It’s time to say “Thank you”, to Agriculture.

There was a car sticker around many years ago which said, “Don’t criticise farmers with your mouth full”. That sticker is truer today than it was then and just as true long before car stickers were the fashion.

Some of us have been fortunate to have lived through and been part of the last half century or so of agriculture. Farming today is unrecognisable to what it was when I went to college in the early 60s and even more so looking back back at the fifties.

But it is in the last fifty years or so that I believe an agricultural revolution has taken place and it has gone unrecognised by many of today’s farmers who have inherited the past and totally unappreciated by the happy, unaware shoppers as they wander round their supermarket filling their trolleys.

So why the Protests?

Militant activists around the world consider farmers to be fair game.  Mobs, of vegans and anti GM demonstrators often supported by the left wing press, believe it is their ‘right’ to enter  a farmer’s premises to damage crops, ‘liberate’ stock, daub graffiti and generally cause chaos. They do this without any care or concern regarding the financial loss incurred by and the trauma caused to, those who feed them and the world. Then they go home, take off their makeup and uniforms, have a feed and go to bed replete.

Photo: The New Daily.

There are those who believe farmers do not care for their land but they are not farmers themselves. There are those who believe that all crop protection chemicals are bad and that low input organic farms can produce as much as conventional farms, yet they cannot present the evidence and they also go to bed replete.

Over the last sixty years as the population of the world has doubled and the arable land has halved, farmers and their scientists have fed the world to abundance; so isn’t it time  we all said, ‘Thank you’?

oOo

Photo: The Conversation

Do you remember or have you ever heard of Paul Ehrlich the American biologist of  fifty years ago?

In 1970,  Ehrlich in his book ‘The Population Bomb’ predicted the end of the world as we knew it.

He was not the first in the modern era to make that prediction. Bible thumpers on a soap box in the park  have mostly disappeared, mainly to avoid abuse for being Christian and the world is poorer for this loss of free speech.

Photo: The Australian.

There are new religions these days and they are indoctrinating the young and the gullible. Extinction Rebellion leads the pack convincing many young people that the world will end within a decade due to man-made global warming. They encourage the young into civil disobedience to ‘change the world and save it from Armageddon’ and they show no remorse when those same kids suffer anxiety and depression and need medication.

Then the world leaders at Davros and the United Nations invited the modern day St Joan of Arc, Greta Thunberg to talk to them about the end of the world and they sat at her feet enthralled by her wisdom. ‘How could a 14 year old have such wisdom’, they asked.

Climate change warrior Al Gore’s Nashville estate expends ’21 times more energy than the average US home uses per year’ A conservative think-tank published a report claiming Gore ‘guzzles’ electricity It claims Gore’s Nashville estate used 230,889 kilowatt hours over the last year Ex-vice president also spends about $22,000 on electricity bills a year, it claims The study was released ahead of the premiere of Al Gore’s latest environmental documentary film, An Inconvenient Sequel: Truth to Power, on Friday By Dailymail.com Reporter Published: 02:20 AEST, 4 August 2017 | Updated: 02:26 AEST, 4 August 2017

Before poor Greta the world was held in wonder by that Ringmaster of Barnum and Bailey’s circus, Al Gore, the American politician — the man who received the Nobel Prize by telling lies about the climate and predicting how we are all doomed because of our past excesses. Gore is the man who wrote the script to his fictitious film ‘An Inconvenient Truth’ while flying round the world in his private jet and resting in one of his mansions, with all the lights on.

When he was proven wrong he showed no remorse. He had made his money.

Ehrlich, however, was the first to predict that the world  would end because millions would die of starvation and what’s more he claimed,  there was nothing we could do about it apart from what he called employing ‘population control’.

This is the Prologue from Ehrlich’s book ‘The Population Bomb’.

The battle to feed all of humanity is over. In the 1970s and the 1980s hundreds of millions of people will starve to death in spite of any crash programmes embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate, although many lives could be saved through dramatic programs to “stretch” the carrying capacity of the earth by increasing food production and providing for a more equitable distribution of whatever food is available. But these programs will only provide a stay of execution unless they are accompanied by determined and successful efforts at population control. Population control is the conscious regulation of the numbers of human beings to meet the needs not just of individual families, but of society as a whole.

Nothing could be more misleading to our children than our present affluent society. They will inherit a totally different world, a world in which the standards, politics, and economics of the past decade are dead. As the most influential nation in the world today, and its largest consumer, the United States cannot stand isolated. We are today involved in the events leading to famine and ecocatastrophe; tomorrow we may be destroyed by them.

In the last fifty years world agriculture has shown just how wrong Ehrlich was. The food producers of this world, the farmers, led, aided and abetted by some of the best scientists in the world are currently producing enough food to feed ten billion people or one and a half times more food than we need.

No other industry can match the startling performance of world agriculture and its farmers but that does not mean that the world can be complacent and sit back on its laurels. The world is changing as we shall see and the challenges will be just as great in the next half century as they have been in the last.

In the last fifty years meat production has increased by ~  300% and cereals by ~180%. Over the same period  the increases in the yields of all foods has been massive, from tomatoes to bananas to wheat and corn.

The state of Punjab led India’s Green Revolution and earned the distinction of being the “breadbasket of India. Photo Wiki.

Plant breeders led by the example of Nobel Laureate,  Prof Norman Borlaug in the 1960s, have achieved what Ehrlich thought impossible. Borlaug and his team produced new and higher yielding varieties of wheat and corn and farmers grew them.  It became known as the Green Revolution and it transformed agriculture from America to India to Australia and Europe and all places in between.

Better yielding crops and pastures have fed the world to abundance. Explore the link for some amazing performances.

But we have a problem — They are not making any more Land.

The problem is that it is not going to get any easier to keep on feeding the ever growing world population, even though we are now producing sufficient food to feed the projected peak in world population of around 9 billion in about sixty years. We have a few real problems on the horizon, which could affect food production.

