 Thanks very much and it's great to be here. I'm very much a passionate rural and regional operator. I'm the only senator in South Australia who bases myself outside of the metropolitan area and I believe that I have an obligation therefore to be the strong voice for rural and regional South Australia in my role as a senator. But obviously that's been further elevated by becoming the Assistant Minister for Agricultural and Water Resources and now I believe that I need to be the voice of everybody who lives in rural and regional Australia. The session that we're here today about making resilient industries and communities into the future and what I think the role of government is and government policy in assisting in the delivery of those resilient industries and communities from here on. There's no question that the Australian economy is transitioning out of the mining boom as its principal platform which it rested its economic lorals and prosperity and we're moving into an economy that is going to be significantly changed into the future. I like to think that the government of which I'm a part of has a very sound agenda and a gender of ambition and gender of innovation but most importantly an agenda of simplification. I'm a firm believer that the role of government is only to do what the private sector can't, won't and shouldn't do and that the best thing that we can do for industry in terms of assisting industry and doing what it needs to do is to plainly get out of the way. I think that one of the biggest issues that we've faced in the past as an agricultural sector is that over recent times we've abrogated our responsibility for ourselves to government. So easy is it now that we seem to think that if there's a problem the government will fix it, the government will come up with the answer and I think that to a large extent that's government's fault because we've accepted that responsibility but to a degree it is also industry's fault because you've allowed us to take that responsibility. I sort of liken it to a time when your local tennis club, if you needed to build a new clubhouse for your local tennis club you'd all get together on the weekend, the plumber and the carpenter and the builder and the tyler and us as kids used to run around collecting and carrying things for these traders and you'd build the club rooms or you'd mend the club rooms or you'd extend the club rooms. These days the idea if you need a new club rooms is we're going to work out who can write out the government's application for funding the best and I think that we need to take an approach of we've actually got to get out there and help ourselves but if we expect industry to help itself then we have to get out of the way as government because I think industry spends half its life filling out forms that governments expect them to do to comply with regulation. So I think the role of government is about developing sensible policies and around those sensible policies they're making sure that we deregulate or we get out of the way and only require you to do what you need to do. Obviously innovation on the back of research and development is a very strong area where government needs to be involved in this particular space. Market access because the reality is that we are an exporting nation we're never going to get rich selling to ourselves so market access and then the transition to enable us to get to that market access is very important and finally the provision of infrastructure so that that access is actually physically able to happen whether it be you know moving your product to market or just being able to do your business. Obviously as a government we're very proud of the fact that we have implemented a series of free trade arrangements with our near neighbors but the reality is that we're only as strong I think in Australia as our biosecurity system and that our clean green image is what makes us the envy of the rest of the world and it particularly makes us the envy of the neighbors that we have that we're seeking to export to. So I think biosecurity is probably the greatest challenge that we face into the future to secure the resilience of our industries and our communities because if we have if we lose our biosecurity trump card in the current market that we see that we sit in then I think we will have a very serious well it will be a very confronting future that we face. I'm often get into trouble and I'm pulled down the end of the table probably report back for me saying this as will anybody in the audience who's from the department but I actually believe that biosecurity should trump free trade at every turn that's not to say that we should be allowed to use biosecurity as a non-tariff barrier to how we do business but the reality is that unless we protect our interests as a clean green environment we're in all sorts of trouble into the future. As I said R&D is a really important role for government to be playing in this space we're obviously extremely committed to research and development having put significant amounts of money in in addition to the the existing $550 million that we do to RDCs every year this government has increased that by another $200 million for the R&D for profit so obviously we consider that to be a really good return on investment for government funding particularly when I think ABAs yourselves have indicated that it's a 12-fold return on investment for every dollar that government spends in R&D we see a $12 return at the farm gate for farmers so it's a pretty good pretty good return on investment I wouldn't mind getting