Ag's rollercoaster - the year that was

ABOVE all else, 2011 will forever be remembered for the Indonesian live exports fiasco which will never be described as a political highlight.

Yasi and the floods

The year started out with the devastating QLD floods and Cyclone Yasi striking the eastern seaboard wiping an estimated $9 billion off the national economy; stripping $2 billion from the value of crop production alone.

Those natural disasters caused untold social and economic heartache and can only be blamed on Mother Nature.

Live export

But the government’s man made catastrophe, however, in closing down the Indonesian live cattle trade abruptly, can only be blamed on bureaucratic incompetence.

The Indonesian fiasco was undeniably the biggest controversy to ever hit the Australia cattle industry.

The Australian government snubbed its key trading partner and northern neighbor, Indonesia, in shutting down the live export trade overnight on June 6, 2011.

Stakeholder reaction was a mix of anger and frustration at the government’s consideration of the $320 million a year industry.

While many people will say the ultimate outcome provided the best result for animal welfare and instigated more robust supply chains with commercial incentives to eliminate animal cruelty, few people in Australia’s Top End - especially those working the land day-in, day-out who treat their cattle with great respect and care - will ever forget or forgive this government for their handling of the situation.

Few of them will ever forgive the Prime Minister for over-riding the Federal Agriculture Minister Joe Ludwig’s initial decision to identify the 12 offending abattoirs shown in the controversial May 30 ABC Four Corners program and close down those facilities but keep the trade open for the vast majority of facilities processing cattle at approved standards, heading into peak season.

The political decision was made to shut the trade down as new animal welfare measures needed to be implemented.

The same measures are now being implemented in other live export markets, like the sheep trade to the Middle East, following recommendations out of the independent Farmer inquiry set up as a consequence of the Indonesia fiasco.

But those markets remain open while that implementation takes place and the governments, industries and people of those countries have not been offended.

As political pressure mounted, the Greens and Independents in both Houses of Federal Parliament raised new legislation calling for a total ban on live exports.

The Bill was overwhelmingly defeated in the lower house vote.

With the Top End suffering from chronic cash-flow starvation while seasonal bills rolled in, the government announced an initial $30 million assistance package and a further $70 million package for businesses and cattle producers hit by the ban.

In response, Northern Territory Cattlemen’s Association Chairman Rohan Sullivan said the government was insulting the cattle industry by throwing it crumbs rather than fixing the problem.

Supermarket wars

The year also started with an attack on the Coles and Woolworths supermarket duopoly for selling home branded milk products at $1 a litre in an aggressive marketing campaign launched on January 26, which threatened the future viability of Australian dairy farmers.

Senator Colbeck said a Federal Senate inquiry into the milk pricing war and the appointment of a new ACCC Chairman had provided greater scrutiny of the issue and the retail stranglehold of Australia’s two major supermarket chains and “that’s a good thing”.

He said the government may not have taken up some of the inquiry’s recommendations but the appearance of Coles and Woolworths to answer some tough, probing questions from the likes of Liberal Senator Bill Heffernan and Independent South Australian Nick Xenophon helped raise the bar on scrutiny and transparency.

Senator Colbeck said dairy farmers in Northern NSW and QLD had already felt the price reduction’s impact on their farm-gate prices, which the Coalition and industry predicted from the outset.

Coles and Woolworths claimed their price strategy was vindicated because southern farmers had been shielded from any price impacts, so far.

However, Senator Colbeck said southern farmers had escaped price impacts because they relied upon the global milk price - but if that changed he would not be surprised if the supermarket giants also “squeezed” southern farmers, though tougher contract negotiations with suppliers.

Murray Darling Basin

The Murray Darling Basin Authority’s (MDBA) water planning reforms carried over a process into 2011 that started in October 2010 with the highly publicized release of the Guide to a draft Basin Plan.

The entire MDBA process has been underpinned by fears that unacceptable volumes of water for irrigation and rural towns will be stripped from rural communities and re-directed towards the environment, which will drain their economic life-blood.

This has generated intense uncertainty and reportedly is already causing housing and land values to drop in some areas and scare away investment opportunities.

Despite that uncertainty and the ripple effects already being felt, the government stalled on the reform process in 2011 by delaying the draft Basin Plan’s release until November, after Federal parliament had adjourned for the year.

Early reaction to the draft Plan at the first round of community consultation meetings in catchment areas like Griffith and Deniliquin that are set to provide 971 gigalitres of the 2750GL target, suggests it has failed to deliver the desired triple bottom line outcome demanded by rural communities throughout the process, catering equally for environmental, social and economic considerations.

At the start of the year, the MDBA was rocked when former Chairman Mike Taylor quit dramatically, citing dissatisfaction and frustration with the Water Act’s preference for environmental considerations over the social and economic concerns of rural communities.

But new Chairman Craig Knowles swept a broom through the MDBA and succeeded throughout the year in guiding the Authority into a stronger position by clearly communicating critical elements of the plan, including its moves towards greater community consultation, inclusion and flexibility in reducing environmental water flows, which were missing notably from the Guide.

Carbon Tax

The Carbon Tax debate continued with great fan-fare throughout the year before the legislation eventually passed through parliament.

However criticism of the scheme will continue to be a major political focus as it comes into play mid-2012.

Shadow Federal Agriculture Minister John Cobb has been a staunch critic of the tax and will continue to voice his opposition.

He said Australian Bureau of Agricultural and Resource Economics and Sciences figures released last week had only confirmed what the Coalition had long been saying all along – that farmers will face additional costs under the Carbon Tax.

He said in July, the Coalition forecast a marked increase in costs for farmers that rely on electricity, especially dairy farmers.

The Government has been accusing industry of overstating these costs but Mr Cobb said the government’s their own department report has confirmed “what we already knew”.

Foreign ownership

Future global food security concerns underpinned many key agricultural policy debates in 2011, including foreign investment and coal seam gas mining.

Moves were made to quantify the level of foreign ownership in Australian agriculture amid fears the industry could be gradually over-taken by China or India who are making moves backed by wealthy banking enterprises with direct sovereign links, to better position themselves for the future dietary demands of exploding middle class populations.

A Senate inquiry was held to look at the issue and uncovered a concerning lack of current information and highlighted concerns with the Foreign Investment Review Board’s (FIRB) current rule of only applying a national interest test to transactions over $231m.

The foreign investment issue and the protection of prime agricultural land from the threat of coal seam gas mining, and the unknown impacts of CSG on underground water supplies linked to that land, are expected to remain at the political forefront throughout next year, as policy making seeks to achieve greater balance between the competing forces.

Canberra CommentFairfax Agricultural Media Canberra correspondent Colin Bettles tackles the big national rural and agricultural issues which will impact regional and rural Australians.


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