To start with world isn’t getting any bigger. Urban sprawl, desertification and salinisation are eating up arable land and that is going to make feeding the world a little more difficult in the future. This is how difficult.

First of all, what do we mean by Arable Land?

Arable land is the land under temporary agricultural crops (multiple-cropped areas are counted only once), temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow (less than five years). The abandoned land resulting from shifting cultivation is not included in this category. Data for ‘Arable land’ are not meant to indicate the amount of land that is potentially cultivable.”

Arable land in the World now and in the future.

If I were to tell you that by 2050 there will less than 0.18 of a hectare of arable land for every person on earth on which to grow their food, what would you think? Would you believe me? You’d better, because it is true.

Gjerdrum, Norway. Family portrait of the Glad-Ostensen family with one week’s worth of food in June. The Hungry Planet project. Photo: Peter Menzel

A hectare is 10,000 M2. Measure it out, 1800 square metres is about a quarter of a soccer pitch. By 2050 you or the farmers of the world will have less than that area on which to grow ALL the food you need for a year. We don’t know how much is less.

That is all the land that will be available to grow all the cereals and vegetables you need for a year. Some of the grain  will go to feeding livestock like hens and cows for milk and maybe for a beef animal(s) and don’t forget the cereals for the grog and the cotton for your clothes. Do you think you could do it on a quarter of a soccer pitch?

Will the people thrive in 2070?

In 1960 there was 0.361 of a hectare available for every person on earth, in 2018 it had dropped to  0.184 ha, so the available arable area to grow your food has about halved in the last fifty years. Will the area halve again in the next 60 years? We don’t know.

It gets worse. Twenty percent of the current arable area is irrigated, but 30 million hectares of that land is affected by salinisation and a further 80 million hectares affected by water logging.

The population of the world in 1960 was ~3 billion in 2019 it was ~7 billion and predicted to go to ~9 billion plus when it plateaus in about 2064.

So, the population of the world has doubled and the arable area has about halved in about 60 years and most 0f us have been fed to abundance —  that is what our scientists and farmers have achieved.

In spite of that achievement globally, about 8.9% of the world’s population — 690 million people — go to bed on an empty stomach each night. Since 2014, the number of people affected by hunger has been slowly on the rise. If it continues at this rate, it’ll exceed 840 million by 2030.

There is no shortage of food, in fact we grow too much for our population so we throw away  and waste an enormous amount. Ironically, obesity and diabetes are now the scourge of the Developed World, both ailments can be caused by eating too much of the wrong foods.

Child in Aden.

The  cause of of hunger and starvation in this world is mainly war, but alarmingly there is an increase in the number of hungry people in the small nations in the Caribbean and in the dry corridor in South America . Men, women and particularly children go without food while politicians and world leaders fight wars and satisfy their own selfish agendas — they are all culpable, but they will never be called to account while the the citizens of the so-called free-world, look the other way.

When will the  world Population Peak and can all the people be fed what they want?

The most up to date estimate that I can find  on world population predictions is from ‘Lancet’,  and published in Science Daily. Lancet, until they got very commercial and controversial during the Covid19 hiatus, have been a very reliable, science based organisation.

Their estimate in 2020 was that the world population will peak in 2064 at about 9.7 billion and then decline to about 8.8 billion by 2100, a figure which is about 2 billion less than previous estimates.

The question then is not can the world survive because it surely will, but can the world continue to produce the food that the people of the world are increasingly demanding as their standard of living continues to improve, or will there be an increase in hunger and starvation?

There is no doubt that the amount of arable land in the world will decline.  This is a serious question for Australia when we consider that for the last thirty or forty years we have built another Canberra every year to house our increase in population, most of that growth has come from migration. We have to consider carefully whether we can afford to keep on building new towns on our precious arable land.

Photo: ABC

Salinity will always be a problem in Australia and particularly in the biggest grain growing state, Western Australia. In 2000 the Howard government  budgeted together with the states to spend some $14 billion to fight salinity, I can’t remember over how many years.  The programme was to be managed under the auspices of The National Action Plan for Salinity and Water Quality. At that time it was estimated that in Australia we were losing a football pitch every HOUR to salinity.

The consensus is that the programme largely failed.

Australia is not alone in fighting or not fighting salinity. In California in 2017 it was estimated they were losing some 10% of crop yield or US$3.7 billion a year to salinity. They have an added problem that some of their irrigation water is going saline.

There seems to be agreement among the research fraternity that worldwide salinisation and sodicity are increasing, by how much nobody really knows.  El Nino and La Nina seem to have an effect on Australia, and  what is going on in China remains a mystery.

It is hard to predict how much arable land will be gobbled up as the population increases and cities become larger and new cities emerge. It has been estimated that between 2000 and 2030 global croplands will decrease somewhere between 1.8% and 2.4%.  leading to a loss of production of between 3% and 4%.

It is also estimated that the ‘lost’ land will be used for new habitats for humans and what’s more  it will the best land that is lost, land with productive capacity 1.7 times better than the average.

It’s not all bad news, researchers from communist China are claiming that their arable land will increase in the future as urbanisation of the people increases from 56% to 80% of the population between now and 2050.

Terrace farming in Viet Nam

This migration from the country to the city, the Chinese claim, will release another 5.8 million hectares of land for food production, an area equivalent to 4.2% of China’s cropland in 2015. Consequently the Chinese claim that food production, even off these low quality lands will increase in China by 3.1% to 4.2% by 2050 compared to 2015.

Science in the future will not be standing still.

The prospect of new discoveries and innovation in science continuing even accelerating agriculture’s capacity to increase production and keep pace with the ever increasing population, will only happen if the governments of the world increase the funds they make available for research and development (R & D). Tax dollars are the people’s money and the people must demand a say in where the money is spent.

The return on investment can be massive if we produce the food the world will certainly want.

Genetic Modification.

