From the start, Australian agriculture has specialised in selling raw commodities, and has done so to great effect. Despite home to some of the oldest soils on the planet and an often-challenging climate, we have built one of the world’s resilient agricultural sectors.
But it’s clear we need to remain competitive as other countries modernise their agriculture, often helped by lower labour costs.
As margins tighten (current notable supply-driven exceptions aside), we need to be extracting every drop of value from our food and fibre before shipping it offshore.
Industry has been talking about the need for value-adding for decades. Many launched their own value-adding projects, with mixed results. There have been great successes, and great failures too.
Value-adding will truly come into its own when it is embedded into our farm culture — when farmers are not only thinking about getting their raw product to China, but also into the Australian value-add supply chain, because that’s where the advantage lies.
There are promising signs that this shift from a commodity export culture to a farm product culture are underway.
The National Farmers Federation 2030 Roadmap, which charts how Australian ag might become a $100 billion business over the next decade (yes, 2030 is only 10-and-a-bit years away), paints a vision in which “Value added food products have fuelled a resurgence in Australian manufacturing, thanks to incentives which seeded dedicated precincts across the country”.
Last week (March 27), the Federal Government swung $35 million behind the “dedicated precincts” idea when it endorsed the Future Food Systems Cooperative Research Centre (FFS CRC).
An initiative of the NSW Farmers’ Association, the FFS CRC will be investigating high-intensity, high-value ag production built around dedicated “food hubs” in regional and peri-urban Australia.
(The NFF Roadmap and the FFS CRC both reflect the sentiments of current NFF chief Fiona Simson, a commodity farmer with considerable foresight).
If we can build successful models for “food hub” regions, and replicate them, value-adding becomes less an act of individual entrepreneurship and courage.
By creating centres that cluster logistics, labour and knowledge, the risks and costs of setting up a new business are reduced, but the profits remain to be taken.
For inspiration, consider the Netherlands: two-thirds the size of Tasmania, and the world’s second-largest agricultural exporter (in terms of value). Dutch ag exports hit 92 million Euros in 2018.
Proximity to markets help, but other European nations are not doing what the Dutch are doing: tightly linking R&D, production and value-adding into a single formidable agricultural powerhouse.
Australia will always be a commodity exporter, but bringing prosperity to the regions will require much, much more. I think we’re finally having the conversations and making the investments that make that “more” possible.
By Robbie Sefton
This article was published in The Land newspaper on Saturday 6 April 2019. Link to the article can be found here:
Robbie Sefton has a dual investment in rural Australia as a farmer, producing wool, meat and grains, and as managing director of national marketing communications company Seftons.