that and everything else I invested in. The other future for us I think is you know the reality of things like you know big data and the internet of things and digital agriculture if you look back five years those words didn't even exist let alone the the concepts in which they describe so we need as a I think as a government to make sure that we provide that sort of innovative technologically advanced environment that allows us to be able to do business smarter than than our neighbours because the reality is that we have a tremendously high cost of living we have a hugely high cost of compliance in environmental compliance whether it be industrial relations compliance and we also have a very high standard of welfare safety net which means that we are always going to be more expensive than anybody else that we compete with an international marketplace so therefore we're never going to be cheaper so we've got to be smarter so as a government we need to provide the platforms to allow you in doing your business to be smarter things like the NBN is absolutely essential I mean I know we've had a few hiccups with the NBN but I'm not going to be political and blame anyone all I can say is that we're working as hard as we possibly can as a government to ensure that we get NBN to everybody but it's really important for our agricultural sector because of course that means the difference between you being better able to be able to deliver and to use the technologies that are currently available if only you had that sort of access mobile black spot goes without saying but also you know water infrastructure the delivery you know the one thing that I think constrains our ability to expand agriculture is obviously our ability to get access to water in whichever way we do access water the infrastructure fund that we've put forward in relation to dams and pipelines and wears and dealing with with aquifer recharge five hundred million dollars towards that I think it's a very strong commitment that we understand as a government that water infrastructure is going to be the key to our future and I'm sure you've talked about the Murray-Darling Basin plan and the implementation in terms of ensuring the long term sustainability of our river system finally investment growth I believe this morning that Senator Colbeck Minister Colbeck spoke about the the the issue of investment and one of the things that I think that is going to be continually be topical and we've got to really address and stop being probably quite so scared of his foreign investment the reality is with the growth projections that we've got for for our country and particularly in the agricultural sector unless we have foreign investment we've got no hope of being able to achieve those outcomes so I think we've got to stop being quite so scared of foreign investment and maybe have an open and mature conversation about how we can have foreign investment that's in the best interests and in the national interest instead of every time we see somebody has actually bought one of our assets with with international money the country going into into meltdown so the in we are a government I truly believe that is committed to agriculture I'm very excited to be part of it I suppose that you couldn't really get a bigger indication of the commitment and a demonstration of our commitment to agriculture than when Barnaby Joyce decided that when he was made the deputy prime minister that instead of taking the big ticket portfolio of infrastructure and transport he chose to keep agriculture and water resources so it's a pleasure to be here today and look forward to hearing what the others have got to say and answering some of your questions so thank you. Thank you very much a fantastic opening and I think you've echoed a lot of the themes that were discussed so I look forward to hearing the questions in response to that so our next speaker on the panel is Professor Stuart Locky who is a professor of sociology and Stuart has a long history in working in agriculture and natural resource management and also looking at futures and futures oriented he's actually now the director of the Kans Institute at James Cook University and is also a farmer himself through his fantastic vegetable garden that he's got going in so thank you Stuart. Thanks pardon me thanks Peter yeah look it's great to be down here in Canberra and then a whole country it took me a while the other night to find a pair of clothes shoes that hadn't gone mouldy but I did make it here in the end. Look projecting the future is always fraught so it's easier to give a bit of an intro here and start with all the disclaimers about the surprises around the corner but there are a few things a few trends that are fairly well embedded. We know that there are a lot of people in rural Australia who are doing it tough and we know there are a lot of businesses that struggle to make a reasonable return and to reinvest we know that there are communities that are doing it tough we know that there are rising incomes in the wider region which provides reason for opportunity and optimism. We know that there have been a number of native title determinations now that that whole process is maturing and we have a very very substantial indigenous estate which particularly in northern Australia is really reshaping the land ownership base and the social base for rural industries. We know that as demand for our products expands through the region that the key part of that demand is the demand for quality and if those markets mature in the same way as say European and North