The very mention of genetic modification (GM) raises the temperature, the hackles and the ire of many, mainly because of the fear generated by activists predicting Frankenstein crops and animals which are totally without foundation in fact. Many don’t realise the contribution GM technology already makes, much of it not in food production but in medicine, keeping people alive, including:

  • vaccines
  • antivenoms
  • bacteria derived toxins
  • Immunoglobulins
  • monoclonal antibodies
  • allergens
  • blood products and clotting factors
  • hormones such as insulin, growth hormone,
  • enzymes such as pancreatins
  • heparins.

GM crops have been around for forty years and they have raised production in some cases many fold. During that time there has not been any evidence that has shown a deleterious or harmful effect on either man or animals or the environment during that time, none.

Some products have been abandoned it is true and that is the very purpose and nature of good science.

Scientists within organisations with the same views and ethics of the broader community develop GM technology. Claims that these scientists would be party to launching harmful food on the people of the world is ridiculous, ludicrous, simply because it would mean that by so doing, they would harm their own loved ones.

Winds of Change’.

It is well known that many parts of Africa struggle to grow enough food for their ever growing population. The forecasts are that population growth will accelerate in Africa in the future. Nigeria for instance, is predicted to have a larger population than China by 2100 with 791 million people , it will be the second most populous nation in the world only topped by India with 1.01 billion.

Since the ‘winds of change’ swept through Africa in the fifties and sixties there have been problems with insufficient food in many parts of that continent.

Scientists in Nigeria have just made a major contribution to improving the diets and welfare of all Africans by releasing a genetically modified cow pea which is resistant to the borer Maruca vitrata which has been known to reduce yield by as much as 80%.

This important food  supplies much needed thiamine and iron as well as protein in the diet and this GM technology will help Nigeria fight its constant battle with malnutrition, especially among the young.

There are other saving as well, Nigeria, if all goes well, will no longer have to import, every year, up to 20% of the cow peas it needs.

Omega-3 oil.

Omega-3 oil has been known for a long time to be beneficial in our diet. The only source has been from wild, oily fish, now that has all changed, the  CSIRO and the GRDC together with Nuseed in Australia, have developed an Omega-3 Canola, which is now being grown around the world. One hectare of canola replaces the oil from 10 tonnes of wild fish. The world-wide benefits from GM technology, like this one saving the wild fish stocks from over fishing, seldom make the main stream press.

GM North Atlantic Salmon.

The consumption of fish per head of population, world wide, has more than doubled in the last sixty years. In 1961 the average consumption per head was 9kg and in 2018 it was 20.5kg.

Global fish production was estimated to have reached 179 million tons in 2018. Total fish production is predicted to increase to 204 million tons by 2030 and consumption per head to increase 1kg.

Currently fish farms supply 52% of the fish for human consumption and this is forecast to increase. In fact it has to increase because wild fish stocks are at best being maintained and at worst being depleted by ocean harvesting, mainly by communist China. With their own waters depleted China’s fishing fleets are ranging far and wide in search of catch.

Consequently the  global wild fish catch is increasing, up just 7% in the last decade. The challenge for the fish industry is to provide enough fish for the ever increasing demand and not obliterate the natural wild fish stocks. The global interest and the investment in fish farming, particularly in R & D is increasing.

For example in the 1990s two scientists genetically engineered the Atlantic salmon to grow twice as quickly as the conventional salmon while consuming less food.

That GE salmon has been on sale in Canada for a number of years and the producers have recently overcome the last hurdle to enable the GE North Atlantic salmon to be sold in America.

The time consuming debate on labeling  was with those who catch the rapidly declining stocks of wild North Atlantic Salmon and with some of the regulators. Now resolved GE North Atlantic Salmon are  being sold in Canada the USA and shortly they will be sold in Brazil.

There is no doubt that GE or GM or GMO (genetically modified organism) fish, of which some claim there are already about 20 species developed or under development will make a major contribution to the ever increasing world-wide demand for food and protein.

One of the most important factors breeding GM fish and all animals both GM and non-GM is the feed conversion rate or FCR that can be achieved. The FCR is how many grams of food it takes to produce a gram of weight in the animal or fish.

Pigs, for instance, have a feed conversion rate (FCR) of  about 3 to 1. That means for every 3 grams or kilos of feed consumed by the pig it grows 1 gram or kilo. Cattle have an FCR of 5 – 7 to 1 , so they are not as good as the pig at converting food into meat.

The GM salmon has a FCR of 1.2 to 1 and a new GE trout has an FCR of 1 to 1. That seems impossible to me but that is what they have done. The sustainability of the fish farming industry and so the feeding of the ever growing population is greatly improved by gene technology.

The debate will continue and no doubt rage at times, what we must all remember is that compromise may be needed if future generations can live as well as we do now.

Scientist in America developed a GM potato which provides 42% of a child’s daily needs for vitamin A and 34% of the child’s daily needs for vitamin E all from just one 150-gram serve.  Women of reproductive age get the same benefits. That is a huge step forward for the Developing World.

M98H61 ETHIOPIA, Amhara, Gondar, school for blind children

Twenty years after its invention and after many thousands of people have died from a Vitamin A deficiency, Golden Rice looks like it will finally be produced in the Bangladesh and the Philippines. It will save millions of people, mainly children from premature death, blindness and loss of their immune system.

I will never understand Greenpeace and others and their fight to never allow this life saving rice to be grown. Their nasty rumours and down right lies have now been overcome. Twenty years have been wasted in bringing this potentially life saving plant into production.

CRISPR technology.

I think CRISPR technology will answer more of the impending challenges of feeding more people off less arable land than will GE.

What is CRISPR? : The essence of CRISPR is simple: it’s a way of finding a specific bit of DNA inside a cell. After that, the next step in CRISPR gene editing is usually to alter that piece of DNA. However, CRISPR has also been adapted to do other things too, such as turning genes on or off without altering their sequence.

