Is the Australian wheat industry finished?

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Two reports from the Australian Export Grains Innovation Centre (AEGIC) on the competition Australia will almost certainly face from Ukraine and Russia in the wheat markets of the future should be compulsory reading for all wheat farmers in Australia. They provide a sobering analysis of the wheat market and will force the sensible to seriously contemplate their future.

 

We live in a fantasy world, a world of illusion. The great task in life is to find reality.

Dame Iris Murdoch 1919 – 1999.

Stranger than fiction.

The post harvest stories, some of them as close to fiction as one can get without the author claiming to be a novelist, have recently appeared in both the national and the agricultural media. Minister Joyce is on the front foot; that is when it isn’t in his mouth, determined to persuade the Australian electorate, through a compliant media, that all is well in Australian agriculture and that the emerging Right in politics in Australia (Hanson) and around the world (Trump and Brexit), has nothing to offer to those who live outside the ever increasing majesty and grandeur of the State capital cities of Australia.

I have used the words ‘majesty and grandeur’ quite deliberately. Around Australia billion of dollars has been spent on State capital cities, much of that money is for the enjoyment and the pleasure of those who live in those cities. As we shall see, as billions has been spent on shoring up the city vote with new sports stadiums and the like, the infrastructure vital to agriculture has been allowed to deteriorate and in some cases decay to the extent that we are no longer world competitive — we can no longer, at times, but ever increasingly, compete for markets around the world.

The Nationals heartland is in rural Australia, it’s the country folk who get them into parliament. In WA they did a deal with the Liberal Party, which put the Liberals into government and some National members into key positions in the WA Government. Again, and have we seen it too often, a minority determining government policy? The Nationals are now worried that Hanson, the Hunters Shooters and Fishers Party and maybe others will replace them in Parliaments around the country and in so doing, replace them in holding the balance of power.

Minister Joyce wants everyone in the country to believe that record high prices for livestock and an ever-increasing demand for wool are the beginning, as one journalist put it, of a ‘golden era’ for the farmers of Australia.  Coupled with what some are calling a record harvest, what could possibly go wrong for Minister Joyce and the wheat farmers of Australia? Well this for starters. Continue reading “Is the Australian wheat industry finished?”

This little Piggy – #2

It’s all a load of pigs.

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I thought the Federal Minister for Agriculture, Barnaby Joyce, might have a view, which he could share with us regarding the alarming statistic that 80% of all processed pig meat consumed in this country is imported. I was wrong.

I thought he might, together with his state counterparts, also have a view on the plague of  wild pigs, some twenty million many say, that roam this land and by their very existence threaten our major livestock industries. I was wrong.

I accept that in spite of what I have written those who administer agriculture in this country don’t know or don’t care or both, about the domestic pig industry and threat feral pigs present to our livestock industries.

Preamble.

It would be easy, when reading what follows, to conclude that as the author, I am suffering from an acute case of self-righteous indignation because nobody in government, anywhere in Australia, has responded in a positive way to my original article and personal letters. So before anyone has such scurrilous thoughts, I should explain myself.

I understand that it is in the view of the Australian government, as demonstrated by their actions, that it’s easier or they are more content, paying interest on the money the country has borrowed and continues to borrow, in part to pay for the shortfall in our balance of payments, that is we import more than we export, than pay that money to Australian farmers so that this country can be where it should be, self sufficient in food.

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Compiled from: ABARES Agricultural commodity statistics 2014 Table 7 by Ben Rees. The difference between the Trade balance and B.O.P is net income flow. Net Income flow comprises net flows of interest on debt , dividends and transfer payments.

I also understand that this is a free country and that Coles and Woolworths who between them control 80% of the food retailing business are free to roam the world seeking the cheapest food they can get their hands on so they can continue their price war with the objective of increasing their respective market share, so they are part of our balance of payments problem. It is quite evident they would rather do that than support the Australian pig industry, so that it can employ and deploy, by the size it could be, the latest in technology and science in the world of pig meat production, from genetics to processing. The rise in food imports and the decline in food processing in this country I have written about before —but here it is again in case you have forgotten. Trends in Australian food trade.

