Bring in the Clowns

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Cleaning the swamp?

I blame politicians and their apparatchiks for my ever-increasing sense of despair regarding the future of this country and its agriculture. The evidence is clear and apparent. We are in debt up to our eyeballs and we shouldn’t be. We are a country rich in valuable natural resources from which we, the people, gain little benefit. We are rich in coal and gas and we have an power crisis for which we the people are paying dearly. Astonishingly, we continue to pay billions of dollars in subsidies to so-called renewable energy companies to generate the power we need, yet, even more astonishingly, we have failed to understand that when the wind doesn’t blow and the sun doesn’t shine, they don’t generate power. To add insult to injury the wind turbines and the solar panels used in this massive ‘con trick’ are imported, mainly from China.

China, a country where they continue to build clean-coal power stations , five hundred are currently being constructed and planned. Power stations, which use Australian coal, because the Chinese know it takes a lot of power to run a smelter that turns Australian iron ore into steel and bauxite into aluminium. If this is the best our governments can do at running the country it begs the question, ‘Do we need politicians? I can present a good case that for over a decade in Western Australia we have virtually been without without a Minister for Agriculture and nobody has noticed. Agriculture continues to suffer and be disadvantaged through lack of investment in infrastructure and R&D but nobody cares except the farmers. There is evidence now, if ever we needed it, that the world in Australia has gone mad; the Federal government has launched a scheme to save electricity, where there will be incentives this summer to NOT turn the air conditioner on. They will give money and would you believe cinema tickets to those who reduce their electricity during times of peak load. I don’t think pop-corn is included with the cinema tickets, but you never know with this Walter Mitty federal government. This is a bit like what  some clown brought up the other week and blamed the free tobacco given to the native stockmen in the last century and before,  on the high smoking rates among aboriginal people today. Here we have a government offering all people the equivalent to axes, beads and tobacco to not turn their air conditioners and other electrical appliances on during the times of peak load. They have a nice new meter they can fit into your power line that records what power you use and when. Not sure if it also has a built in surveillance system like ‘Big Brother’, but we are getting there. I know my mother could not have lived into her late nineties in Perth without her air conditioner. She was frugal even in those days regarding power. What government that has all of its marbles, bribes the most vulnerable in society, the poor and the disadvantaged, with this sort of nonsense?

Some thoughts from Prof John Galbraith.

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Prof John Kenneth Galbraith. 1908-2006.

“I was studying agriculture, how to produce better chickens, better cattle, better horses — horses in those days — better fruit, better vegetables. This was in the early years of the Great Depression, and the thoughts crossed my mind that there wasn’t a hell of a lot of use producing better crops and better livestock if you couldn’t sell them, that the real problem of agriculture was not efficiency in production but the problem of whether you could make money after you produced the stuff. So I shifted from the technical side to, first, the study of agricultural economic issues and then on to economics itself.”

At an early age Galbraith put himself through a fundamental career change which saw him become one of the worlds leading economists. A Canadian farm boy who became an adviser and sometime speech writer to several Presidents of the United States. Not a lot has changed in agriculture since Galbraith observed that efficiency in production was not a lot of good unless profit was the result. Early in his career Galbraith with his colleague and mentor Professor John Black, in an article ‘The  Maintenance of  Agricultural Production During the Depression’ and while discussing what activist position the government should take, they asked the question why agriculture had failed to show “rational” economic responses to depression or recession. From the late 1920s to the mid 1930s, the volume of industrial production in America fell by 40 per cent while agricultural production fell by only 4 percent. They debated the question in depth in their paper, but their concluding point is clear and in an uncanny way, could be applicable today, especially when we consider the head down arse up attitude of Australian agriculture, the level of debt, the inexorable and undeniable shifting of rainfall patterns in the West Australia wheat belt, low yields compared to our competitors and poor current and forecast prices for grain. Are Galbraith and Black holding up a mirror to the Australian wheat industry?They concluded;

We fear an attempt to analyze our problem in the language of current economics has given altogether too much of an appearance of rationality to the conduct of agricultural producers. No doubt the production decisions of the majority of farmers are made without any reasoned considerations of maximised returns. If these respond to economic change in a “rational’ direction they are likely to do it as a matter of submission to economic pressures; or perhaps in imitation of their more successful neighbours. It is a commonly observed phenomena (sic) that large numbers of farmers fail to respond at all at times indicated by the conjunctures (combination of events. Ed) of economic change; or, if they do respond , they turn in directions adverse ( preventing success or development; harmful; unfavourable) to their individual fortunes.