American markets we can expect that quality the notion of quality will expand from one that's based on products being clean and safe to a notion of quality that includes the perceived social and environmental responsibility of those products. Which opens up a whole range of opportunity for Australian exporters to remain competitive. But it also forces us to ask some perhaps uncomfortable questions about our cleanliness and our greenliness. Because it's only the bias perception of what we're doing that counts and there's a long history in Australia as there is elsewhere I'm sure of taking quite a nationalistic and at times parochial approach to our self-reflection which in agriculture is manifest in a kind of technology push. A kind of approach to some of the more difficult issues like mulesing that suggests it's the consumer who needs to understand our need to use a particular practice rather than our need to find an alternative. And I mentioned mulesing deliberately because it struck me as something that really we should have dealt with a long time ago. I could have brought up GM now I was at some wonderful talks in the last session where people talked about how important genetically modified varieties were to their sustainability and to their practices and without casting any judgment myself on those practices on those crops or on the notion of genetic engineering you would have to say that the rollout of genetic engineering as a technology push has been really badly handled. If we're going to be exporting on the basis of quality we really need to be driven much more by what our consumers want to buy and we need to be sensitive to their perceptions. Now we're going to have to introduce lots of technologies I would suggest and things that are currently not on our horizon at all that people are going to be uncomfortable with and so we need to find ways of dealing with that discomfort rather than trying to roll things out and force things on people and then dealing with the consequences later. I've also heard some great talks where people have addressed the whole issue of standards and verification and certification. This is an area where I think we really need to be on the front foot. If we're not on the front foot in the development of standards which show what we're doing in a transparent and verifiable manner we will be forced to adopt standards developed elsewhere and they won't be standards that are necessarily very well adapted to Australian agriculture to Australian ecosystems or to Australian communities. I'm glad the minister raised the issue of foreign investment. I guess the nationality of the money becomes a bit of a lightning rod issue. What interests me about the issue of investment is the changing business structure of agriculture. One of the other trends that we know is happening is increased climate variability and we need business structures that will be resilient in the face of variability. They need to be resilient over time and they need to be resilient over space and I'm sure capital coming in from outside of the family farm structure will be a critical part of that. How does that capital, how do those new business structures relate to the sorts of institutional arrangements we've pioneered in Australia to collaborative natural resource management? You know people use a mode of terms the Chinese as opposed to a Chinese company or a Chinese investor or perhaps some Chinese person who really loves agriculture. What I want to know is how do we develop businesses that fit with the institutional arrangements we've got for looking after our landscapes because as everybody knows we need to look after our soils and our landscapes and our ecosystems in order to have a profitable agriculture. The indigenous, the indigenisation of land holdings in much of Australia raises the issue of property rights. I was really pleased to see property rights come up as chapter two of the white paper on developing Northern Australia. I think there's a bigger discussion that needs to be held there which goes beyond native title holders. A bigger discussion about what the various kinds of property that we use in rural Australia mean, whether that's native title, lease hold, free hold or the many variants of all three and of the responsibilities that are associated with those. I could talk forever but we'll leave it there. Thank you Stuart. I think you've raised some really interesting parts for discussion. Again, keep those questions thinking as they're mulling over. So our next panelist is Professor Kim Anderson. He's the George Cullen Professor of Economics and formerly Foundation Executive Director of the Centre for International Economic Studies at the University of Adelaide where he's been affiliated since 1984. I think you can guess what Kim's going to talk to us about. During 2014 and 15 Kim was a member of the expert working group for the Australian Council of Learned Academies project for the chief scientist on securing Australia's agriculture future. It was published in July 2015 and Kim has also recently completed a research project on emerging Asia, trade distorting policies and food security concerns, implications for Australia. So over to you Kim. Thank you. Thanks Peter and thanks to everybody here to stay in for this last session. I think we've had a real treat over these two days hearing about the future of agriculture, looking firstly at the opportunities out there in the global market and then focusing on the competitiveness of Australia in servicing some of those markets. On the global demand side we've heard that