31 July 2012
The theme for this year’s Grains Conference is ‘The Commodities and Investment Jigsaw: Piecing it all Together’, permit me to reflect on this for a moment.
The global financial crisis provided a number of challenges to those seeking investment in recent years, but with the current positive outlook for Australian agriculture, now is a good time for investment.
In supporting business through the global financial crisis, Labor took decisive action to insulate Australia from the worst of the downturn.
Now, as the Australian economy returns to trend growth, the Gillard Government is returning the budget to surplus.
This has put downward pressure on interest rates providing confidence for international investors as well as domestic credit providers.
Confidence in the Australian market remains stable and our growth is amongst the strongest in the OECD. These are positive times for Australia and our economy.
The Gillard Government is committed to ensuring our economy remains strong. This is responsible fiscal management on a macro scale.
While this management keeps Australia strong in a global sense, on the micro-level, as business people, you all undertake challenging work, at times facing hurdles such as fluctuating international markets and climate variability.
This combined with many years of drought and the subsequent floods caused extraordinarily difficult times for agricultural industries across Australia.
Through innovation and plain hard work, our grains industry saw its way through those difficult times and continues to have a bright future ahead.
Looking at a few indicators, winter crop production is forecast to be 38.5 million tonnes in 2012-13, which is higher than the ten year average to 2011-12 of 33.7 million tonnes.
The strength of Australia’s grains production is in stark contrast to current conditions in the US.
Key growing regions in the mid-west of the United States are causing many farmers to do it tough. Let me extend my sympathies to them.
These conditions are expected to significantly affect US grain production, resulting in increased world grain prices.
The world wheat indicator price reached a year to date high of US $381 on July 7.
These forecast higher prices represent opportunities for Australian growers and place the industry well to discuss the future and how we can strengthen the sector.
The grains industry is as strong as it’s ever been, but in order to build on this success, we need to set the jigsaw pieces in place to encourage resilience, continue to increase our competitiveness, our productivity, and our market access.
Let me turn to one of these now, productivity.
The Gillard Government is working to improve productivity for producers in a number of ways, including through the opportunities presented by the Carbon Farming Initiative, as well as by cutting red tape through reforms to our export certification, biosecurity and agricultural and veterinary chemical schemes.
We will continue to support the industry in these efforts.
During the past month I have released two important documents on behalf of the Gillard Government – our Rural Research and Development Policy Statement, and our National Food Plan green paper.
This Government is committed to rural research and development, because as a government, we think that through world class innovation we can continue to increase the productivity of our agricultural industries.
The changes outlined in the statement will deliver improvements to the agricultural industry, an industry that has grown its productivity at twice the rate of other domestic industries.
On average, the Federal Government provides around $700m in tax payer funds to rural R&D each year.
We will continue matching levies for research and development.
The policy statement will take the next step and extend our matching to privately funded R&D where the results of such research are publicly available.
This can encourage private companies and individuals to invest in R&D, benefitting the whole industry.
Tomorrow you will have the opportunity to look at the role of R&D within your industry during a session hosted by the Grains Industry National RD&E strategy.
That session will look at “Improving the delivery and adoption of grains industry R&D” - this sits well with the government’s policy statement which looks at how to increase adoption of R&D.
The Government has already started working on implementing the improvements to the Research and Development Corporation system outlined in the rural R&D statement.
This work complements the National Food Plan Green Paper released earlier this month, where investment in R&D is viewed as one way of increasing production over the medium term.
The National Food Plan Green Paper takes a broader look at the question of how we maintain a competitive and productive food supply chain in Australia.
This paper is the first time the federal government has looked at the whole food supply chain in one place, from paddock through to plate.
It looks at our strengths, our challenges, and our opportunities for growth.
Australia is food secure. We are a net exporter of food, producing around twice as much as we consume, and our farmers are some of the most productive and innovative in the world.
With domestic demand for food increasing, it is important we take the right steps now to make sure we maintain this strong position into the future.
The Food Plan green paper can help, it presents a range of policy options about our food system for consultation.