There were ways to edit the genomes of some plants and animals before the CRISPR method was unveiled in 2012 but it took years and cost hundreds of thousands of dollars. CRISPR has made it cheap and easy.

Gene technology of one kind or another is obviously going to play a major part in answering  the inevitable food production challenges that are heading our way in the next seventy years or so. Less arable land, changes in rainfall patterns whether they be caused by anthropogenic climate change or not doesn’t really matter, the people will have to be fed.

This is where CRISPR or gene editing technology, I think, will come into its own. Making plants resistant not only to insects but pathogens. Another area which is showing great promise for CRISPR is creating plants that use less water and even more exciting plants cereals that can use saline water and need less fertilizer. Plants that can convert sunshine better and so grow quicker, maybe enabling multiple crops in a season. Disease control without chemicals, so important because so many currently vital crop protection chemicals are derived wholly or in part from the petro chemical industry.

One of the great successes in CRISPR application has been with tomatoes. Remember this isn’t achieved by transferring genes from another entity it is just changing  the plants susceptibility to all manner of diseases like botrytis and in some cases, like golden canola, getting the plant to produce better nutrition.

Now they have gone a step further and removed the need for constant pruning to maximise yield and they have done that as well as bringing the harvest date forward to an amazing 5 weeks. It’s a great story and one of many around for this technology.

What can ALL Australian governments do to meet the challenge facing agriculture and the fisheries of the future in Australia?

Fix the Roads.

First and foremost it will be a major challenge for agriculture to get both state and federal governments to recognise that Australia has got a major roll in global food production in the future — but it will not happen unless they embark on long term strategic planning and turn that planning into action.

Holding a conference in Sydney and calling it the Global Food Forum means nothing to the man and woman on the land when their truckload of stock or grain comes to grief on yet another poor, narrow and inadequate road.

Governments around Australia have for too long ignored the fundamental needs of agriculture for a highway system that works and is cost effective. Without better highways and roads agriculture cannot grow.

Good and at one time efficient railway systems  have been allowed decay or have been deliberately and systematically dismembered by all state governments. They have done it with no consultation and with little thought for agriculture for which they were originally built. The result is that agriculture has been driven into using bigger and bigger trucks on roads which are demonstrably old and in poor condition and not fit for purpose.

All states need highways that can get farm produce, food, from the farm to the city quickly and efficiently.

Water – Harvest it – Move it.

Australia is not a dry continent, we have just lost our ability to harvest water and transport it to the places where it is most needed.

If water was moved from or harvested in the north of Queensland to the black soil country in that state and NSW, the production of food in this country would dramatically increase. There is almost nothing, nothing that cannot be grown in that vast region.

The same goes for Western Australia, all that state needs is water. We have had the late Ernie’s (Bridge’s) pipe dream and Colin’s ditch and many other moves to move water from the North to the agricultural areas.

I have watched the Fitzroy River in flood for months, goodness knows how many Sydney Harbours  ran out into the Indian Ocean.

I have grown wheat in a dry year and watched it die before maturity. We have the answers to these challenges, it is about time we used them.

Make food Processing an industry to be proud of again.

We cannot continue to base our agricultural exports on produce to which we don’t add value and at one and the same time import food to which value has been added. We import potato chips from Europe and South Africa – how silly is that? We import pasta and export Duram wheat. I know! The amount of food we are importing is alarming and going up every year. Why is that when there is nothing I can think of that we cannot produce in this country? We did once upon a time, to find food from another country was unusual and usually a luxury item, now it is the norm and ever increasingly so.

If we are to be great food traders again our food processors need cheap power and good roads or rail to get their produce to well organised ports.

Coles, Woolworths and IGA.

The big three need to tell us why they scour the world for the cheapest food they can find, often at the expense of Australian producers. The farmers and the processors in Australia need their support – not just in trendy TV ads but in everything.

If ALDI becomes a force all over Australia we need to recognise that most of their food, apart from fresh food, is imported from the EU and mainly Germany – the trade must be reciprocal – Germany must take Australian produce – fairs fair.

Zero Carbon by When – 2050? -2035?

Nobody knows by when and nobody knows what it will cost. That is the world we live in.

According to the Royal Society it seem unlikely that increased levels of CO² to 550ppm will have any effect on crop yields of many of the crops important for harvestable food, known as the C4 group. So there is unlikely to be any benefit to food producers from climate change as it seems the world will rush headlong into carbon zero by 2050.

What farmers will almost certainly be challenged by is this rush to electrify everything. I have no idea and I don’t think anyone else has the foggiest idea what this will mean for agriculture – what will the change cost? Can today’s big trucks and huge tractors be electrified and presuming they can – what will it cost to change over?

Rural debt in Australia is increasing at about $1 billion a year and the real price of many crops like wheat have been in decline since the abolition of the Corn Laws in England in 1846. So your guess is as good as mine on prices producers will receive to pay for change.

Cheerio.

 

 

 

 

 

 

 

We Must Not Give Our Birthright Away.

Henry David Thoreau, circa 1850. ‘I trust that I shall never thus sell my birthright for a mess of pottage.’

For the sake of future generations, Australia must not give away its birthright for  a mess of pottage.

I wrote the following after a long  on-line discussion.  It was the culmination of a larger debate about the real cost of renewable energy. I have tidied up a few phrases for clarity.

Thank you for your considered replies. I am in my eighties. My profession is agriculture from farming to science to agribusiness.

I have watched this country change substantially over the last 50 years or so. That we have largely lost our ability to be self-sufficient in some of the vital parts of our economy concerns me greatly.

Manufacturing jobs have been exported, it started way back when, when it was to Japan because their labour was cheaper than ours. Then there were others others like Taiwan, Singapore, Korea and Russia for wool. Now we have China.

Fifty years ago , even twenty years ago we were self sufficient in oil, now our position is strategically fragile because the majority of our oil has to make two trips through the South China Sea and there is tension on that sea as China builds artificial islands.