Are we rational in Australia?

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All including freight expressed in A$. From the top. $271.12. $273.31. $274.67. As of Oct 6th. per tonne delivered Egypt. Gasc is Egypt.

Is it possible for Australian agriculture to follow a rational approach to production? We know what the world wants in the way of food that we can produce, is there any way that we could develop a national approach to meeting that long term need? For the first time in my life, wheat producers now know how competitive they are in world markets. They know what it costs others, like the emerging Juggernauts of the wheat industry, Russia and Ukraine, to produce and deliver a tonne of wheat to the end user. If Australian producers are not competitive in the wheat market now, they have to ask the question whether they can be in the future?  It can be argued that the headlong rush out of sheep and into wheat and canola in the naughty nineties, is a prime example of irrational behaviour, did the rest follow the more successful neighbour? Were they seduced by a well constructed agronomic magic carpet of snake oil and promises? Twenty five years on, average yields are going down. Is that irrefutable fact recognised by wheat growers? The national average wheat yield is 1.8 tonnes per hectare and with prices where they are at present,(see the Gasc price)  the after harvest sums are not good for many. Because costs continue to increase and the combination of the two presents a challenge. Now the world wants ever-increasing amounts of animal protein and we can’t supply it. I was told by a wool broker the other day that the world still wants, in increasing amounts, Australian merino apparel wool and ever increasingly retailers are asking questions about mulesing. The wool prices are good and this broker believes the market will want and pay good money for more wool in the foreseeable future.

The problem with agriculture in Australia, like in life in Australia, is that there are too many people involved in the politics of the industry and nobody is involved in planning the long term structure. All talk and no action. There is no Strategic Plan for Agriculture and there is no Business Plan. Therefore nobody in agriculture knows where it is going and very few individuals know where they are going. It is true that we are not as fortunate as some of our competitors. In the Baltic, if the winter wheat is killed by the permafrost, they can get out of jail by planting sunflowers and other crops in the Spring. In other parts of Europe after the early harvest comes off they can plant a fodder crop like turnips, graze that crop off during the winter, manure the field at the same time, and plant another cereal crop in the Spring. In Australia we don’t have that luxury in most of our wheat growing area, we get one chance, one crop. For many it is a gamble of over a million dollars every year on a few crops like wheat, barley, oats and canola, which rely totally on one season’s rainfall.

Australian grain growers are now looking towards harvest, few will realise their budget targets in Western Australia, the biggest wheat growing State. They have spent millions of dollars growing the crop but I see little activity of committal to forward contracts, meaning few know what price they are going to get for their wheat. I will bet that few, if any, have thought about whether or what area they will grow wheat next season, 2018/19. They have just accepted in their mind that they will, because they are grain farmers and because wheat is a major part of their enterprise. Does what is going on in the rest of the world affect how many hectares Australian wheat farmers plant? Does Australian agriculture have a global view, or is it still of the view, or it likes the excuse, that it Australia’s job is to feed the rest of the world because the world is short of food? The bad news is that the world isn’t short of food and it looks like there will be a surplus of wheat in 2018/19.

Is planning a silly idea? – Well, ready or not, here come the Russians.

Is it possible for Australian agriculture to come together, with State and Federal governments and build, formulate, a Strategic Plan covering say, the next decade? And attach to that Strategic Plan, a Business Plan for the next year or two? It probably isn’t, it’s just a silly dream because of the divisive and adversarial nature of all politics, including agricultural politics in Australia. Very little is done by politicians for the national good. Look at the power industry and the bankers, between them, they have become the government of Australia. Contemplate how apparent and visible that claim is. The total lack of interest in the structure of Agriculture in all tiers of government is best demonstrated by the hopelessly inefficient and expensive farm to port infrastructure across the nation, for which the grain producer pays.

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Graph 1. In millions of tonnes. Indonesia expects to import 8 to 9 million tonnes of milling wheat this year according to Millers Assoc.

Do we need a Strategic Plan? Of course we do, especially when our major grain export market, the wheat market, looks like being challenged both in price and volume. As if Ukraine isn’t a big enough threat to what Australia likes to think of as ‘traditional markets’ in Egypt and Indonesia to name just two, it looks like their big (brother) neighbour, Russia, is now getting very serious about being the world’s biggest wheat exporter in 2018. Graph 1 shows that Australia is losing market share and in just four years is selling less wheat to Indonesia. The big movers in 2016 were Argentina and Ukraine and to a lesser extent ‘other’, which is probably Russia. Graph 1 also contradicts comments I heard recently on the radio that Australia’s wheat trade with Indonesia is increasing. It’s going down and look at the grey area, that’s Ukraine.

