Ag needs 'value-add' mindset: BCA

02 Dec, 2015 01:00 AM
Coca-Cola Amatil managing director Alison Watkins leads BCA's agriculture and food manufacturing committee.
Consumers are flying into Australia to take Australian-made products off our shelves
Coca-Cola Amatil managing director Alison Watkins leads BCA's agriculture and food manufacturing committee.

IF AUSTRALIA wants to make serious money from agriculture it needs to abandon new foreign investment controls on farmland, wake up to the importance of genetically modified (GM) crops and develop an aggressive value-adding mindset.

These recommendations (and many more) aimed at cultivating investment in the agri-food sector and lifting farming's export potential are headlining a Business Council of Australia (BCA) report championing how the sector should cash in on huge market growth on our doorstep.

Despite Australia's respected agricultural credentials, the agri-food sector currently represents just four per cent of the nation's GDP, with many food manufacturers moving offshore rather than expanding in recent years.

The BCA warns major competitors including the US, Argentina, Brazil, Canada, South Africa and New Zealand are already taking decisive action to realise the opportunities emerging, particularly in Asia.

NZ intends to lift its export earnings to be worth 40pc of GDP within a decade.

Economy-wide reforms were critical to the future competitiveness of Australia's agri-food sector, including better strategies to encourage foreign business investment and build industry competitiveness.

The BCA report highlights Australia's reputation as a preferred source of high quality, safe and premium food for fast expanding markets in our region, but is critical of an over-reliance on bulk commodity sales which represent 88 per cent of food and beverage exports.

With global food demand set to grow 77pc in the next 35 years, Australia needed "a more modern outlook and a comprehensive reform agenda" for the agriculture sector and food industries.

"The definition of agriculture is much more than raw materials, but realising this opportunity requires a shift in the mindset of government and industry," said BCA chief executive Jennifer Westacott.

"Massive opportunities" existed to lift returns to farmers and business, create new jobs and broaden the reach of the sector into the Australian economy.

The BCA's Building Australia's Comparative Advantages Agrifood study highlighted the role GM foods would play in improving nutritional quality in developing markets and the productivity of crops in response to climate and pest challenges.

"Government needs to build consumer understanding and cultivate consensus across the supply chain, providing factual evidence about GM foods to address community concerns and relevant regulatory constraints," the report said.

"Every legitimate scientific and regulatory body that has examined the evidence (including the World Health Organisation and the European Commission) has concluded the approved GM crops are as safe as their conventional counterparts."

The BCA has also focused on the need to develop northern Australia's agricultural and business capacity, plus the need for more streamlined and commonsense planning rules so food processors and transport infrastructure could develop.

Also in the BCA's sights is the fragmentation of farmland into unproductive "hobby farms", and the need for buffer zones to protect land from urban or industrial growth so agricultural producers can develop efficiently, too.

Coca-Cola Amatil managing director Alison Watkins who leads BCA's agriculture and food manufacturing committee, said moving down the agri-food value chain would make farmers and early stage processors more in "in touch" with consumers' needs and able to extract greater value from their sales.

"Australia's never going to feed the world, but we can respond to the needs of a sizeable a portion of the world's fast growing population by being much more than a supplier of basic commodities," said Ms Watkins.

Drawing on her current experience with food company SPC and when previously developing GrainCorp's malt and oilseed processing ventures, she said Australia must learn to "drive the attributes that drive value back to the agriculture sector".

"Yes, a lot of food processors have gone offshore to NZ, Thailand or China - and you definitely have to be within a certain cost band to stay here as a profitable manufacturer - but if you deliver clean, safe Australian-made product in an innovative premium package, there are endless opportunities."

Managing director of the big Murray Goulburn dairy business Gary Helou agreed, pointing to exceptional demand for milk powder based nutritional products and other dairy goods.

"Consumers are flying into Australia to take Australian-made products off our shelves," he said.

Mr Helou noted one of the big advantages of encouraging a more sophisticated value-adding culture was that transforming farm products into valuable foods invariably involved regional businesses based near the farm source, resulting in"secure jobs and vibrant local communities".

