ADDRESS TO ABARES OUTLOOK CONFERENCE

MARCH 5, 2014

E&OE.......................................................................................................

Thanks very much, it's good to be here. I had a very short stay with you all last night at the commencement of dinner. I hope that your attention levels are as good as your attendance levels at this late state of the conference and I hope that I can contribute something that's useful.

One of the difficult jobs, particularly being in opposition, was that I spent the last six years developing a policy that will drive the industry into the future, looking at where we will take the industry and what the foundations of that policy will provide for an industry. That's what I spent my six years trying to do in opposition, most of it as the Shadow Parliamentary Secretary in the agriculture portfolio, predominantly looking at fisheries and forestry but also doing a lot of work at home in Tasmania around horticulture.

Horticulture is a significant element of the Tasmanian economy and one that's really struggling with where it is at the moment and what its future might be. We're spending a lot of money in Tasmania at the moment on irrigation development, one of the few places where there is actually investment into providing water into the community, and I've regularly had farmers asking what they can grow with the water. It's a fair question because they're finding it hard to make a dollar out of the commodities that they're growing at the moment. So they are very legitimately asking where they can go in the future and that goes with a number of industries.

We're seeing, after the Prime Minister's contribution at the forestry dinner here in Canberra last night, a significant debate around the utilisation of native forest resources in Australia. It's an important debate to have and one that I think has been significantly skewed by people who have a vested interested in just saying don't go there, don't use that natural resource, just stop. That attitude is not sustainable. It's not sustainable for our regional communities, it's not sustainable for our economy and it actually provides a whole range of other threats to that natural resource base and to those communities. The management of bushfires is one of those threats.

The Coalition is looking to put in place a forest policy that provides a 20 year rolling process for regional forest agreements and provides protection for those forests where it is appropriate and the utilisation of those forests where it's appropriate for the benefit of those communities and for industry. We're also utilising our very strong forestry regeneration practices and forest management practices in this country to ensure there is a sustainable industry into the longer term, that's providing a base and a platform for the industry into the future.

Likewise in fisheries, we're now in the process of talking to the states about offshore constitutional settlement (OCS) details and how that fits into our broader harvest strategies and how that provides for a healthy marine environment which then guarantees a healthy fishery in the future.

We're also looking at the development of a national aquaculture plan, which is important given that there is going to be enormous demand for seafood in the future. Seafood is a product that provides 25% of the globe's protein. If you think about trying to grow that in terrestrial terms you would have to cut down the globe's remaining rainforests 22 times over to produce the same amount of grass fed protein. So the importance of maintaining our seafood resources and access to that really important source of protein into the future is very clearly demonstrated by that single fact.

Of course we have opportunities right across the agricultural sector and I think in Australia we are at a very exciting time. There are enormous opportunities and part of the future that we're working towards as a government is accelerating free trade agreements so that we get access to those growing markets, those high value markets that provide an alternative to Australia's agricultural sector.

We're never going to be the food bowl of Asia, if we double our food production by 2050 we'll feed ourselves plus 1.3% of Asia, hardly a food bowl. But what we should target is that high end of the market. We'll be lucky to be the caviar on the hors d'oeuvre, but that's what we ought to target, the high value and quality end so that it provides an alternative to our farmers and our growers.

They're the sorts of things I think we ought to be targeting. An important focus for the government will be negotiating free trade agreements and negotiating the import protocols that go along with those so that our farmers have access to those high quality, high value markets. Those markets already appreciate the quality and safety of the food that we produce in this country. I've seen it, I've heard about it and I've talked to people who demand it. They're things that I see as priorities for our agriculture, fisheries and forestry policy into the future.

I look forward to participating in a discussion with other panel members this afternoon. Thanks for being here and thanks for your time. Thanks for listening to what I've had to say.

ABARES Outlook Conference - panel discussion

The following is a transcript of Senator Colbeck's answers in a panel discussion at the ABARES Outlook Conference 2014 'Scanning Long-term Horizons'.

Question: "Senator Colbeck, you've had a long involvement in this portfolio I'm wondering what changes you've seen in terms of the rural communities and that demographic shift?"