It was Winston S Churchill who commented that, ‘A camel is a horse designed by a committee’. Agriculture in Australia is a massive, gargantuan camel. It’s a camel of massive proportions, look at it— there are hundreds and hundreds of people and tens of organisations that claim to represent those who produce food and fibre across this wide ‘Land of sweeping plains, Of ragged mountain ranges,  of droughts and flooding rains.’ We have more organisations claiming to be the  ‘Peak Body’ for their part of agriculture than there are departments in our State and Federal Governments and that is a big claim. That’s the trouble isn’t it? There are so many people running around doing things, doesn’t matter what, often nobody knows what, so long as they are seen doing something. Many of those people are  living off levies paid by the producers on the assumption by the producers that the recipients of their funds will lessen the load on them, make life better, shine a light on the hill. If they can’t do those things, what are they there for? More importantly if they are not doing it, what are they being paid for? Those levies would be better off in the producers bank.

Market Intelligence is vital – Bad news for Australian wheat growers – Russia is planning to be number one.

Russian HarvestI may be wrong but what follows was important international agricultural news at the end of September this year and I didn’t hear or see it discussed in the agricultural media in Australia. A quick check on the Internet has confirmed that to be the case. The news was not good for wheat growers in Australia, in fact it was terrible. Sovecon are forecasting a bumper wheat harvest for Russia in 2018. Planting has got off to a good start and could exceed 18.5 million hectares. “This is a big expansion on previous years and will not be good news for wheat farmers around the world”, claimed Mr Sizov Jr, managing director of Sovecon, Russia’s premier market analyst, it could see Russia become the biggest exporter of wheat in the world. This year, 2017/18, was Russia’s record harvest at 81.1 million tonnes, making well in excess of 30 million tonnes available for export. Mr Sizov went on to say that wheat farming was still profitable for Russian growers. “The strength of Russian sowings is being encouraged by relatively weak costs of production, which means that they are running profitably even at current price levels. Societe Generale earlier this month pegged the cost of production for Russian wheat farmers at about “$100 a tonne, or $2.72 a bushel, thanks to sharp rouble depreciation and lower-cost labour, fertilisers and land rentals”.

Mr Sizov said that production costs were, in many regions, even lower, at some $80-90 a tonne, in parts of southern Russia, a major origin for the country’s wheat exports. SocGen added that the cost of production in Russia “is substantially lower than in the rest of the world”, forecasting that, against these economics, US farmers will reduce winter wheat (Chicago and Kansas) sowings by 5.1% for the 2018 harvest “to a multi-decade low of 31.8m acres”.

Part II. Good managers welcome change.

Mention to the average CEO or General Manager that their Board has decided to restructure the business and a cold shiver of apprehension will invariably run down their spine. Restructuring means change, few welcome change because there is always an element of the unknown. Wise CEOs and Company Directors know that change is constant, because the market place in which they operate their business is constantly changing. So to keep pace with change, treating strategic plans and budgets as living documents and not something written on tablets of stone, is fundamental to not just being up with the game, but where possible, in front of it.

How many on the Board of a family farms  or a so-called corporate farm for that matter, consider that the time has now come to restructure what has become the wheat belt? And how many CEOs or General Managers, as they are invariably the same person(s) have a shiver run down their spine at the very thought? Over several articles I will try, with others if I can persuade them, to present the case for a wheat belt restructure — a proposition for some 4900 wheat belt boards and managers to restructure for a reliable future. That is just in WA, how many wheat farmers there are across the nation I don’t know. The alternatives are to rely on evolution over which, history tells us, there is and never has been any control, or a cause a revolution — or is a revolution just a restructure with blood?

We will attempt to look at whether change is possible in Australian broad acre agriculture, is it possible to decrease our reliance on grains? Change is happening both to markets and to the environment many work in. Rainfall patterns are changing, I have written about this before and presented the best evidence I can find. Perhaps we can look at it from a structural perspective? In WA as the east gets drier, what is the future? Is it the job of this generation to plan for those to follow. Will there be followers? We shall see.

Off Topic.

