IN A recent report by global consulting firm McKinsey and Company, it was emphasised that better government policies and business structures can help tap into agriculture’s potential as a growth industry.
The report, titled Compete to prosper: Improving Australia’s global competitiveness, was funded by the Business Council of Australia.
Agriculture (and to a lesser extent food manufacturing) was among a handful of star performers for potential growth and competitiveness.
However, we’re a long way from realising this potential.
Our performance to date shows we have no guarantee of success in exporting goods to the Asian region.
And we’re already being out-shone by our neighbours across the ditch.
New Zealand’s Dairy Restructuring Act allowed that sector to expand into the global market – hence we have the farmer-owned co-operative Fonterra as a major player on our shores.
The report spells out the power of good policy, with Fonterra now “controlling 40 per cent of global dairy exports, and has enjoyed a decade of double-digit growth while Australia’s dairy industry has flat-lined”.
We, too, have the same potential, and across more than just dairy.
Our clean, green image, our location and the fact we control a good chunk of the world’s lamb production, half the world’s wool and have the resources to run large farm operations means we’re sitting on undeveloped opportunities.
If the government is serious about tapping into Asia, it needs to invest in policies and incentives which allow the right business structures to develop.
Allowing bigger Australian companies to emerge would also provide the economies of scale to compete in Asia, including the ability to conduct their own targeted research, development and marketing – areas in which Fonterra is a big spender.
Many of our industry bodies focus on these areas, but operate on tight budgets as they attempt to provide gains across all their levy paying members’ markets.
Larger business structures would be more effective at targeted research and marketing than these industry bodies, and therefore market development, but the policies need to be created to allow them to develop.