the standard things of population growth per capita income growth and diversifying diets are continuing to be major drivers of what happens. But as Stuart just mentioned also these attributes of food such as food quality, food safety and the sustainability of their production also seem to matter increasingly to consumers. On the supply side the traditional driver has always been changes in technology when no longer into massive clearing of land and so on. But we saw both for the US and for Australia that most of the increase in supply of the last few decades has come from agricultural technological improvements in total factor productivity. And so obviously if we're going to have continuing growth in supplies we need to ensure we're investing appropriately in that. The new drivers on the supply side though I think are climate change at least we're understanding more that that is going to be a driver into the future. That's likely to increase the variance of production as we get more extreme events around the world and will therefore increase the importance of openness to trade as a way of compensating for those variations in national production. We might also see a decrease in the average level of production if climate change makes our agriculture globally less productive and so that will have an impact on raising the price of farm products. The other driver I think over the past decade that is relatively new is the use of biofuel policies to suck sugar, corn, oil seeds out of the food market and putting it into the fuel market. So developments in those policies obviously are going to also have an impact on supplies available to the food market. The projections we saw both from A-Bears and USDA suggest prices are not going to be necessarily much higher or much lower than we see these currently, that is say the spikes of the last five or six years, perhaps an aberration and we should expect perhaps flatter prices over the coming time unless there are disruptions again, of course, in those market places. So turning to Australia's agricultural competitiveness in that global setting, we heard a lot I think including from the minister this morning about the three free trade agreements we've signed recently with North Asians. We can't attribute the growth in agricultural exports over the past few years to that, of course, those are just starting to be implemented but hopefully they will provide more market access in these next few years than we would have had otherwise. We are lucky to have as our neighbours countries that are relatively densely populated and resource poor, so they become demanders of the sort of products that are a sort of rich country like Australia exports. But we have to keep in mind that those, the growth in Asia is not only for food, it's also for minerals and energy products, but it's also for services like tourism and education. And so insofar as Australia can supply those other things then the agricultural sectors competitiveness will continue to depend on the relative demand for those export products from Australia relative to what the agricultural sector could supply. That is to say it's a real exchange rate issue going forward just as it has been in this past decade with the mining investment boom causing the Australian dollar to strengthen. One other thing to watch I think in the Asian setting is the growth of support for the agricultural sector in key markets. Indonesia, India, and in China all support their agricultural sectors now to the same extent or even slightly above the extent to which OECD countries support their farmers. And that's been an increasing trend from a situation of virtually zero support 20 years ago for those countries' agricultural sectors. So watching that policy development is going to be important because it could include increased barriers to imports and thereby reductions in the growth of import demand in those countries. And it's not going to be an even situation in China for example. They are likely to remain relatively open to the importation of feed grains and soybeans and corn for example to support their livestock sector which will be protected from import competition and that's the livestock sector that Australia would have a stronger comparative advantage in than it would in feed grains and oil seeds. The other thing to keep in mind is not only this intersectoral pressure within Australia as between mining or tourism or education exports versus agricultural exports but also the competition internationally for agriculture and exchange rates of our competitors like Brazil and Argentina and so on are going to be as important as the exchange rates we face here ourselves. We've seen Argentina for example with its new government that came in in December devaluing and removing export taxes they've had in there in place since 2001. That makes them much more competitive now than previously so that'll affect beef, wheat, wine and so on. So keeping an eye on that will be important. The other things to watch I think are Stuart mentioned niche markets that we may have for things that we do very well either because of standard things like food quality or food safety but also how we label our products, the integrity that goes with those. We've heard during the today examples of how the Chinese prefer to pay are willing to pay twice as much for milk products for example for feeding babies if they have an Australian label and even more so if the product is canned in Australia rather than canned in China. So there's a processing sectors here that will have comparative advantage if we