IT IS pure fantasy to think it would somehow be worthwhile or even possible to pause or even turn our backs on the process of globalisation that has delivered us such success, GrainCorp CEO ALISON WATKINS told the Australian Farm Institute conference on Thursday. The following is excerpted from that speech:
AUSTRALIAN agriculture is on the cusp of its greatest era of opportunity ever - an era with the potential to dwarf the post WWII wool boom.
Our acknowledged skills as efficient, professional producers of high quality food and fibre, combined with our proximity to Asia … effectively give us an inside run in the race to meet the world’s growing demand.
It’s not all just thanks to circumstance; our sector has also embraced extraordinary change to put ourselves into this prime position. To make sure we don’t squander this unique opportunity, we must remain open to the world and continue to back ourselves in the competition for this extraordinary market.
Through embracing this openness our industry has come a long way already. It was not so long ago, that as a grain grower, you’d plant your crop, apply the inputs, hope for rain at the right times, and drop the harvest off at your local bulk handler.
Growers were largely isolated from end customers and there wasn’t much change in the varieties that were planted, because all the market feedback came back through the filter of the AWB, ABB or the applicable marketing authority.
Since those days, the Australian grains industry has been through enormous changes as part of the process of globalising our national economy. We are now undeniably – and inextricably – global.
Our industry and politicians have shown leadership and enormous courage to … encourage others to invest in our country, to build on our own relatively limited resources and population.
Globalisation makes sense
In the case of the grains industry, there are clear reasons why Australia’s push to globalise makes a lot of sense.
We produce far more than we can possibly consume ourselves and so we need access to global markets to buy our products. Without access to the world, our industry would be substantially smaller, if it existed at all.
Given our small population, and long supply chains that constantly crave extra money, we need to attract capital to maintain and improve our competitiveness.
Despite being outside the top 50 countries in the world by population, our economy is the twelfth largest. We’ve opened many new and formerly closed markets for our produce and our economy has proven more resilient than any other, being pretty much the only economy in the western world to deliver sustained growth over two decades, in the face of the global financial crisis, Asian crisis and other shocks.
We’ve also successfully attracted billions of dollars of investment into our economy from a variety of sources – including international – helping us grow and pursue new opportunities.
ADM’s strong interest in GrainCorp is a case in point here. Its offer is a large and very meaningful vote of confidence in Australian agriculture.
Globalisation has also substantially increased the incentives, competition and options open to Australian growers.
Choice is important
Just five years ago, there was only one export buyer for your wheat. Now there are 20 exporters with connections to hundreds of end-users in every continent.
Growers now have a huge amount of choice who they store their grain with. There is now a staggering 40 million tonnes of grain storage across eastern Australia for an average winter crop that is well under half that size.
In GrainCorp’s catchment, up to half the crop bypasses our export supply chain altogether and is sold to over 100 domestic customers.
If you look at the grain that does leave the country, there are more than 50 different container packers in eastern Australia that now account for fully one-quarter of all grain exports.
Even at the ports, which have been the focus of so much attention, there is growing competition, with four bulk terminals operating in competition with GrainCorp’s ports.
Of course, strict ACCC regulation also applies at our ports, which ensures that they remain open to all exporters, notwithstanding the new competitive pressures they are subject to.
In short, where our road to the world used to be one giant funnel; growers now have choice; there are multiple pathways to market.
No turning back
I recognise there are some industry observers who yearn for a return to more insulation from global dynamics – for us to turn back inward.
But it is pure fantasy to think it would somehow be worthwhile or even possible to pause or even turn our backs on the process of globalisation that has delivered us such success.
It’s a fantasy that assumes that the global environment will remain static, predictable and unchanging. In fact, change is the only constant, as both our domestic and international markets continue to demonstrate.
If we stay the course, our world-leading growers are ideally positioned to play a pivotal role in feeding the world as we head towards peak population within the next generation.
Yet we can’t just assume that we’ll take part in the benefits of this just because we’re close to Asia.
There are plenty of rival exporters in the wings who are just as hungry – probably even more so having watched our success – than we are. They are investing billions in improving their processes and supply chains and we can’t afford to stand by.
The UN’s World Investment Report of 2013 shows that Australia’s rank as an attractive destination for foreign investment has fallen from sixth last year to thirteenth this year.
For an industry that has relied on the rest of the world for so much of our demand and investment we simply cannot afford to ditch an approach of proven success at this critical time.