Luke Bowen (pt 2) The Northern Australia beef sector: a producer's perspective

Uploaded by ABARESoutlook2012 on 29.04.2012


So switching to I guess, why does the industry do it?

I'm just going to show some statistics on rates of return.

Now these are rates of return based on different
regions in the Northern Territory.
Basically a lot of these--the lines across
the bottom, which are top end in Katherine Region
show some of the lower rates of return.
We can see that we are in negative territory.
Now if we look at that as an average across the
whole of the Territory the rate of return still
remains very low and I think people making
investment decisions might look at that think,
well why are we doing it?
This is ABARES data on farm cash income on
Northern Territory properties.
Once again we see a fairly consistent line through there.

The further north you go the higher the cost of
production per sort of animal unit,
higher levels of supplementation,
animal husbandry and management,
mean that the cost of production seems to
increase the further north you go and that is in the
live export zone.
And we also know that the price of beef and the
price of our commodities isn't going through the
roof like we would like.
We need to keep track of those increases in cost.
So the industry is continuing in that squeeze
in that pincer where efficiency has to increase
incrementally every year to keep ahead of the game.

So it's a pretty rough ride and I think there's
people in this room here who could talk with a lot more
authority than I about the profitability of the
northern industry but I'm here to say it's a
challenge and it's one that I think will continue.

Now I'm going to switch to,
I guess, our relationship in our region.
And if we look at the sort of northern zone we hear a
lot of talk about Northern Australia these days.
It used to be, you know, eastern states,
Western Australia and east and west and all the rest of it.

There seems to be a lot of talk about north and south
and I think last year things came into focus,
this Northern Australian sort of focus,
and the focus on our region on Southeast Asia
was talked about a lot.
Look, if that's Northern Australia and we've got a
live export zone which is something like that.
I know on Trish's map, you know,
we got some squiggly lines there but the Pilabra
probably doesn't come quite into that little polygon.

However, when we look at the place in our region,
we are closer to some of these major cities and to
what is the largest Muslim country in the world,
one of the world's largest democracies right on our doorstep.

We are closer to most of those major centres than
we are to our own capital city and to southern states.

So you always get a very strong sense in Northern
Australia that you are part of this world.
Now that, give or take a couple of hours either
side in time zone, 50% of the world's population
live above Northern Australia,
well live above the whole of Australia,
but above Northern Australia.
Counties such as China, India,
Korea, Japan, eastern Russia,
Taiwan, Philippines and Indonesia.
And many of the predictions are that
obviously that region's going to continue to grow
dramatically and in consumption of goods.

Our security, and I think our future,
is very much part of this region.
When you've got a country of that size it's not only
about a biosecurity buffer for foot and mouth at the
moment but it's also a really strong buffer for
us strategically.
And our relationship with that part of the world,
to me, would seem critical to our future prosperity
and security.
Indonesia is a country of many thousand islands,
of 200-300 different ethnic groups.
It came out of about 400 years of colonial rule
under the Dutch into a dictatorship and now into
a democracy and they're making a reasonable fist
of it but by hell it must be a hard job,
and the success of that, will I think,
we are very much intertwined with that.
Our future is very much intertwined with that.
And this relationship goes well beyond cattle.
It goes to wheat and cotton,
to a whole heap of other strategic issues.

Okay, so that's our place in the world.
Well we do live in a complex world and
certainly Northern Australia is a very
complex mix of land, tenure of culture,
and different land use.
And if we look at, I believe we don't
necessarily understand our own region particularly
with our own people, when we move that to southeast
Asia we have less capacity to understand what people
are thinking and what they're doing in our
nearest neighbour.
I believe we don't generally understand
ourselves enough.
We have a less chance of understanding those beyond
our borders.
I use the word anthropology.
It's a interesting word because in the Northern
Territory the world anthropology has some very
strong undertows.
It's identified with land rights,
it's identified with a whole range of things.
Many people ask what an anthropologist is but it's
an example of social science.
And I believe there's not enough study of the people
in our region, the people in Australia.
Farmers for example have always been,
we always hear that farmers don't adopt new
technology, why won't they take this new technology
on, why won't they take on this new science that
we've just discovered?
Agricultural extension has always been about finding
something new, taking it out to farms and making them adopt it.

Why don't they adopt it, well who knows.
There's a dollar in it, why not adopt it?
The drivers behind why we make decisions and why we
innovate and change are never very well understood.

And I think, to me, Northern Australian development is
very much intertwined with understanding the
environment that we're going to be working in and
there's a lot of social science in that.
And anthropology is simply, I guess, a study of some of
that social science.
Now last year a group of producers from the
Territory went to Indonesia and the year before.

We took an anthropologist with us,
a bloke who spoke the Bahasa,
he understand what was going on below the surface.