can, as Stuart mentioned, keep a high reputation for quality there. Finally on the FTA stuff I think in addition to the three bilateral agreements that we've signed in recent times with North Asia we have the Trans-Pacific Partnership Agreement that is currently being ratified amongst its member governments. That will in some ways neutralise the preferential access we've secured in both Korea and Japan because that will be regionalised then through that agreement. So our preference there might be relatively temporary. That is the problem with bilateral or regional free trade agreements versus multilateral agreements such as through the WTO that each country is just climbing over and others to try and get a bit of preferential access and it tends to neutralise over time even though if enough of it happens you gradually open up but it's a very slow stepping stone to opening markets globally. If we were able to get multilateral agreement to open markets globally world prices will rise much more and we'll get a stronger benefit to Australia's farmers. There was a small move forward with the Naurabi Agreement of WTO Ministers in November to outlaw export subsidies at last for farm products but the areas of domestic support that was stressed by Joe Glauber this morning but also import market access are still to be dealt with and we hope that the WTO can at some point become more active and the membership will agree to a more comprehensive and more ambitious agricultural liberalisation package down the track. The other regional arrangements to worry about I suppose are things like the TTIP between the US and the EU if that were to happen we would lose some of our competitive access into our preferential access into the European Union for example so these things don't stop you have to keep working at them and it would be so much better if we could work out it multilaterally but with this year being the 30th anniversary of the KENS group maybe this is a time to celebrate that group's formation which was crucial to ensuring that agriculture remained high on the Uruguay around negotiations through to 2004 and so maybe we could use that opportunity to try and reinvigorate that group and push for multilateral action down the track. OK, thank you very much so some interesting things here around competitiveness looking offshore and trade agreements. Paul, over to you as the last panelist Paul Morris has been acting as Deputy Secretary in the department since January 2016 Department of Agriculture and Water Resources that is in his role he's responsible for agriculture, fisheries and forestry policy, farm support programs and the department's economic and scientific research arm, ABEDS and Paul previously headed up divisions responsible for corporate strategy and governance, trade and market access and innovation. Between October 2013 and July 2015 Paul headed the task force responsible for developing the government's agricultural competitiveness white paper. Paul, thank you. Thanks very much, Peter and good afternoon, ladies and gentlemen. It's always a little bit difficult being on a panel with one of your ministers but I think I'll treat it a bit like Senate estimates where if you ask me any difficult questions I'll just flick them on to the minister to answer. So getting down to my presentation I think it's interesting we sometimes talk about agriculture as if it's a single entity and agriculture ought to do this or ought to do that. But in fact, it's a sector that comprises around about 120,000 farms and employs more than 315,000 individuals. More broadly, it includes a large number of processes, trans borders, stores, exporters, wholesalers, retails and of course investors and throughout the whole supply chain. And of course it plays an important role in the socioeconomic performance and community life of many rural and regional towns throughout Australia. We heard from Karen Schneider yesterday that the agricultural sector remains dominated by family farms and they continue to be the main source of investment in the sector. But we also heard from the deputy prime minister yesterday that we need to see more investment and in particular more investment from others in the sector not just from family farmers reinvesting their earnings. It's important though that we also see that investment goes into more than just turning over the capital stock that exists in agriculture. It's important that we see that there's new investment in adding capital stock to the sector so that it can grow into the future. Now for investment as well as other decisions it is how the individuals involved in the sector so individual decision making respond to the external factors and pressures that they face. And we've heard from the other speakers about many of those external external pressures and factors. And they include things like conditions in input and output markets the availability of new innovations or improved product characteristics seasonal conditions macroeconomic influences such as exchange rates and what's happening in other parts of the economy interest rates and so forth. And of course government policies have a role to play. So all those things are very important. If we look forward though and say well what are the three sort of major factors that are really going to influence the future of agriculture as we go forward and I put them into the following categories. We've heard about some of them. Kim mentioned about global food demand is expected to continue to grow strongly in coming decades. We've heard the 75% figure by 2050 is something commonly