable they have to concentrate their efforts on developing and
maintaining long term export markets. According to Mr Carroll:
Products need to be grown specifically for export: bearing in mind
phytosanitary requirements and buyer specifications as to variety, quality,
size and so on. [234]
7.205 Mr Carroll also stressed the need for horticultural industries
to come to grips with the necessity for a “coordinated approach to
production, quality control and marketing”. [235]
Horticultural Task Force Report
7.206 On 3 May 1993 the Commonwealth Minister for Primary Industries
and Energy established the Horticultural Task Force. The Task Force was
asked to develop an export growth strategy for horticultural industries
based on the on going work of the Australian Horticultural Corporation,
the Horticultural Research and Development Corporation (HRDC) and the
Horticultural Policy Council. The Task Force was to identify the “major
factors impeding the international competitiveness and sustainable development
of Australian horticultural products and importantly recommending solutions
and strategies to overcome these impediments.” [236]
7.207 In its report submitted in February 1994 the Horticultural
Task Force identified a number of impediments to the development of competitive
horticultural industries in Australia. The following initiatives were seen as being
necessary to overcome some of these impediments:
- increase research and development activities in the industry;
- develop cohesive and professional leadership in the horticultural
industry; and
- reduce production and distribution costs. [237]
7.208 The Horticultural Policy Council identified a number of
additional factors that it saw as essential to the success of the industry, including:
- the provision of marketing and promotional support;
- the establishment of continuity and reliability of supply;
- provision of a broad range of products; and
- the need to be price competitive. [238]
7.209 Other key issues that must be addressed if the horticultural
industry is to continue to add-value to its production include:
- the provision of information within the horticultural industry;
- education and training within the industry;
- product development and innovation;
- the quality of production; and
- the promotion and branding of Australian horticultural products. [239]
Final words
7.210 The Committee finds itself in agreement with the views of Mr
John Radcliffe of the CSIRO's Institute of Plant Production and Processing. Mr Radcliffe
believes that in the future Australia will be a source of high value, differentiated
niche-speciality foodstuffs and that:
These foodstuffs will often involve value adding within the farm production
system, in subsequent food manufacturing, or both. It is against the
premise of meeting these markets that we must continue to develop our
agriculture. [240]
7.211 As noted earlier in this chapter the Committee accepts that in
some situations it may be more profitable to export bulk produce with
no value-adding component involved. However, the Committee is of the view
that Australia's agricultural production must become increasingly oriented
to value-adding. Australia must produce diverse value-added products which
meets the needs and desires of consumers in Australia and overseas. [241]
Footnotes
[212] Maximising the Return: Adding
Value to Australian Wool: Report of the Wool Processing Task Force, Department of
Primary Industries and Energy, Canberra, 1993, pp x, xii-xv, 2, 9, .
[213] Wool: Structuring for Global
Realities: Overview and Recommendations, Report of the Wool Industry Review Committee,
Canberra, August 1993, p. 18; see also Wool: Structuring for Global Realities Report
of the Wool Industry Review Committee, Canberra, August 1993, p. 71.
[214] David Powers, Ultrafine Merino
Wool, 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. 100
[215] Mary Scott, Future Export
Markets for Australian Cotton, Outlook 96, Vol. 2, Agriculture: collection of papers
delivered at the Outlook 96 Conference held in Canberra 6-8 February 1996, organised by
ABARE, p. 353.
[216] Mary Scott, Future Export
Markets for Australian Cotton, Outlook 96, Vol. 2, Agriculture: collection of papers
delivered at the Outlook 96 Conference held in Canberra 6-8 February 1996, organised by
ABARE, p. 353.
[217] Mary Scott, Future Export
Markets for Australian Cotton, Outlook 96, Vol. 2, Agriculture: collection of papers
delivered at the Outlook 96 Conference held in Canberra 6-8 February 1996, organised by
ABARE, p. 353.
[218] Mary Scott, Future Export
Markets for Australian Cotton, Outlook 96, Vol. 2, Agriculture: collection of papers
delivered at the Outlook 96 Conference held in Canberra 6-8 February 1996, organised by
ABARE, p. 353.
[219] Evidence, GRDC, p. 1052.
[220] Evidence, AWB, p. 66.
[221] Evidence, AWB, p. 66.
[222] Evidence, AWB, p. 64.
[223] Evidence, AWB, p. 66.
[224] Evidence, AWB, p. 69.
[225] Evidence, AWB, p. 67; see
also John Brown, Australian Agribusiness Trading with Asia - An Industry Perspective,
Outlook 96, Vol. 2, Agriculture: collection of papers delivered at the Outlook 96
Conference held in Canberra 6-8 February 1996, organised by ABARE, p. 161. For information
on the international wheat market see R. Rees and others, Outlook for Food Grains,
Outlook 96, Vol. 2, Agriculture: collection of papers delivered at the Outlook 96
Conference held in Canberra 6-8 February 1996, organised by ABARE, pp. 281-282.
[226] Evidence, AMLC, p. 308.
[227] Evidence, AMLC, p. 310.
[228] Evidence, DPIE, pp. 892-893.
See Evidence, AMLC, pp. 317-318 . For further information on the Aussie Beef
campaign see Evidence, AMLC, pp. 337-338
[229] Evidence, AMLC, p. 314.
[230] Evidence, APC, p. 418. For
information on how networking and integrated pork processing would operate see Evidence,
APC, pp. 419-422.
[231] Evidence, DPIE, p. 893.
[232] Evidence, APC, p. 422.
[233] Evidence, APC, pp. 430, 433.
[234] Mr Brian Carroll, Emerging
Horticultural Exports, Outlook 96, Vol. 2, Agriculture: collection of papers delivered
at the Outlook 96 Conference held in Canberra 6-8 February 1996, organised by ABARE, p.
395.
[235] Mr Brian Carroll, Emerging
Horticultural Exports, Outlook 96, Vol. 2, Agriculture: collection of papers delivered
at the Outlook 96 Conference held in Canberra 6-8 February 1996, organised by ABARE, p.
394.
[236] Horticultural Task Force, Strategies
for Growth in Australian Horticulture, Canberra, February 1994, letter of transmittal
to the Minister; 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, pp. 156-157. The report by the
Horticultural Task Force set out 61 recommendations. of which 29 came under the
responsibility of the Commonwealth Government. Several of these recommendations were
listed earlier in this chapter under the heading Specific strategies for the Commonwealth
Government.
[237] Horticultural Task Force, Strategies
for Growth in Australian Horticulture, Canberra, February 1994, p. iii.
[238] Malcolm Irving, Horticulture-International
Competitiveness Prospects for Australian Horticulture, 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. 154.
[239] 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. 163.
[240] John Radcliffe, New Technologies
for Australia's Primary Industries, Outlook 96, Vol. 2, Agriculture: collection of
papers delivered at the Outlook 96 Conference held in Canberra 6-8 February 1996,
organised by ABARE, p. 98.
[241] See John Radcliffe, New
Technologies for Australia's Primary Industries, Outlook 96, Vol. 2, Agriculture:
collection of papers delivered at the Outlook 96 Conference held in Canberra 6-8 February
1996, organised by ABARE, p. 98