We see the tip of the iceberg.
We see the visible things.
We don't understand the political,
the cultural, the religious things that are
going on under the water.
So we've, you know, I guess to me it's just an
example of how we have to better engage,
not only in our own region,
but internationally by understanding the cultures
and inter-workings.
And some of these have led to some exchanges
where we're seeing people move and establish those
links between Australia and Indonesia with the
view to making it a long-term thing for our
joint future.
Now overlay with some of those conflicts things in
Northern Australia emerging markets around
the carbon economy and environmental credits.
You know, what's real and what's not?
Some of it's real and some of it's not,
and there's a lot of carpetbaggers and
opportunists who are involved in this face and
they have been for the last 15 years.
But now we're coming to some traction with
legislation in place and it's really flushing
everybody out of the system.
So what's real and what's not?
This is putting a lot of pressure on Northern
Australia and potentially it will in the future as
there's a lot of demand for land use change and we
have to watch it very carefully.
Food bowl of Asia, this has always been the talk
from some quarters.
Now obviously we'll never been the food bowl of Asia
but there is some room between--is that balance
that we have to find.
And you know, there's also a very strong culture in
Northern Australia, basically locking it all
up and throwing the key away,
get those cloven-hoofed animals out of Northern
Australia, they're the devil incarnate,
get rid of them.
And in some cases almost get rid of the people that
manage the land as well.
So there's--we've got some very strong conflicting
forces at work in Northern Australia.
And many of those people who argue for the locking
up and throwing away the key will happily sit in
Northern Australia and eat the food from our southern
production systems.
They'll drink the wine from our southern
productions systems, yet they want to lock Northern
Australia up for good.
So there's some of the conflicting things.
We've also got a large indigenous land holding
across Northern Australia and balancing the
aspirations of those people both within the
pastoral industry and with some of these emerging
environmental markets is going to be a challenge in
the future.
But clearly when we see legislation across three
jurisdictions the need for harmonisation is critical
in that and our relationship with Asia.
So, just coming back to home--representation.
I'm just going to talk quickly about Northern Australia.

If we look at the number of parliamentarians that
represent Northern Australia you can count
them on one and a bit hands and when they come
to Canberra and try and get their point across
it's a pretty difficult task.
When it comes to investing in Northern Australia and
infrastructure in roads and ports,
and all those sorts of things and
telecommunications, getting it across the line
is politically a big call because it doesn't carry a
lot of votes.
So we're constantly struggling in Northern
Australia with this need to be heard,
the capacity to be heard.
Now that also goes to the industry bodies with which
we are all generally a part.
Now I'm going to just--I don't want to dwell on
this too much, but I just want to show a diagram.
And this is just the meat industry and that's the
Red Meat Advisory Council there.
And these are some of the pink bodies which are there to
establish policy.
In our case, Cattle Council for the beef
industry is a critical policy. Now sitting above
that are some of the statutory bodies which are
there to deliver the services to industry.
And you know, we're all very much aware of Meat
and Livestock Australia last year and Live Corp
who provide services with producer levies to these
bodies here.
But they have a, they're not an agri-political
group, they're a service provider for industry.
Then we've got Animal Health Australia and the
residue, national residue scheme.
And state governments.
Now this just keeps going, Safemeat Australia and
then we have state farm organisations.
And then we've got all these relationships
between all these different groups and then
we've got--then we've got the money side of it.
We've got these producer levies which,
and taxes which go to fund MLA and fund some of these
other bodies.
And so it starts looking like that and then like that.

And then, you know, we're from the NTCA,
we're a state farm organisation,
and there's another six or seven of those and then
there's commodity groups as well.
So it starts getting pretty complicated and I'm
not saying this has to change or anything like
that, I'm simply saying it's a fairly
futile--[laughter and mild applause] But you also see some of those
same Mediterranean meals with government policy as
well and government interactions across the states.

And I think the industry is not alone in this.
However, my point--my point is that industry
representation is critical and at the moment there is
a decline in membership to state farm organisations
to commodity councils and that has a knock-on effect
to those peak bodies because the money is not
flying through the system.
So national representation is not being effective and
that, you know, lack of national representation
and state farm representation,
and commodity council representation,
means that they're not delivering the services
back to members.
And why aren't they?
Well people maybe don't see them as relevant.
But what it's doing is it means that national policy
is not effective and that's not good for
government, it's not good for industry,
and I don't think it's good for our future.
So I there's a lot of--I think there's a lot of
thought needs to go into the way this system of
representation is working or not working and also
how our levies are used as well to service the industry.

That's as far as I'm going to go with making any
comment but it's certainly something that's in the
melting pot as far as industry is concerned and
I think government have a strong interest in it as
well to make that effective.
So I guess the future is we've got to try some new
things and I'll just finish off by putting it
in the context of next 100 years and I think some of
the critical things that as producers and as
residents of Northern Australia,
we know that the fundamentals in our
industry still remain very good.
From market prospective the fundamentals remain
very solid.
And to underpin those fundamentals people need
the skills, they need the course power to be able to
make a profit, to make a quid and manage their
natural resources underneath which they sit
and put something back into the community.

There must be long-term returns.
These industries have to be sustainable and we have to invest in
our relationships in the region because our future
is very much woven through the fabric of the region.
The solutions I think that we have aren't technical solutions.

We so often come in with technical solutions.
Indonesia is a good example of a technical
solutions--come in with the solution don't
understand the cultural, economic,
political context or religious context that sits
underneath it, don't understand the people.
We make that mistake here and we make it elsewhere.
So the solutions aren't just technical solutions.
They're solutions about people fundamentally,
why people will do what they do,
and why they'll make choices in the future.
We got to do that--we've got to do that.
First of all we have to understand ourselves and
this comes back to the issue about the disconnect
between urban and rural Australia.
Do we actually understand ourselves before we
project ourselves or try to understand the other
side of the fence? Because that's what it is at the
moment, there seems to be sort of two sides of the fence.

So we need to understand ourselves before we can
seek to understand those who we want to influence,
who we want to use
somebody's term, there's a lot of talk
about social licence.
I don't particularly like the term because it's
inferring there's a regulatory body that
issues these licences but what we saw last year was
it was mainly online getups and things that
that issued licences last year.

But anyway it calls for common sense.
The development of Northern Australia calls
for some common sense and some balance.
So, there you go that's--that's it.