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Stats ABS. We are always ready to believe our own propaganda. Food exports, whether we like it or not have been falling, imports have been rising. Food processing in this country has been falling.

I will also show in a later article that not only China, but many countries within our region, like us, import thousands of tonnes of pig meat from the EU, America and Canada, when we in Australia, as it were, are on their doorstep and desperate to grow our export trade.

Am I being dramatic?

It would be easy to construe that I am being a bit dramatic when I write about the threat wild pigs present to the livestock industries in Australia. I deal with this matter specifically later in this article — there is just one thing I would like to add, well two really. I have twice seen, first hand, the devastation that Foot and Mouth disease can cause – both times in the UK. The first time when I was about 13, the family put a barrier across the narrow lanes leading to the farm. There was disinfected straw everywhere even the crows were viewed with suspicion. The closest outbreak was five miles away. The fear in my family was palpable. Their dairy herd was their pride and joy and the sheep that grazed the mountains provided stability to the tenuous hold they had on their post-war hill farm.

The second time was maybe twenty years ago, when I was working over there for a few weeks. An outbreak was traced back to northern England and within days they were searching for sheep and cattle all over Europe. Meat exports stopped and markets closed. The losses ran into billions of pounds. Both events, disasters, caused the massive loss of some of the best animal genetics in the world. When it was all over there was a debate on whether if it happened again, the UK would start vaccinating. I think it was decided it would be impractical considering the movement of livestock around the EU.

Some countries in South America do vaccinate and they have developed internationally recognised foot and mouth free zones and this has enabled them to continue to sell boxed beef into Europe. They continue to export live cattle to those countries, mainly in South America, which have F & M.

Writing letters.

I wrote to the Federal Minister for Agriculture. I didn’t get a reply or even an acknowledgement of receipt of my letter.

There are obviously more important matters of State and photo opportunities regarding national biosecurity than 20 million wild pigs – like Johnny Depp’s dogs. They are not coming back evidently, not the dogs, but Mr and Mrs Depp.

This was the letter I wrote to Minister Joyce: Continue reading “This little Piggy – #2”

Is our current agricultural policy defending the people?

Mailler’s excellent article ‘Why is Agriculture Different’, begs the big question of the extent to which the agricultural industry’s relationship with government policy has resulted in a viable, sustainable and world competitive Australian agriculture? And if not, is the government failing to defend the people?

Empirical data – as Mailler brings to the fore – tends to show that the relationship of agriculture with government policy (in the context of global competition and the myriad of factors that express themselves through industry performance data and trends), has resulted in the industry exhibiting signs of systemic failure. The ‘vital signs’ of this industry are not good.

If one sets aside short term factors of drought, flood, fluctuations of commodity prices and looks at the long term trends, it is inescapable that revenue has been ‘chased’ by costs and in some cases overtaken by costs. The trends are seemingly inexorable.

While in any industry there will be leaders and laggards and those who fall off the bottom, the situation for agriculture as Mailler points out is not just the ‘tail’ that’s failing – it’s many of the core businesses that make up the industry.

Whether one agrees or disagrees with past and current agricultural policy, one must surely accept the notion that the outcomes are not good?

So what of policy for agriculture?

Governments have a primary duty to ‘defend the people’ and see to their wellbeing.

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Photo: Courtesy Veeoz

For a couple of hundred years, most ‘western’ governments have taken this duty to extend from:

  •  basic ‘human rights’ of health and education systems (safe drinking water, sanitation systems, hospitals, primary, secondary and tertiary education), through …
  • reform and development of democracy (wide range of concepts of what is democratic!)
  • military defence of their territory and its people from aggressors and on to…
  • making their industries competitive in the markets where their goods and services are sold.

Governments develop and implement POLICIES to cover all these aspects and more of our national life in pursuit of their big job to ‘defend the people’.

Importantly, governments generally see it as prudent to make the nation’s export industries profitable and sustainable in the longer term because their profits contribute so much of the resources to fund the implementation of all other policies!

One of my observations in Australia over the last 40 years or so is that agriculture has been progressively de-capitalised and made less resilient as a result of government policy. Local control of the industry is being lost as new capital, new vision and new policy comes in from overseas. Continue reading “Is our current agricultural policy defending the people?”