There was a time we were self sufficient in food, now we rely heavily on imports, our food processing and manufacturing industry has fled due, in the main, to high power costs, much of it has gone to NZ, where they now process Chinese produce and then send it here — we eat frozen Chinese fruit and vegetables.

Continue reading “We Must Not Give Our Birthright Away.”

It doesn’t make sense.

In July of this year a $22 billion proposal by Sun Cable Pty Ltd, a company which is backed by by two Australia  billionaires Fortesque Metals founder Andrew Forrest and and Atlassian co-founder (with Scot Farquhar) Mike Cannon-Brookes was  granted ‘major project status’ by the Australian Government to investigate the building in the Northern Territory of a massive 10-gigawatt solar farm (40 million panels) coupled to a 30Gwh storage facility, which I presume means a big battery.

Continue reading “It doesn’t make sense.”

The China Paradox and Wolf Warrior Diplomacy.

China buys 30% of  Australia’s exports.

The news that China accounts for thirty percent of Australia agricultural exports demonstrates how reliant the Australian rural economy has become on the People’s Republic of China.

That news caused some to question the wisdom of the marketers of Australian food and wine in placing such a heavy reliance on just one customer.

That is valid question, but  did you know that  China buys 30% of everything Australia exports.

Agricultural exports are just a mirror image of what is going on in the rest of the country. In 2017-18 Australia exported goods and services worth a staggering $123 billion to China equal to 6.7% of the Australia Gross Domestic Product.

Continue reading “The China Paradox and Wolf Warrior Diplomacy.”

The Myth of a Level Playing Field.

Albanese calls for a more 'resilient' society | Canberra CityNewsMr Albanese, the Leader of the Australian Labor Party, has a poor grasp of Australian political history.

Mr Albanese recently roundly criticised Treasurer  Josh Frydenberg for channeling Margaret Thatcher  and the policies employed by her to ensure the much needed economic recovery in the UK following Prime Minister James Callaghan and his self inflicted demise in his ‘winter of discontent’ of 1978/79.

Callaghan finally decided to call a General Election in 1979 after the country had been ravaged for years by high inflation and unemployment.  In 1978/79 strikes in both the private and public sectors almost crippled the country.

Uncollected rubbish was left to rot in the streets of London, the dead were not being buried, there was a mounting national shortage of food and fuel due to the truck driver’s refusing to work, which all combined to cause a crisis so bad the government considered declaring a state of emergency and mobilising the troops to take over vital services.

Eventually, after strikes which were violent at times, the unions got the wage increases they wanted but it was a pyrrhic victory for them. The country, the people had had enough of the militant unions shambolically and carelessly wrecking the economy, so when they got the chance they elected Margaret Thatcher to be the first woman to be Prime Minister of the United Kingdom.

In eleven years Margaret Thatcher rebuilt the UK economy and made it world competitive and respected if not liked around the world.

Albanese  rejected what he saw as Frydenberg’s move to Thatcherism in favour his more Keynesian way of more and more government spending to build infrastructure and particularly social housing, for which, admittedly, there is a great need all over Australia.

Does Mr Albanese not know or does it suit his argument not to recognise that Bob Hawke and Paul Keating were the first Australian leaders to employ economic rationalism —  they were the first true disciples of Margaret Thatcher?

They were Thatcherites through and through, they introduced Free Trade Agreements, globalisation and the ‘market economy’ to Australia.

It was under their government  that we started to see the demise of the Australian manufacturing and food processing industry — all in the name of being ‘world competitive’.

It was also the start of a deliberate campaign to reduce the political power of agriculture in Australia.

Continue reading “The Myth of a Level Playing Field.”

Is the Future of Wheat Growing in Australia a Catch 22?

The Story so Far.

The question that should be asked is whether large swathes of wheat growing land in Australia and particularly in Western Australia will be viable in the future? Because if the answer is no, then now is the time to start looking at the ways  and the means for restructuring Australia’s wheat belt.

There are two conflicting forces at work. Two opinions based on two areas of science:

1. Soil amelioration is becoming popular in Western Australia in an effort to improve crop yields. It is expensive, in some cases very expensive. There are yield gains to be had, how long the gains last is open for debate because they vary site by site. There are also problems particularly with soil stability and structure.

2. Climate scientists are predicting falls in crop yields in Western Australia over the next twenty years to levels which I predict will make it uneconomic to grow wheat given the year on year rise in costs and the decline in the real price of wheat over the last fifty years.

Continue reading “Is the Future of Wheat Growing in Australia a Catch 22?”

Building for the Future

Success is not final, failure is not fatal: it is the courage to continue that counts.

Winston Churchill.

There now seems to be a general consensus within the community and especially within the agricultural community, that Australia’s reliance on China has lulled us all into a false sense of security. We have been complacent. We have been happy to accept the contribution China has made to our standard of living by making available to us a range of ‘goods’ at prices that have been more than acceptable.

We have been more than happy to receive their tourists in their tens of  thousands and a similar number of students without whom some of our universities, especially the regional ones, cannot manage. There could well be cold economic winds this winter on some campuses.

China has infiltrated our lives to the extent that there is an argument that we cannot now manage without them.

But manage without them we must; we must change. China’s aggression towards Australia is a sober reminder that they are a communist totalitarian regime intent upon the control and subjugation of others including Australia.

Continue reading “Building for the Future”

Beer – Beef and China.

“An economic rule states that one should never underestimate the inability of free marketers to use common sense,”

K J Galbraith 2006. Lincoln Journal.

One of the interesting aspects of the current debate on the behaviour of China towards Australia, after Australia asked for an enquiry  into the source of Covid19, is that many of those who are well known as journalists and commentators, and even some hopelessly naive Australian politicians, and we have our share of them, have shown most clearly that they know little to nothing about the art of negotiation or as many of us know it by another name ‘bloodless warfare.’

