Global Farmer in Australia

COSTS UP – PRICES NERVOUS – TIME FOR CHANGE?

Here we are at the start of a bright new 2014. Some Western Australian grain growers had a good harvest in 2013, but some still have plenty of debt and some have left the industry. It seems we are experiencing another period of adverse terms of trade as the economists would put it, or at cost-price squeeze as most of us understand it. But this situation has existed in one form or another since the 1980s and the industry has adjusted greatly to stay viable.

Let’s look at a little history. In the late 80s and early 90s the state average wheat yield virtually doubled from just under 1t/ha to just under 2t/ha. So how did that happen? Well, the cost-price squeeze was instrumental in focusing the minds of farmers mightily. They knew that something had to be done and furthermore they knew what. All the relevant findings were known, either through local research or through hard-won experience and observation.

The average date of sowing was advanced by about 3 weeks aided by the availability of the appropriate chemicals, semi-dwarf varieties and reduced or zero tillage among other things. At the same time the percentage of the crop that received a premium for quality (Hard, Noodle, Soft, APW) was increased from about 15% to over 50%. Continue reading “COSTS UP – PRICES NERVOUS – TIME FOR CHANGE?”

The City – Country Divide. As big as ever.

The gross value of Australian farm production in 2009-10 was $48.7 billion. So the just announced drought aid package of about $320 million from the federal government is equivalent to 0.6570841889117043% of $48.7 billion. Public domain image, royalty free stock photo from www.public-domain-image.com

Public domain image, royalty free stock photo from www.public-domain-image.com

Looks like it could be a good year!’

That, ladies and gentlemen of the land, is what you are worth. In other the words, as far as the government is concerned the sustenance and the rebuilding of much of agriculture in Australia after one of the worst droughts in the last 50 years is worth three quarters of five eights of bugger all.

Rural debt is already in excess of $63 billion, so if you borrow another $320 million from the government, you will add 0.5079365079365079% to your debt – but first you have to qualify.

If the qualification criteria are anything like those set for the commonwealth/state funding last year, there won’t be a queue anywhere shortly.

If you want to put the drought aid package into perspective $320 million will pay for one third of a new footy stadium in Perth. Six and a half kilometers of Freeway at $50 million a kilometer or about the same price as it recently cost to upgrade 4.2 kilometers of the Great Eastern Highway.

As many have waited for rain, shot livestock, sold them for next to nothing, taken the kids out of school, done budgets, and talked about next year, should they or should they not try and keep going? I have wondered what this new government, a conservative government will do to ease the problems being faced by so many in rural Australia. This is what agriculture produces for Australia and in exports for the rest of the world:

(Note there is s slight difference in the above gross value of the figures. They both came from ABARES)

Travelling round in Western Australia it’s not difficult to see the affect on small rural towns of 30 years or so of farm aggregation. Farms have doubled in size and families have gone. In some cases schools have closed. Shops are empty, some towns look neglected and many can’t raise a weekend footy team, so they import players from the city to keep the local league going – probably pay them too.

The mantra of the 70s of ‘Get Big or Get Out’ preached by bank managers and farm consultants and amplified a hundred times by the popular rural press made a poorly researched academic theory into what many believed was the only way to survive.

How much use, how effective are the politicians elected by rural constituencies and the extensive and expensive agricultural lobby (MLA, GRDC, NFF; add to the list at will) at getting the true story of Australian agriculture into the heads of the urban politicians who, because of numbers, not because of brains, run the country? On current performance they are about as much use as tits on a bull.

Quite honestly who cares about Holden and QANTAS? One is foreign owned and the other has to face up to competition from foreign government-subsidized airlines.

There is no reason why we should subsidize a car that doesn’t sell; and if we can’t afford to subsidize QANTAS, then we have to let them go and find their money somewhere else. Air travelers being what air travelers are, all but the rich and those on expense accounts will fly by the cheapest airline. ‘The Spirit of Australia’ is sentimental nonsense and political clap-trap.