These cover a wide range of areas, including market access and infrastructure - which I will take a moment to touch on here today - as well as land use, skills and ongoing food policy development.
Already consultation on these options is underway with industry and communities across Australia, and the feedback we receive will help shape the nation’s first ever National Food Plan.
The paper provides a great opportunity for the Australian production sector to discuss a range of real issues that impact on our ability to feed Australian families, and to provide significant commercial gains by being more competitive in the global market.
The Green Paper puts forward a number of options where Government can play a role in assisting industry gain access to new markets, such as expanding the number and locations of Australian Agricultural Counsellors in our diplomatic missions around the world.
Removing barriers to markets is another positive way in which we can provide greater returns for exporters and producers.
The Gillard Government has pursued beneficial free trade agreements for agriculture around the world to encourage trade and lower and remove tariffs on agriculture.
One such example is our agreement with ASEAN and New Zealand.
The agreement includes one of the most dynamic regions of growth in the world following the global financial crisis and represents over $100 billion in trade with Australia.
By pursuing these agreements, Australian producers and exporters can continue to gain access to markets and make already established markets more profitable which in the end, will allow further investment in our own production.
As I mentioned, infrastructure is key area of focus in the National Food Plan green paper.
The paper acknowledges the need to identify what infrastructure our food industry needs now, and what infrastructure the supply chain will rely on in years to come.
The adequacy and efficiency of Australia’s rail infrastructure, I’m aware, is one of particular interest to the grains industry.
The Federal Minister for Transport, Minister Albanese is aware of that and this government has already been investing to assist you in getting your product to market.
This government is rebuilding more than a third of the interstate rail network - some 3800 kilometres - and also laying 235 kilometres of new track.
The unprecedented capital works program is allowing the network to carry more freight than ever before.
This will increase capacity across the interstate network, providing more opportunities for rural and regional sectors to gain access to affordable transport.
Beyond that, the Federal and WA governments are providing $300 million to assist in rebuilding and modernising of Western Australia’s grain rail network.
The work is being done in partnership with industry and, once completed, will mean lower transport costs for farmers and fewer trucks on the road.
On the east coast, grain growers will be among those to benefit from the government’s commitment to the 1700 kilometre inland rail link to connect Brisbane and Melbourne via the central west of NSW.
This rail link will provide another opportunity for you to get cargo to port while taking pressure off our roads and the existing coastal line through Sydney.
The recent work the Gillard Government has undertaken on rural R&D, the Food Plan green paper, opening up new international markets, and investments in infrastructure, are all ways that the Government will support this strong industry to continue to grow and prosper.
However, I’d also like to finish today by touching briefly on two issues that the grains industry has been considering in recent times.
The grains industry is made up of growers from right across this country, from the west coast to the east.
Having effective industry representation should be of critical importance to every one of you so you have a united voice to government that can represent you.
I encourage all members of the industry to participate in this debate and share their views.
On that note, I’d like to commend the progress being made by industry on addressing industry-good functions.
Recently the industry has turned its mind once again to the who, what, and how of industry good functions.
Some of these issues such as marketing, grain quality and market stock intelligence have been discussed over a number of years.
A number of solutions have been raised, and while there is not quite industry consensus yet, good progress is being made.
Industry wide reform can only be achieved from within and I look forward to seeing further options and discussion about how these functions can be provided by industry.
In conclusion, over the next two days you will discuss a number of opportunities that face the grains industry, and will continue to work collaboratively to put the pieces of the jigsaw together for your businesses and industry sectors.
While the future of Australian agriculture across the country is strong, the Gillard Government is committed to continuing to put in place the correct policy settings to promote growth and innovation.
We will examine Australia’s food supply chain productivity through the Food Plan and encourage Australian producers to look at how to cope with climate variability in their businesses, including preparedness for drought.
There are options to help industry find new markets and send their world-class products across the globe.
While the Government plays the supporting role, the main player is you, the industry.
Piece by piece, the grains industry will continue to build on its strengths and this conference is an important part of that journey.
I wish you all well in you two days here, and I look forward to hearing of the developments out of this significant exchange of ideas.