I look back at the changes I've seen during my work the portfolio and growing up in a rural community in Tasmania. The valley where my family were milking cows was settled in the late 1890s and by the 1930s there were about 15 or 16 families there, by the 1970s there were four families and I think there are two families left in that community now.

So the point that was made about change occurring is certainly something that is going to continue and the thing that I've seen is the onset of technology, the importance of research and development, the application of that research and ensuring that the farmers understand that and have the opportunity to take it up.

I saw about two years ago large finance organisations and accounting firms starting to take a real interest in the agricultural sector. That is now starting to be demonstrated by the requirement to run family farms as a business. Yes farming is a lifestyle and I think it will always remain that to a certain extent but you have to be prepared to make business decisions.

I reflect on a comment made by a chap by the name of Tim Reid who's a cherry grower in Tasmania and happens to be Australia's Farmer of the Year at the moment, he was given a piece of advice when he was young which is "don't get attached to the asset". Now that's something that I think a lot of farmers actually do but he now credits that advice with his success. He has changed his business model completely from being an apple grower in the Huon to being one of the largest cherry exporters, the first to export into China, opening up new markets and moving his business to a different place in the Derwent Valley. That one piece of advice was the important part of his decision.

Education will play an enormous role in the future and I think that change in demographics that we're seeing in the agricultural sector is going to be really important, as well as the application of science. There is an enormous amount of work to do there. I think those trends will all continue. There will always be a cohort of family farmers but I'm not sure where the balance between family farming and corporate farming will be.

Question: "You often hear people say we are the food bowl of Asia, but Senator you mentioned in your speech that we're not and I've heard that echoed by a number of people on the panel. So I'm just wondering how have we got to this point of thinking that we are the food bowl of Asia? And if we're not, what are we?"

It's largely people in my profession trying to make it sound like there's a huge opportunity in being a food bowl for Asia, or a bigger opportunity than we've got the capacity to meet. The reality is that we are going to be a smart player in the market but we've got a limited capacity. So the discussion about knowing our market, understanding our market, and having well-developed supply chains is really important.

The aquaculture industry in Tasmania at the moment is withdrawing from the international market because the local market is growing at a huge rate. It grew 40% last year, 30% the year before and 26% the year before that. So that goes to the discussion that I had earlier about a national aquaculture plan and the importance of seafood in our diet and your discussion around a healthy food source. So we need to understand our markets really well and we need to innovate.

I chaired the food processing inquiry which reported in 2012 and we visited SPC. While we were walking around the factory I turned to the manager and said, "you've got a lot of money to spend here haven't you?". He just looked at me and nodded his head. Canned fruit is a declining market in every market in the world except for China and India. SPC is going to struggle to compete into that market.

We need new innovations to help sustain a business like that. SPC is going to have to spend a lot of money and there is a huge opportunity. I talked to some of the farmers up there, they're seriously smart farmers, and they say to me the dollar gets to 80c and they can't grow enough fruit. You've got all those fluctuations that work along with it and some of them saw what happened coming and were preparing for it but got caught because it happened a little bit sooner. Some people were very happy that their market was the cannery; they didn't understand the competition happening in the real market which is at the supermarket shelves. Because we can buy fruit and vegetables every day of the week, and expect to be able to, we don't buy canned fruit of processed fruit and vegetables so much anymore. So those changing trends in our markets I think are really important for our industries to understand.

I was talking to a vegetable grower yesterday and he told me we produce 25% more vegetables in Australia than the market currently needs and we wonder why the supermarkets are getting a good price out of us, we're oversupplying the markets. That's why I say that those new market opportunities that we need to help negotiate for our industry are so important because that's the opportunity to put some price tension back into the market and get some better returns at the farm gate. It's the market that's going to do that. We can make all the promises as politicians but we need to get the settings and the frameworks right for the industry to be able to do it.

Question: "Do you have any comment in terms of our agricultural relationship with Indonesia?"

Ithink Indonesia's going to be one of those markets that becomes very important for us as a country, there are 200 million people there just to the north of Australia. They are becoming a very sophisticated community, you look at the way they are accessing their food in the more developed areas, in the cities they have a supermarket culture. They are already in that place.