The difference between Holden and QANTAS and Australian Agriculture is that compared to agriculture, Holden and QANTAS are games of Lego, they don’t grow food and they will never contribute to the national economy in the way that agriculture does.

We will now have to import all of our motor vehicles. Will we ever have to import all of our food? Who knows? Making a living off the land is becoming difficult for many. Working the land is apparently not what many of our young people want.

So maybe in the future it will be Chinese Utes and migrant farmers growing the food? Be like history repeating itself. Great Wall for a Chev and a Chinaman for a Pom.

Saying of the week from Rob Gillam from the Pastoralists and Graziers on hearing the drought relief package offered by the Prime Minister:

“Yes I’m pretty hesitant to give a lot of support to this package. I’m very fearful we’re going back to a business subsidy type circumstances,” he said.

Please explain!

The China Enigma

Be not afraid of growing slowly; be afraid only of standing still

There is now no doubt, there is unquestionable evidence that the Premier of Western Australia, The Hon Colin Barnett, MEc. MLA. Minister for State Development; Science and the Hon Ken C. Baston, Minister for Food; Fisheries, are intent upon doing everything they can to secure more Chinese investment into West Australian agriculture. How they are going to do it?
They are going to hold an investment conference especially for the Chinese. Mr Barnett and Mr Baston are certainly not standing still:

Western Australia – China Agribusiness Cooperation Conference.
State Reception Centre, Kings Park, Perth
9 -11 April 2014

Premier Barnett with a hook for catching sharks.
Photo:WA Today.

Premier Colin Barnett is a passionate West Australian. There is also no doubt that Mr Barnett has determinedly used his Office, and the influence that goes with that Office, to secure major commitments from the Chinese to invest in West Australian industry, mainly into mining, but there have also been substantial Chinese investments in agriculture.

Mr Barnett has led delegations of business people from Western Australia to China to further cement relationships and to forge new ones.

I don’t think it would be unfair to call Colin Barnett a Chinaphile.

Premier Colin Barnett Southern China Airlines Gala Dinner — Premier Colin Barnett at Southern China Airlines Gala Dinner.
Photo: WA Tourism

There has always been a belief among the majority of West Australians that ‘Chinese’ investment in Western Australia in the past has been conditional upon the imprimatur, and investment of the Central Government of the People’s Republic of China.

In other words the Government of China is always involved somewhere in the deal as an equity partner. Mr Barnett must be aware of this and be unconcerned that a sovereign state is investing in and becoming an owner of, Australian freehold property.

As far as I am aware it has never been denied that the Chinese government will be a equity partner in any investment in Australia.

Recently Mr Barnett was critical of Australia’s foreign investment rules, claiming they were sending the wrong message to China. Mr Barnett said that the United States could invest more than $1 billion in Australia without being subject to Foreign Investment Review Board Rules, but it was different for China’s state owned enterprises where any level of investment from $1 up was subject to review.

Mr Barnett believed this caused resentment in China.

In July 2013 speaking from Zhejiang province in China Mt Barnett said he believed the Chinese were not seeking to own Australian land – they just wanted to protect their investment for food and have a secure relationship with Australia.

Yet the previous month, June 2013, the Queensland Country Life reported that Chinese investors had spent $757 million in the first quarter of 2013 buying land in Australia, with WA, according to Landmark – Harcourts, topping the charts with sales of $350 million. True or false? We may never know.

Well, whatever is the truth, what the Premier really believes will be revealed on April 9 2014. Continue reading “The China Enigma”

No more farmers?

There is every chance we will run out of farmers before we know whether we can feed the people of the world.

It’s a frightening proposition but just look at the evidence.

In 1968, Paul Ehrlich in his book ‘Population Bomb’ made the prediction the world faced massive starvation due to overpopulation. He wrote:

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate.