It is well known that when it comes to selling their wares farmers around the world are weak, some weaker than others. It is also well known and oft quoted the statement by President J F. Kennedy “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.” These days we would say ‘person’ but the statement remains correct. The question is what have farmers done, particularly in Australia, to redress what is an iniquitous situation?

Continue reading “Beer – Beef and China.”

Is China our Friend or ?

Photo: Wikipedia.

In 2018 Australia imported goods from China to the value of US$57.7 billion or A$77 billion with an  average exchange rate of .75 That is nearly $6.5 billion a month, every month.

It came as a shock to almost everyone to learn recently that we import over 90% of the medicines we use and most of them come from China and America. If China doesn’t make the final product they do make many of the ingredients. This alarming fact may never have come to light without the outbreak of the COVID19 corona virus. If China stopped supplying us and or America with medicines, what would we do?

We no longer live in a world of ‘It can’t happen here’ Because we know it can. We rely on China for so much; over US$13 billion in electrical goods — that must be most of our TVs and phones surely? Is this a danger to our independence and sovereignty?

Continue reading “Is China our Friend or ?”

The National Farmers’ Federation and their Dreamtime.

The National Farmers’ Federation of Australia, the National Party and the Liberal Party, together with the Australian Labor Party, all believe that Australian agriculture can raise its production to $100 billion  at the farm gate by 2030.

That is an increase of 66.6% on the production of 2018 or an annual increase of about 4%, and presumably, though they haven’t said as much, they all expect the producers to make a profit every year— which is more than they do now — but they don’t tell you that.

There are some truly grim truths about the financial ill-health of Australian agriculture and they are all produced by government statisticians and the Reserve Bank of Australia.

Why these grim truths were ignored by the NFF when they set their $100 billion target, and why that target was endorsed by those who determine the the agricultural policy of this country, is for them to answer.

It would appear that there isn’t a minister for agriculture in Australia today, at both the federal and state level, who had any qualifications or hands on experience in agriculture or (agricultural) economics prior to being appointed to their agricultural portfolio. Even worse they all seem to have many other portfolios and being only human, the time they can spend on agriculture has got to be limited.

This must mean that our ministers of agriculture rely on advice from the federal and state government agricultural bureaucracies, the state and national farmer organisations and those stalwarts of Australian agriculture, the MLA and the GRDC, who are kept fat by the millions of dollars of compulsory deductions levied on producers.

Ben Rees; B. Econ.; M.Litt. (econ.)

Ben is a seriously underutilized elder statesman in Australian agriculture, probably because he deals in facts, not emotional subjective dreaming in which many in the so-called high echelons of agriculture in this country indulge.

Ben recently presented a paper to the Royal Society in Queensland. For the complete article Rural Debt and Viability click on the link above and then at the bottom of the page when it comes up click on: Ben Rees on rural debt and viability. I will try and post the complete article on this website as soon as I can.

You may not agree with Ben’s opinion — but it will make you think and make you wonder what the so-called leaders of agriculture do in their working time — time, which we all pay for.

Just a glance at Graph 11, lifted from one of Ben’s papers, demonstrates that the problems facing Australian agriculture today have not been caused by drought and will not be fixed by building new dams — the rot started years ago — it’s called debt.

Compiled From: ABARES commodity statistics Australian farm returns, costs and prices, 2006& 2018. Rural Debt from RBA, Table D9 Rural Debt, RBA Statistical Tables, online. (Ben Rees)

 

This is what Ben writes about Rural debt, gross value of farm production and net value of farm production: Graph 11 illustrates the impotence of the RBA to deliver required real sector policy. By 1983, GVFP was rising at the expense of NVFP. Beyond 1983, any relationship between debt and GVFP NVFP evaporates. Upward inflections in the debt curve are identifiable in 1988 and 1993 following tariff reform. Any relationship between GVFP and debt cease to exist beyond 1993; and; finally in 2003-04 the debt curve rises steeply cutting through the GVFP curve. Finally the GFC effect slows down the rural appetite for debt. From 2017, the debt curve gradient begins rising more steeply than the GVFP curve indicating that rural production is again being funded by rising indebtedness. Some good old fashioned fiscal policy was badly missing. (Ben Rees)

Nobody involved in agriculture providing they can understand basic economics like 2 + 2 = 4 – 4 = 0 can fail to see the the agricultural tragedy contained in Graph 11.

Australian agriculture has been on a productivity binge for the last fifty years. Since 1990, the gross value of farm production has grown from about $20 billion to where it is today at about $60 billion, a growth of some $40 billion or 200% in thirty years. Whereas the net value of farm production has grown from about $5 billion to about $20 billion an increase of some 300% during the same period, which looks great until we examine the debt, (red line) which has grown from $10 billion to just under $70 billion during the same period, an increase of an astounding 600%.

This increase in farm production has occurred as the number of farms has decreased. In 1970 we can see from Graph 11 that rural debt was just a few billion dollars and there were about 180,000 farms, the numbers are too small to calculate. By 2016 farm numbers have reduced to 100,000 (the NFF claims there are just 85,000 farms) and the debt has risen to ~$77 billion and by 2019 that debt has risen to $80 billion.

If we divide 100,000 by $80 billion it gives us an average farm debt of $800,000, and that is for all farms producing over $25,000. It doesn’t end there. In a publication produced by the federal Department of Agriculture and Water Resources for the  Royal Commission into Misconduct in the Banking and Financial Services Industry in 2018, it is claimed that 70% of the aggregate broad acre debt was held by just 12% of farms.

On average these were large farm who produced some 50% of the total value of broad acre farm production in 2016-17. It should be noted that debt figure does not include the total credit facility limit which was estimated in the same paper at a whopping $86 billion. For many with large cropping enterprises an annual overdraft facility can, in the short term, double their debt exposure. No wonder so many feel as though they are standing on the edge of an abyss when the weather does not perform as planned.

