As floods take hold in the outback, Dr Lee Duffield presents two vastly different approaches as to what can be done.
BREAKING OF A DROUGHT is part of the romance of the country.
When you start thinking it won’t rain again the bucket-loads begin: well over 100-millilitres in a day, dams filling, five-year-old children frightened not knowing what it is.
Last week started with one-third of the local government areas in Queensland under emergency declarations because of heavy flooding, swamping much of the grazing country with impacts extending well into Southern Inland Australia also.
As heavy rain and floods take hold in the outback, Australia’s rural industries are positioned to grasp all kinds of opportunities – not just the Heaven-sent storms – but new attitudes and old ones are having a tug of war over how that should be done.
PERSPECTIVE 1 - GETTING DOWN TO BUSINESS
A speech by Greg Campbell, until recently CEO of the Kidman pastoral company, recalled the “good luck” ingredient: you get success in rural business with wise management — and good luck.
He told an Agribusiness audience in Brisbane last month, that opportunities were being realised by rural enterprises benefitting from new investors coming in, development of better market channels and breakthroughs in production technology.
The modernisation message, focused on the beef industry, was mainly about making a studied use of bulk good data, reflecting both the speaker’s scientific background researching impacts of pest animals, then over 20 years’ top-level management of a major agricultural company.
He identified entrants into the industry ranging from superannuation funds through to billionaires interested in new products, new marketing approaches and technologies — remote monitoring, drones, robots.
All would not be easy; bright ideas not enough.
Some of the interventions they brought had invited disasters, as in one key example: heavy investment in water points on a large tropical land-holding to cut walking distance, for stock, to a two-kilometre radius. It did not work out. With the wet season, helicopters were needed and the cattle were bogging — creating especially poor outcomes in animal welfare.
Similar problems occurred with ventures to cultivate Waigu beef and other new breeds in unsuitable climates for them.
The message on animal handling was meant for experienced producers as well as bean counters looking for a new economics because facts had to matter.
“Choose the right bulls and heifers by genetics not just because they look good."
Prescription for change
Producers needed to reconcile hard information and set up a well-imaged plan on different access routes to several markets, breeds, locations and capital expenditure.
“Such basics as that are often neglected,” Mr Campbell said. Especially, much information on genetics impacts was “poorly taken up on the commercial side”.
Concentrated on improving margins for the success of the business, this was a corporate-style approach that could be taken up well by family enterprises also.
Several were already leading the way, with examples of diversification into feedlots and other businesses, and collaboration with neighbouring properties on channelling product to markets.
The prescription would extend to cultivating bio-diversity, and good labour relations recognising the actual scarcity of skilled agricultural labour.
Hearing this treatment by Greg Campbell, something seemed missing from what you usually might get at rural industry events. It was strictly business-like without bush politics.
Facts about farming
Farm industries, while tied to weather and foreign exchange rates, had been going through a good period and here was the background information, the economics of Australian farming laid out in clear perspective, everyday sources like the Australian Bureau of Agricultural and Resource Economics (ABARE) or the Australian Bureau of Statistics (ABS) giving a straight picture of actual quantitative worth and investment value.
Agriculture directly employs 300,000 people or 4% of the total workforce – against health care and social assistance 10%, construction 8% and education and training 8% – and contributes 3% of Australia’s gross domestic product.
Agricultural production is valued at $60-billion a year, more than three-quarters going for export. In the leading exports categories, wheat and meat account for 4.5% of Australian earnings — minerals 45.5%, education and research 7. 5% and tourism 5.8%.
Historical figures on rural investment give a not-bad, not-that-good picture — a worthwhile enough field to build on. Capital gains are 1-3% per annum, return of investment 3-6% over the last 30 years, currently at 4 to 4.5% per annum – as against stocks and bonds 9% per annum over nearly a century of account keeping – and longer-term cost of debt is 7%.
PERSPECTIVE #2 – MORE BUSH POLITICS
A second survey of the state of Australia’s rural industry agreed on main points supported by a similar array of figures — but gave a much rosier story.
Not surprising as it was delivered by the then minister for agriculture and water resources in the present Government — none other than current backbench Member for New England Barnaby Joyce. This was one of his opening addresses to the ABARES annual outlook conference in Canberra in March 2017.
In this reckoning, good times were a “boom” that stood to continue due to favourable trade agreements and also government aid — various financial and rural infrastructure schemes like dam-building.
Leaving aside questions about the economics of such programs and questions of environment, there were concessions in the speech to the modern-day corporate approach.
We had a distinction between producers who “went broke” and those who succeeded, who had:
“ ... short, medium and long-term visions of what they wanted their businesses to look like … They purchased on facts and were forensic in their research, and they worked very, very hard."
The broke ones had a “litany of excuses and hard luck stories” and “fascination with the personal accoutrements of a lifestyle that in no way could be supported by the basic economic fabric of their business” — giving the example of enterprise funds used for buying up on polocrosse ponies.
Otherwise though, even while “smart wealth is moving into the agricultural sector”, we had to owe it all to the hard yakka, decency and intuitive style of country folks, where successful ones’ plans “mightn’t have been articulated on paper" but were “logical and unemotional”.
“My philosophy in politics accepts but is not enthralled by the corporate farm. My passion is for the person — that stoic person who by the sweat of their brow creates wealth from soil, and holds in their heart a love of our nation so dear that every town has a war memorial …”
No time for townie enterprises here, no space for townies.
“There's something noble about the person who gains their wealth by feeding and clothing people, as opposed to exploiting people or preying on their weaknesses or massaging their conceits.”
A boost for agriculture in the national accounts, whatever its place in the full scale of production, meant that the bush was saving us all, as “the industries of regional Australia continue to drive the nation's economic growth.”
“My vision is the Australian mum and dad at the kitchen table that they can avail themselves the wealth that properly remunerates the efforts and privations that they go through in running a farming enterprise.”
How much of this makes sense to large parts of our population and how much is delusional? Does it get into policy and translate into the kind of sectoral preferences that lead to big-scale direct-benefit spending — often enough for marginal enterprises, many prone to “go broke”?
Can we skip it at some point, sooner or later – on the farm as anywhere else – and just get down to business?
Dr Lee Duffield is a former ABC foreign correspondent, political journalist and academic.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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