Farmers fail to capitalise on Asian demand

05 Mar, 2013 03:00 PM
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FARMERS will fail to cash in on growing Asian demand for food unless productivity rises and there is a major shift in how Australian produce is marketed overseas, the government's agricultural forecaster warns.

The Australian Bureau of Agricultural and Resource Economics and Sciences executive director Paul Morris will also tell a Canberra conference on March 5 that the high dollar and tough global economy mean the next five years will be challenging.

And the longer-term outlook is uncertain, as farmers cannot compete on price with low-cost producers in countries such as Brazil and India, which are now the world's leading exporters of beef.

"Australia is now effectively a high-cost supplier of products," Mr Morris told The Australian Financial Review, ahead of the ABARES annual outlook conference.

"If agriculture continues to do what it does now, we're probably not going to be able to take advantage of the opportunities for the future. We need to go through some transform­ational changes."

In the medium-term, through to 2017-18, he said farmers, who export about 60 per cent of what they produce and are very dependent on global economic conditions, faced a "subdued outlook".

To take advantage of much vaunted longer-term opportunities in the Asian Century, he said farmers must focus on reversing the decline in productivity that had occurred in the past 15 years, on promoting the quality of their produce and on tailoring it to the demands of emerging markets.

"We need to move away from a commodity-based export scenario to one more based on targeting the specific quality needs of consumers, particularly middle-income and high-income consumers in Asian markets," he said.

"It's probably not going to be on price that we're able to compete, but on quality – whether that is food safety, how our meat is presented to the market or our clean, green environmental attributes."

The ABARES conference theme, "future food, future farming", follows two relatively good years for agriculture, when farm exports reached a high of $35.9 billion in 2011-12, well above the drought-affected average of $28.4 billion in the five years ending 2010-11.

But Mr Morris said there was no room for complacency, as some of Australia's key commodities would face stiff competition. Grain production was rising in the Black Sea region, of Russia, the Ukraine and Kazakhstan and there was strong growth in the soy bean crop in Brazil.

Australia's horticultural producers were already facing tough competition domestically, he said, as the high dollar made imports attractive.

The opportunity presented by the growing Chinese middle class was the focus of much attention at last year's ABARES conference, but Mr Morris warned against over-reliance on China.

"It [over-reliance] leaves us vulner­able to changes in China. We need a diverse market. We need to continue the emphasis on free trade, opening up markets, trying to remove technical barriers, like quarantine barriers, in the Asian region," he said.

He will also discuss the role of industry and government in responding to consumer demands, including animal welfare campaigns, and argue that if industry can address such concerns, there is less pressure on the government to impose costly regulation.

And if the government felt forced to act, then it should be clear about the economic costs of extra red tape.

"The reality is that locking away more forests into national parks, putting fisheries in marine parks, putting more regulations and legislation on chemical use in agriculture – there's good reason for doing some of those things in terms of what the community wants but we shouldn't assume we can do those things and not have impact on economic growth," Mr Morris said.

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READER COMMENTS

THE FARMER
5/03/2013 8:18:01 PM

Your headline should read farmers unable to gain access as pollies fail on free trade deals & market access while they continue to talk shit in Rootyhill .
what the
5/03/2013 8:55:26 PM

Which dunny has Morris been locked in; with the long term collapse in farmer’s terms of trade the only thing that the remaining farmers have been able to do to remain productive is to improve productivity, thus the collapse of the "rural" demographic.
Jock Munro
6/03/2013 3:05:41 AM

Wheat growers had iconic wheat marketing arrangement until it was abolished by the Rudd Government and the Liberal Party in June 2008. We competed on quality and service and none could better us. We now have foreign mega merchants and others making substantial profits out of Australian wheat as they compete down prices for Australian growers and destroy our hard won reputation that was built up over 60 years.
john from tamworth
6/03/2013 5:59:03 AM

What would a featherbedded government bureaucracy like ABARE know about productivity?If it was closed down tomorrow no one would miss it.
Bushie Bill
6/03/2013 7:08:17 AM

The posters to date show the problem with Australia's ag industry: it is insular, ill-equipped to objectively analyse its shortcomings, unprepared to face reality with innovative strategic changes, not ready to face reality and deal with it in a logical planned manner. Agriculture is essentially committed to the 'groundhog day" mentality of ensuring everything done today is done inexactly the same way as yesterday. It is unwilling or unable to introduce new ideas and new thinking to face the challenges before it. It wants to solve today’s problems with thinking of a half century ago.
Bushie Bill
6/03/2013 7:09:28 AM

Anyone wanting to make a profit rather than whinge and blame everyone else for his/her failures is ostracised as a reactionary. The future for agriculture belongs to those who are prepared to tell the old, tired and out-of-date dispirited whingers their day has gone. The future belongs to those prepared to take responsibility for their own futures and to do something constructive and meaningful about it. Whingeing and blaming others doesn’t cut it when you are unprepared to change. Ag’s political power is bugger-all and heading south. Recognise this and use your diminishing power wisely.
dunart
6/03/2013 7:13:45 AM

to supply product, you need to make a profit, even a small one. farmers need to improve productivity? what a joke as our suppliers productivity has crashed, charging us several times the world market cost for normal agriculture production costs. You really need a sense of humour when these “experts” start talking. Just goes to show you what a protected labour market does to peoples thinking?
Denis
6/03/2013 10:19:23 AM

All these so called experts live work and breathe in a protected and regulated environment.
THE FARMER
6/03/2013 11:09:31 AM

Bill you need to leave some space between in & exactly. What can be done on farm is limited by climate , rainfall patterns , seasonal patterns, location ,& returns of aLL potential uses .It's often the most innovative that are the first to get sold up .Rabbits , jojoba, any thing M.I.S related , cluster farms & of late, exotic sheep .Your verbose posturing offers nothing new , just a funkier way of calling farmers whingers .When the rest of the economy is un-competitive & protected its hard to operate . Tell us please how we can all be more profitable.
Sodbuster
6/03/2013 8:01:11 PM

"...FARMERS will fail to cash in on growing Asian demand for food... ..and there is a major shift in how Australian produce is marketed overseas, the government's agricultural forecaster warns..." And which bunch of muppets at a whim banned ALL live export to Indonesia. Marketing exercise par excellence...
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I am well aware of the manipulation that occurs on futures exchanges and that is why I am
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What a plan! Wipe out bread supply competition, AND rip off customers on other items- all the
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how many good price years ahead are there. It will take a huge price swing to catch up to 14