The increasing debt levels have followed the increase in land values as shown in Figure 1. The ability to borrow against an asset, as we all know, has nothing to do with the ability to repay a debt. If the Royal Commission into Misconduct in the Banking and Financial Industry revealed anything it was that the banks were more than willing to lend against rising equity levels without determining whether the debt could ‘reasonably’ repaid by the borrower. It also showed that they showed no mercy to those who, for whatever reason, defaulted. Rural debt continues to rise at over a billion dollars a year.

However, the alarming result of the spiraling debt, highlighted by Ben Rees, is that $1 of debt is now needed to produce 64 cents of production as shown in Chart 1. Whereas in 2003/4 one dollar of debt produced $1 of production and in 1989 one dollar of debt produced $2.14 of production. What kind of crazy economics is that?

The billion dollar question must be, ‘How many dollars of debt will be needed to generate one dollar of  production on the road to achieving $100 billion at the farm gate?’ Maybe the NFF have the answer?

Have another look at Graph 11 at the widening gap between net value of production and gross value of production. That graph begs the question whether there will be an acceptable margin between costs and returns to repay what now seems to be an inevitable mushrooming of debt.

Figure 1Thatcherism

Not many in the Australian Labor Party today will recognise that those two great reformers, Hawke and Keating, were devout disciples of Margaret Thatcher, and as a result of their adoption of ‘Thatcherism’  and its mantra of ‘the market economy’ Australian agriculture suffered as market support was gradually reduced to where it is today — virtually non existent.

What Hawke and Keating and all successive Australian Governments have failed to recognise is that the adoption of the market economy philosophy around much of the free world in the eighties and nineties did not affect the  huge ‘market support’ or subsidies paid to agriculture.

Without US$580 billion in annual subsidies farmers in the EU  , the United States of America and almost every country around the world could not survive.

Australian producers receive world prices for their exports and have some of the highest costs  and the lowest yields in the world, particularly in wheat production — their competitors also receive world prices for what they produce, but they also receive  government subsidies.

Where price is king  in the food markets of the world it isn’t rocket science to conclude that Australian producers face severe competition in both our domestic and overseas markets.

Have a look around the supermarket shelves in Australia and see what is imported, and what, once-upon-a-time, was grown and processed in Australia.

Australian supermarkets scour the world for the cheapest food they can buy and every time they bring more food into Australia, they put another nail in the coffin of Australian agriculture.

One of the reason that rural debt is increasing is because of land purchase. Farmers have been buying more land in an effort to benefit from an economy of scale. Fewer workers because the sheep have gone has meant bigger machinery, bigger machinery means bigger borrowing. Again, it ain’t rocket science. The quwstion is, has it worked?

 The Cost of Debt Funded Production.

Let us now look through Ben Rees’ prism at farm debt over time and what producers have been able to produce with that debt, Ben writes:

Chart 1 below empirically analyses debt to output as a policy efficiency performance indicator. The orange curve is Debt/ Gross Value Farm Production (GVFP) whilst the blue curve is calculated by dividing GVFP/ Debt.  

Compiled from; ABARES commodity Statistics 2017; and, RBA Rural Debt Table D9 online 2018. Ben Rees.

 

2.1 Performance Indicator Outcomes

  • Steeply positive gradient long term orange trend curve ( Debt/GVFP)
  • Orange curve suggest that production has been debt dependent
  • Steeply negative gradient blue long term trend curve ( GVFP/Debt)
  • From 1984, declining efficiency as debt relentlessly consumes production
  • In 1989, $1 debt produced $ 2.14 in output.
  • By 2003-04, $1 of debt produced $1 of output
  • In 2010, $1 of debt produced 64 cents in production
  • From 1993 to 2013, sectoral performance lies below the negative sloping blue trend curve.

By any reasonable assessment, Rural Adjustment has not delivered theoretically expected outcomes from economies of scale, increased efficiency and rising productivity. Post 2003-04, both curves identify debt funded output as inefficient and unstable. Any other sector would have demanded a change in policy direction; but, agricultural leaders appear to have strongly believed the rhetoric of market theology that reduced farmer numbers structuring economies of scale would ensure long term sectoral viability. That simplistic arithmetic approach by industry leaders, major political parties; and, commentators has been a gross violation of established economic knowledge.

Ben is right. We must conclude that there is no plan for agriculture in Australia apart from that being offered by the NFF and endorsed by all political parties.  What does that say for their understanding of established economic knowledge?

Is debt going to strangle Australian agriculture?

In October 2018 the National Farmers’ Federation (NFF)  presented Australian agriculture with an enormous challenge —a vision for the future:

17th October 2018

The National Farmers’ Federation (NFF) has laid  down a bold vision for the industry: to exceed $100 billion in farm gate output by 2030.

Based on our current trajectory, we know industry is forecast to reach $84 billion by 2030. This suggests that we still have significant work to do over the next 12 years if we are to achieve our vision.

To support their plan, the NFF have developed a road map which tells us how Australian primary producers from wheat, sheep and beef producers to bee-keepers and everyone in between what the ‘road’ is to the national farm gate producing $100 billion by 2030.

The NFF road map is complicated. I wonder how many farmers, agricultural producers and their advisers and critically, their bankers, those who lend them money, have read it — and more importantly, been able to understand both the map and their position on it?

There is no doubt that agriculture in Australia requires re-structuring. Whether the NFF Road Map is the way forward I leave for you to decide.

Is $100 billion by 2030 now the clarion cry of Australian agriculture?

To produce $100 billion of farm gate output by 2030 will require a 66.6% increase measured in dollars of production across the face of Australian agriculture in a little over ten years.  Seriously?  Given our recent history of growth is that figure realistic? 66.6% growth would require an annual 4% nominal growth rate in  the Gross Value of Farm Production (GVFP).