I have written and published my third novel ‘Bangalore’. I self published my first two books, sales were mainly confined to WA and both books sold quite well, couple of thousand of each title. Several years ago I was ready to do a re-print of the first book when I got an email from someone living on the Gold Coast, telling me how much they had enjoyed both books, the second is a sequel. Not having sold any books in the ‘East’ I asked where he had got his copy from and he said the local library. One thing led to another and I traced the books through ‘Trove’ at the National Library of Australia, put the name of the book in a search engine and hey presto, it tells you what libraries have the book. There were hundreds. Did the same with bookshops, same story. Traced it all back and my trusty publisher had either been pinching my stocks and/or had some printed himself and had been selling my books through a wholesaler from Melbourne. Annoyed I asked for my royalties and a few more pertinent questions and the reply I got was the address of his lawyer.

The lawyer milks the cow

The parties fight as lawyer milks the cow. Australia is now the most litigious country in the world.

For me, end of story. I lost a fortune, a business and a farm because of ‘smart arse lawyers’ trying to prosecute a hopeless case under the Trade Practices Act. English Law allows the rich to do whatever they like and the richer you are the more and better lawyers you can afford to argue for you. I won the case, beat the Terrace, did my own legal work in the end, but it was a pyrrhic victory. Knackered me too and I had a big brush with ‘Jack the Magic Dancer.’ I think they knew all the time, they didn’t have a case, but they thought I would cave in and they would get first prize, our farm. I found I couldn’t fight them and run a big enterprise, superman deserted me. Rational thinking can be difficult with the smell of cordite and blood hanging in the air.

I found out years later that my accountant and trusted friend of 20 years had been feeding the other side information I was passing to him, I thought he was on my side. They were paying him of course, he got his thirty pieces of silver. Eventually I had them all lined up including the accountant, went to the one lawyer friend I had left and said something like, “OK lets go for them, we have them, let’s sue their arse off.” After looking at what I had he agreed the evidence was irrefutable, said it would take about five days in the Supreme Court and then he asked me if I had $250,000. I told him I didn’t have $2500. He then told me that I couldn’t mount the case without being able to show the court I had $100k for my lawyers, $100k for their lawyers, in case we lost and $50k for Court costs and things. He said the first thing the other side would ask is whether I could fund the case, if it looked like I couldn’t they would accuse me of fishing or something and the Court would sympathise with them. So there you have it if ever you wondered.

The result of all this is that I don’t have the money to print another book, but I have lodged it with a publishing company called Inkitt, the deal with them is that the book is now up on their site and depending on the number of people who read it, all for free, they will decide whether to take it to print. So it is there, all for free at https://www.inkitt.com/stories/thriller/166648?utm_source=share_author

A short synopsis of ‘Bangalore’:

Inew bangaloreThere is no more placid place on earth than the home of Angus Sinclair, ‘Bangalore’, a million acre sheep station in the Australian ‘Outback’. Then Patricia, an Air Force pilot and hitherto unknown fiancé of Angus’ son Ewen Sinclair, an SAS helicopter pilot in Afghanistan, arrives at Bangalore and tells Angus that Ewen has been shot down and is missing while on a secret ’snatch’ mission on the border with Pakistan. Ewen’s identity appears on an Arab website and then goes viral on the Internet, now the world knows who he is. On Bangalore Angus receives a visit from officers from ASIO and the CIA to tell him a ‘Jihad’ has been issued against him and all of his family and that terrorists are already on the move somewhere in Australia.

So do me a favour and read ‘Bangalore’ at Inkitt and help get me a publishing contract because believe me, I need it!

Flight to Australia_cover pages_revisedhearts cover IMGMy other two books ‘Hearts of Stone’ and ‘Flight to Australia’ are available as ebooks through Apple, or preferably the company I recommend, a young and innovative Australian publisher in Melbourne called Tablo at https://tablo.io/  I know it’s a strange address but it works and you will find me on there. Tablo was started by a young man in his twenties and they should be supported against the international companies. I also have a few hard copies left at a special knock down price to my friends at $15 a copy + post and packing. Let me know at roger.rankin.crook#bigpond.com  You know why the # is there.

Roger.

 

 

Roger Crook

About 

Over the last fifty years or so Roger has worked in agriculture, since 1967 in Australia. From farm labourer, to station and farm manager, then progressively to a senior management position in agribusiness as the marketing and sales manager of what was at the time the biggest agricultural chemical company in Australia, ICI (Australia- Rural Division), Roger has both a practical farming and comprehensive agribusiness background.
After a brief spell as the marketing director of a big public relations company in Perth, Roger formed his own consultancy specialising in agribusiness communications and the marketing of Australian agricultural intellectual property overseas.
Roger says he will only ever be 'semi retired'. He believes Australian agriculture is at the crossroads so he has set up the 'Global Farmer' as a forum to both pose, debate and hopefully answer some of the challenges being faced by the Australian family farm and so by Australian agriculture.

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