Then along came Dr Norman Borlaug, ‘the father of the Green Revolution’, and his team of plant breeders and the world was saved from starvation. In 1970, Borlaug became a Nobel Laureate.

The ‘Green Revolution saved India from certain disaster.

Between 1950 and 2004 world wheat yields rose from an average of 750kg/ha to 2750kg/ha (FAO), due to the worldwide adoption of high yielding, high input short straw wheat varieties, developed by Borlaug and his teams. Similar improvements were achieved in the yields of maize and rice.

This revolution in plant breeding, combined with new chemicals to control pests and diseases averted the global starvation tragedy predicted by Ehrlich.

In the last forty years the population of the world has doubled and, by and large they have all been fed.

The millions, who have died of starvation over that period, didn’t die because there wasn’t any food for them; they died because we spent our money fighting wars rather than getting food to those who needed it. Continue reading “No more farmers?”

Farm Debt Wrecking Australia

Senate inquiry is a chance to reconstruct farm industries.

Farmers struggling with poor prices, difficult weather conditions, and mounting debt, have an opportunity to propose solutions, in submissions to a Senate inquiry that is being held in coming weeks.

The Senate is inquiring into a Bill that was introduced late last year by Senators Nick Xenophon and John Madigan, to establish an “Australian Reconstruction and Development Board” (ARDB) under the Reserve Bank.

Continue reading “Farm Debt Wrecking Australia”

The Horn of a Dilemma

Over the last week or so, leading up the Christmas 2013, I have watched the television and been filled with horror at the images of one child every three seconds dying of starvation on the Horn of Africa, part of the so-called Developing World. Yet, at one and the same time, obesity is killing people in the Developed World. Many people in the United States of America and no doubt in Australia, consume more than twice as many kilojoules every day, than they require for a healthy life.

In the lifetime of my grandchildren the population of the world will increase from six billion to nine billion. Most of that increase will be in the Developing World.

In our world, the Developed World, there is no shortage of food. In fact, we are so wealthy; we can choose what food we eat — the variety is endless and obesity is a major health problem, especially in children.

We can not only choose what variety of food we eat, we can choose what kind of food we eat — so vegetarians and vegans can purchase a balanced diet free of those items they have chosen not to eat, and meat eaters, carnivores as my daughter calls us, find our choices are almost endless.

As we wander the aisles of the supermarket taking our time making our choices, every three seconds one child dies of starvation on the Horn of Africa. Continue reading “The Horn of a Dilemma”

‘We’ll all be Rooned,’ said Hanrahan.

Australia is part of the Developed World and Australian agriculture has yet to answer the question as to whether it is capable of increasing food production to meet the projected global demands of the future. Are we capable of increasing food production by at least 40% and so help feed the world?

There is global consensus that by 2050 the world population will have grown from 6 billion to 9 billion. To feed the extra 3 billion people the world will have to increase food production by more than 40%. Eighty per cent of that increase will have to come from the Developed World.

There has to be some doubt whether we can. Terms of trade in agriculture are lousy and our debts are unmanageable. There has been and continues to be, a reduction in both federal and state funds for research and development (R & D) and in a later article we will tell the story behind some frightening figures on the spread of salinity in Western Australia and Australia. Continue reading “‘We’ll all be Rooned,’ said Hanrahan.”

Self Inflicted Injury

This discussion paper addresses a few of the changes, which have taken place in the eastern wheatbelt of Western Australia over last twenty years. Changes, which have brought us to where we are today, to where some are claiming there is a ‘Crisis in Agriculture’.

Change in life is constant, no more so than in agriculture.

The question then becomes if there is a ‘crisis’ what has caused it?

The answer seems to be that it is self-inflicted injury.

Continue reading “Self Inflicted Injury”

Western Australia – China Agribusiness Cooperation Conference. State Reception Centre, Kings Park, Perth 9 -11 April 2014

Western Australia – China Agribusiness Cooperation Conference.
State Reception Centre, Kings Park, Perth
9 -11 April 2014