There are three ways of achieving the NFF vision:

  • Assume that the gross value of farm production (GVFP) will increase by 66.6% and assume that yields will not and producers will make a profit or:
  • Assume that yields by  will increase by 66.6% and prices will do what they seem to have by-and-large done over the last ten years and remain constant or decline and producers will make a profit.
  • A mixture of both of the above and assume that rural debt will continue to increase and producers will still make a profit.

A 66.6% increase in the dollars generated at farm gate in what is now just  10 years is a massive ask. Maybe the NFF are banking on new rural industries to help reach the target and well they may, but realistically, surely, the heavy lifting will have to be done, as usual, by the producers of wheat and beef and to a lesser extent canola, wool and sheep meat.

If there is one common thread that runs through all of the research I have put into this article so far, it is that Australian agriculture faces global challenges from ernest competitors who can produce and ship product into markets where we are active at a price which Australian producers would find and more importantly are already finding, difficult to match.

Australia has a large range of different beef products to offer overseas consumers but needed to differentiate itself from competitors through better communications and messaging, the MLA said. Photo MLA.

Our reputation for quality is appreciated by those who can afford it, but as markets expand, like the exponential growth of the middle class in Indonesia and China, so too does the market for products of a lesser quality than that which is available from Australia. Prime examples are buffalo meat into Indonesia at the expense of Australian beef and Australia’s massive loss of market share to Argentina and the Baltic States in the wheat market of the same country. The last one is hard to explain when we can almost see Indonesia from two of our major export ports in Western Australia.

What do the Banks think?

The Commonwealth Bank are  not as optimistic regarding growth as the NFF, their view, as a major lender, is that production will fall across all agriculture mainly due to a drop in rainfall. A 50% drop in grain production and a 40% drop in livestock by 2060 is predicted. If  Australian agriculture is to reach the NFF target of $100 billion by 2030 it will need the support of the CBA.

In contrast to the Commonwealth Bank there is a publication called Australian National Outlook – 2019. The joint Chairmen of Outlook 2019 are Dr Ken Henry AM when he was Chairman of the NAB and David Thodey AO, Chairman CSIRO. The publication is a joint effort by over 50 contributors from some 24 organisations who forecast a better picture than the Commonwealth Bank, but with many challenges for agriculture and for the nation, it is worth a read.

Beware, it is complicated, ambitious and apart from some wild assumptions on climate change, (my personal bias) a very well thought out document, and in many ways it is a pity it is not a fundamental part of the national conversation on the future of agriculture.

It makes one wonder whether those in the NFF who claim to lead this fine industry really understand, seek or accept the considered opinion of others who are already major participants in the industry of agriculture in this country. What is of note is that the Australian National Outlook forecasts a far more modest growth to $80 billion in agricultural production but by 2060, rather than the NFF target of $100 billion by 2030.

The NFF say they consulted widely before settling on the $100 billion target: The NFF led a 6-month consultation effort to inform the Roadmap. It began with a Discussion Paper which distilled insights from leading experts, before commencing a nationwide roadshow, where we spoke to over 380 farmers and other industry experts to field their views. As we consolidated this feedback, we engaged regularly with industry stakeholders and experts to ensure the ideas we’re putting forward are credible and impactful.

The NFF say they have consulted with 380 farmers.  They claim there are 85,681 farmers in Australia. So they consulted 0.4435055% of farmers in Australia in the preparation of their Road Map! Hardly statistically significant.

It is also reasonable to ask whether the NFF consulted with the CSIRO, the NAB and any the fifty other industry brains who contributed to the Australian National Outlook 2019 who have a different view of the future to that of the NFF.

The has been a massive loss of knowledge and skills in agriculture.

What really shook me from Ben’s analysis of the agricultural economy, is the loss over the last thirty years of experience and skill in agriculture — this must surely present this industry with a huge challenge? Again, this is from Ben’s paper:

4.1 Performance Indicator Employment

ABARES commodity statistics for 2018[i] , shows agricultural employment peaking historically in 1990-91 at 387, 000; but, falling to 279 000 in 2017-18 (29%). Meanwhile for Australia, over the same period, employment rose from 7.8 million to 12.5million (60.3%). It stretches the mind to think the decline in agricultural employment alongside such strong national employment growth is explainable by consolidation of farm size and applied technology. Agricultural policy needs to accept responsibility for this employment outcome.

The reality is that structural industry reform began with the 1988 tariff reductions which were ratcheted up again in 1991. Orderly marketing of both major industries wool and wheat were discontinued over 1989-90. It cannot be explained as mere coincidence that agricultural employment began to decline from its peak in 1990-91 as a result of technological adoption by the farm sector at the same time structural reform of agriculture began in earnest.

Chart 3 identifies empirically that agricultural employment contracted strongly across broad-acre agriculture; and, the self – employed small scale farmer. Broad-acre employment decline appears from 2002 coinciding with the worsening of the Millennium Drought. The real loss of employment though lies in the self -employed and owner manager classification from 1992 onwards. The impact of the self- employed owner manager is particularly important as that group comprised largely the part time skilled labour force residing in rural Australia. Policy driven policy of Rural Adjustment   “shipping out” small inefficient farmers would seem a more logical contributor than technology.

[i] ABARES commodity statistics, 2018, Table 1.2 , Australian employment by sector.

  • Long term decline in broad acre employment 52% between 1992 -2018
  • Self-employed fall 71.4% between 1992 to 2018 (192 000 to 55 000)
  • Millennium Drought emerging1997-2009
  • GFC 2009- 2013
  • 2013+ Current Drought

The decline in agricultural employment whilst employment in the wider economy continued to rise strongly is a damming policy indicator. If agriculture was likened to a private firm, a clean out of the board, senior management, and advisors would be expected.

How true!

In the next issue of Global Farmer we will examine whether our main agricultural industries of beef, sheep and grain, are capable of playing their part on the road to achieving  $100 billion by 2030. The question must be asked can they do it and more importantly, who has already claimed they can, because somebody has? Haven’t they?