Breaking rural debt's shackles

Our sector is missing the rigorous debate essential to addressing this profitability problem

THERE are many graziers and farmers across the nation who would argue that drought and debt are the biggest problems facing the bush.

Many would equally argue that sufficient rain and debt restructuring will solve these primary concerns.

There is no doubt some farmers and their communities are being crippled by certain contract agreements with banks and their associated, and oftentimes, unreasonable penalty clauses.

The desperate need for decent rain is also destroying confidence among some, especially those in our northern beef industry.

But a long-term, fundamental problem, which underpins the entire sector that we must never lose sight of is profitability; or more to the point, the lack of profitability.

Applying sound business principles - productivity, profitability and an enterprises’ debt load - are all intrinsically linked.

If any of these core elements fail, the business will suffer.

To put it more bluntly, for a business to reach its maximum performance potential, all of these things need to be present and accounted for. Especially profitability.

Failing to deliver profits to a business can only lead to one result.

And I believe our sector is missing the rigorous debate essential to addressing this profitability problem.

When I speak about debate, I am referring to how primary producers, their communities, peak industry bodies and governments - at all levels - work towards generating wealth and prosperity for their regions, and our nation.

A distant observer with no knowledge of agriculture would argue that rural producers should be able to form an intimidating lobby group with great influence on government – as is the case in many other developed economies.

However, it is not always possible to say this is the case in Australian agriculture.

Among the major issues is that many peak bodies simply don’t represent the majority of their industry constituents.

The reasons for this are many and varied and there is insufficient space in this opinion piece to canvass all of the relevant matters - but much of the problem has to do with their resource capacity.

A very big job is often left to a minority of honorary providers.

Similarly, thousands of primary producers do not engage or participate with their peak bodies - thereby leaving a vacuum of influence.

There is no doubt that the relationship is symbiotic in essence, but not in practice. There is also a lack of representation in government. There needs to be more co-ordination between rural politicians and peak industry bodies to actively campaign for public policy that will positively impact on farm gate profitability.

Failure to communicate hinders the public policy decision making process and further stifles debate for a sector where there are only ever a small handful of politicians that show any interest in rural affairs.

Unless we begin to address these problems with debate and communication in our rural sector, I am concerned that Australia will simply not be prepared to capitalise on the spoils of the Asian Century.

Our geographical proximity to these Asian markets should not be translated to mean these nations will always trade with us.

If our agriculture sector is ever going to be able to service the economic promises we are making in these free trade agreements, we need peak industry bodies that can truly speak on behalf of their sector and can also better coordinate with rural politicians so that we will collectively roll out a swag at the door of any relevant minister’s office and refuse to leave until we have achieved the results we need.

We should all be in furious agreement that things cannot go on in their current form.

There are genuine efforts in motion to re-lay these foundations; however, perhaps the greatest tragedy is that it takes a crisis in debt and drought to begin this important conversation.

As we work through the urgent drought and debt issues confronting the bush, we must also iron out the long term structural and communication creases that will, if we are not careful, jeopardise what I think will be the most promising opportunities to confront primary producers in the last three decades.

It will take participation from every corner of the sector to address the profitability problem.

The stakes are too high for us to not take action.

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FarmOnline
Barry O'Sullivan

Barry O'Sullivan

is a Queensland-based Senator for the Liberal National Party
Date: Newest first | Oldest first

READER COMMENTS

Discusted
22/08/2014 2:32:36 AM

Barry, I admire your passion to do something about this diabolical position we find ourselves in. A hard reality is that once an animal leaves our farm gate we are at the mercy of processors, wholesalers and retailers who can and do screw us with impunity by collusion, price manipulation and outright bastardry and our pathetic agripoliticians sit idly by and let it happen. The inescapable fact is the processors in this country control our industry and our industry bodies and until that is fixed we will always be at their mercy. The debt levels are now so unsustainable we are doomed.
GFA
22/08/2014 5:45:25 AM

You are spot on about the main focus being on farm gate profitability Barry. Also spot on about the lack of a unified farm lobby being a major issue. Because farmers are so fiercely independent thinkers, and so competitive by nature, they tend to be their own worst enemies when it comes to industry unity. Most do not realize that it is not their neighbor they need to compete hardest against but that their biggest "enemies" are governments, the input suppliers, the supply chain businesses and middlemen all taking too much of a slice of their pie. That is where a united lobby group is missing.
angry australian
22/08/2014 6:41:41 AM

Thank goodness a politician who might finally be starting to "get it". Without profit there is little employment,so no taxes for politicians to spend on community needs like hospitals,schools and roads. As for the communication issue Barry, many primary producers feel that being forced into an organisation is little different to compulsory unionism,especially when that involves compulsory levies. Too many politicians have become insular and don't want to deal with the voters who elect them,preferring to deal with peak bodies, this applies more so to urban Senators on rural issues.
Qlander
22/08/2014 6:58:29 AM

Our peak bodies and rural politicians, with their delusional fantasies about 'Free trade' that will NEVER happen are our main problem. We don't need enemies, we have the NLP, MLA, ect for friends.
Rob Moore
22/08/2014 7:52:13 AM

Sound thinking Barry. There is 123 countries that are all looking to China to save their backsides. When in Beijing- we are a speck on the wall. After Clive's brainsnap we are probably a pimple on the globe. to them.Barry- get your crew to support my PPP Bill and things will improve on many levels. I refuse to even try till it is legislated. I will just sit here and annoy Bushie dill the troll till the cows come home.
angry australian
22/08/2014 9:27:59 AM

I've been inside the tent that is Canberra Barry,you can keep it. I soon learned that "consult" was an amalgam of "to CON while inSULTing you". The problem becomes that too many industry reps suddenly think that how easy is this, hang around the Holy Grail and I too can be a pollie. And CEO's of industry groups end up becoming more important than the group they should represent, look at the last 20 years of reps from the NFF. The message to politicians then becomes sanitized because a problem in say Qld may not be the same as one in W.A. Pollies have to go back to listening to their voters
Simon
22/08/2014 10:26:54 AM

The internet and social media have given regional producers a voice and contact with the rest of the population similar to past times when nearly everyone had a farming relative. Producers used these tools effectively to push back against the banning of live exports to Indonesia. Agribusiness council of Australia has implemented a facility where every producer gets the same audience at www.agriculture.org.au
Frank
22/08/2014 12:17:19 PM

People went overboard buying land and struck hard times... Bad luck for them... Sell them off so younger people can have a go... i have little sympathy for those that spent up big on land and have gone broke.. It opens up more opportunities for others...
Farm-Edge
22/08/2014 12:19:25 PM

If farm profits are being squeezed by suppliers and buyers, a counter strategy is for farmers to invest and own more of the extended supply chain. There is a healthy appetite from investors wanting to invest alongside farmers to re-invent the supply chain and share in the profit.
angry australian
22/08/2014 1:21:25 PM

Farm-edge farm profits are mainly being squeezed by a system that primary producers cannot adjust to, and that is the wage and social welfare policies of governments, Coalition and Labor. When you are a price taker any impact on your gross profit impacts severely.It's no coincidence that every time the mandated rate of super has gone up,so have the number of participants in primary industry, this has been seen most severely in the fishing industry where in some areas there have been a near total decimation of the industry. When compounded with other anti rural profit laws the impact is awful
Bush mattersBush matters - LNP Senator Barry O'Sullivan tackles the issues facing Aussie primary producers and people across rural and regional Australia.

COMMENTS

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