I've spoken to growers who are looking to access that market and have been accessing it for a long time. At this point in time there are probably specific commodities that are going in there in particular markets but I think that relationship will grow and change. The relationship stuff is really important and it's one of the fundamentals of any of our businesses. Talk to anyone who's done business in any country in Asia and it's about the relationship first and the trust that is build out of that process that then leads to further opportunities.

Even at a local level a lot of what we do is about our farming relationships and so the role for government in that context is a facilitation role. Ministers come and go, industry councils come and go, but farmers tend to hang around a bit longer. Those relationships that get developed by the private sector and by business and industry are the ones that will end up carrying it.

The way we conduct ourselves obviously has a lot of influence on that and that's been clearly demonstrated by events over the last couple of years, all of those things are important inputs to the relationship. We play a very strong facilitation role in establishing the relationship and then having industry and business work alongside us to continue that relationship and to make sure it's maintained, that's going to be absolutely vital. It doesn't matter what market you go into that's what it's going to be about.

Question: "One issue that has come up a lot is the lack of young people in the industry. If we're going to maintain our competitive edge internationally we need our best and brightest minds working on the farms and on the boats and we need to attract more people to the industry. How can we do that when current social trends see working on the farm or on the boat as a stagnant industry?"

I think we're starting to see that turn around. If you look at two years ago I think there was a situation where the University of New South Wales didn't have enough people applying to fill the agriculture course, but that's starting to change and I think it will continue to change.

It's about what people can get out of the industry, people want to be able to make a decent return and while farmers can continue to talk about not making a return, people in the community are going to say well that's not something for me.

So we're almost our own worst enemy to a certain extent and it's been going on for a long time. With the emergence of new markets, with the growth in demand, and with a growing understanding through some of the relationships that we've been talking about, I think that's starting to change. I hope what I'm seeing has a longer term trend, but I think that's actually starting to change.

The aquaculture industry in Tasmania has a lot of young people wanting to get into that industry and there are a number of high schools that are setting up vocational training programs for students to get into aquaculture. The interest is very strong.

It's about where people see opportunity and so those things need to be demonstrated as part of the story of agriculture. So in aquaculture that's certainly happening in my state and I think those opportunities will appear through other sectors as well across the agricultural economy.

Question: "I operate an agricultural business in one of the most volatile environments in the world and my production can change by a factor of thirty. What advice do you have on how I go out without increasing my risk profile by going and chasing fickle customers who may well leave me when I need them most and when I cannot rush?"

One of the things you're going to have to do is work with the industry. Some of these markets we're talking about are not an individual farmer type supply situation and I think we need to understand that.

Icame back from China a couple of years ago talking about niche markets and people looked at me all funny because they saw a niche market as a farmers markets or something like that. So the language that we use here versus the language that we're talking about in some of these market concepts are completely different.

We had a conversation earlier about relationships and we do talk amongst each other and look over the fence to see what our neighbour is doing to see if that works, and if it works we copy it. But working together in accessing these markets we don't actually do all that well. In fact it's like trying to develop policy at some times.

Working with farmers can be like keeping frogs in a wheelbarrow because they just all head off in different directions when you think you've got them all sorted out and working together. But working together is going to be an absolutely vital element in meeting these markets. You're not going to do that individually so you need to find somebody potentially that's providing a similar product to yours and using their capacity to help balance out your product and meet those markets. That's the way I would see it working and so there is going to have to be cooperation across the agriculture sector in meeting these markets.

I went to a small regional city in the south-west of China that had 7 million people - that's a market. That's the sort of thing that we're talking about and of course there is a whole heap of work to be done in the supply chain.

They understand the quality and the value of our product. I had an intern do some work for me and she found 83% of that upper-middle class are prepared to pay a higher price for premium quality product. I spoke to one young mum over there who was buying Bellamy's Baby Formula which is an organic baby food manufactured in Tasmania. She was buying it for her baby because she knew it was safe. That's in a small provincial city in the south-west of China. They actually do understand our quality and our food safety, which is probably our premium asset at the moment. It is an absolutely huge asset for us in those markets and it is well understood.

You need to work together to meet those markets otherwise that variability that you have on your property it i going to keep you out and you're not going to meet the market anyway, so find a way to work with others in your industry to actually make that happen. Otherwise you will find it very difficult I think.

050314 ABARES Outlook speech
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