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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Philip Downie
2/12/2015 5:13:15 AM

How much value did Alison generate for farmers when at Graincorp? Not much I would suspect. The issue is that farmers do not get paid anywhere near the amount they should and never will, the processors are far too greedy to look at whole of supply chain. Its as much rubbish as the trickle down effect spouted by Pollies during the mining boom, sounds nice doesn't work.
Jo Bloomfield
2/12/2015 5:53:07 AM

Always strikes me as odd when people talk about manufacturing or processing steps of food supply as the opportunity to value add automatically thinking that passes and is in some way controled by producers. It isn't and rarely do those higher in the chain pass down the increased value to those who actually produce the raw product. So much could be done to improve efficency at farm level, particularly with animal production. Our land size will not change, we need to waste less and produce more effectively, maintaining high bio security. Don't put the cart before the horse.
Jock Munro
2/12/2015 6:00:13 AM

BCA gouge Australian Agricultural entities and producers as well as asset strip- they then sell out to the highest bidder. These people have had the ear of the urban political elite ruling class for far too long.
2/12/2015 6:19:03 AM

Just like the world powers (eg puppet govts, int'l banks, foundations etc) who are saying causes of climate change are undeniable, or that the safety of GMOs is undeniable, so to the business leaders advocating the benefits of trade agreements and foreign invest. Perhaps it is sobering to consider the Snowy Mount Scheme was financed by the Commonwealth govt and is promoted as a great achievement. As pointed out by P Mailer your reference to GDP is misleading, much is distorted by this indicator (eg inflation and dist of wealth) and its better in the dustbin. Money should not be issued as debt.
angry australian
2/12/2015 7:28:40 AM

How much value was added to CCA shares by the acquisition of SPC? Or more properly to the farmers of the stone fruit districts around the Goulburn Valley? The write downs were massive but corporate Australia can hide their mistakes with the passage of time. But in the meantime rural communities like Shepparton bore the brunt of those mistakes.How many orchardists have had to rearrange their plans to accommodate CCA's business plans? Alison give us a break, go back to selling sugary water instead of lecturing on a subject that suits the BCA's purposes.
angry australian
2/12/2015 7:49:15 AM

How does "selling the farm" aid value adding? Unless we get major structural adjustment of wages & government imposed costs it just isn't going to happen. And no government in this nation is brave enough to alter either. It's considered better to have a real unemployment rate of about 10%, and a heap of unproductive public servants "bludging" on the community so it's not higher. Of course a cynic may argue that if we sell to a foreign nation with a huge labour pool and allowed them to import that labour under a FTA that may be a way of achieving the outcome. Is that the BCA plan?
Philip Downie
2/12/2015 10:35:15 AM

Let me ask as a way of example did Alison adjust the payment to farmers when Graincorp value added by blending or did that go to bonuses and shareholders? I think that probably sums up the whole issue as rubbish and this is just an attempt to look after the post farm gate returns.
2/12/2015 2:00:29 PM

Good point PD, corporations and their directors are considered to be fiduciaries to the shareholders. They have a duty of care and duty of loyalty to their shareholders. Farmers would be fools to think that these companies will pass on profits. Our best hope as an industry is to get gov't to pay for things (as happened in the past) and our increased efficiencies (hopefully taxes) or payback schemes. Its also interesting to note how many of these corporations don't pay the required amount of tax. So the total sum (ie profits and taxes) is a loss on both sides for the citizens of Aust.
Bob Phelps
3/12/2015 11:14:39 AM

What does the BCA speak for? Watkins advocates solely for foreign profiteers that want to continue exploiting farmers & shoppers. Genetically Manipulated cotton & canola, sprayed with Roundup weedkiller, cannot deliver any benefits as our markets pay premiums for GM-free. Farms & food that feed all Australians well, far into the future, should feature first in any responsible plan. But Watkins ignores food sovereignty and security. Coke owns half of the top ten sellers in supermarkets - rotting teeth, obesity & keeping sugar growers sweet is not the 'food' industry that we need or want!
3/12/2015 11:47:47 AM

GMOs value ad? Get real. The reason they are flying to Australia is because we have minimal GM products and we are clean and green. Pity the whole of Australia didn't follow South Australia's lead on the GM moratorium.
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