heard. A lot of that growth is going to happen in Asia and ABAS predicted Asia will account for about 72% of the growth going forward into the future. So that's really important for us because it's in our region. That growth is having an important impact on food demand and demand for other agricultural commodities mainly because of population growth rising incomes but also urbanization. And you've looked at urbanization in China for example. We've seen the percentage of population in urban areas in China rise from about 25% in 1990 to around about 50% in 2011 and it's expected to rise even further to about 75% by the middle of the century. Now you might say why is that important Well it's important because we know that people in urban areas in China and many other developing countries earn much higher income than other parts of the country they live in. We also know that there's been quite a substantial change in diets as people move to the cities we see that people eat more meat, eggs, dairy and fruit and they're things that will be important for our future in terms of exports as Kim said one of the areas that we have an advantage in is livestock exports. So with around two thirds of our agricultural exports already going to Asia and FTAs having been negotiated in our key markets in Asia we're really well positioned for growth in the future. So that's a key factor going forward. The second factor though and again it's been touched on in part by Kim is the competition in end markets for our outputs as well as for inputs to production. But the end markets aren't just our international markets we need to remember also that around about a third to 40% of our produce in Australia is actually sold domestically. So it's also what happens in competition in markets in Australia and the supermarkets and so forth. Also competition in those markets depend on what's happening in overseas countries as Kim mentioned what's happening in Brazil and Argentina will be critical. But the other side of the coin is also what's happening in input markets. So what's happening to fertiliser markets what's happening to labour markets we saw during the mining boom that there was a big pull away from agriculture for a lot of the labour that we depend on. So people can operate an harvester can quite often operate a piece of equipment in the mining industry and we've seen some drawback I suppose into the agricultural sector in the last year or two. But that was a sort of a big factor in terms of the competition for that labour in our market over the past decade or so. And then the third dominant influence and farmers know this well is of course environmental factors such as the climate the condition of the underlying resource base particularly water and soil resources as well as competition for land and water from other users whether that be the mining industry or urban users or for environment. Now when we developed the agriculture competitor in a swipe paper over the course of the last couple of years we very much looked at those three areas of future development and thought about what's the role of government in dealing with each of those three areas. As Minister Rustin said our role is not to make the decisions for the sector it's really to make sure we set the environment right and get out the way of individual decision makers to make sure that they can get on with making their decisions in the most economic and efficient way possible. So the objective of the swipe paper was really about building a more profitable more resilient and more sustainable agricultural sector to help contribute to economic growth but to do it in a way which was appropriate for government. So we looked at five major themes in the swipe paper. The first was that very critical one about improving competitiveness in the marketplace and you would have heard recently that there has been a new agricultural commissioner appointed to the ACCC who will actually ensure that there's an increased focus on agriculture through that organisation and that'll be critical to ensuring that domestic markets remain competitive in the future. The second area and this is one that was mentioned quite extensively by Minister Rustin her comments was around infrastructure and making sure that if agriculture is going to grow in the future it has the water communications and other infrastructure transport infrastructure which is necessary. And there was quite a significant amount of money that was allocated to developing feasibility studies and developing water infrastructure in Australia for future growth. The third area was around strengthening innovation and this is an area where government and industry have cooperated for a long time in agriculture and we need to continue to cooperate in that area in the future. As ABS has shown though you can't just step in and out of R&D you have to have a long-term commitment. And so what the swipe paper did was it added to the commitment to R&D going forward to make sure that long-term commitment remained in place by both committing to the match levy arrangements but also by having additional funding going into it. But importantly and this is perhaps an area which hasn't been focused on so much in the swipe paper. The swipe paper also sets some new government priorities for R&D going forward and it very much put the focus on farm industry productivity moving the R&D back to looking at how we can improve productivity in the farm sector which is an area where ABS has been saying that we're in trouble because of slowing productivity growth. Talked about sort of priorities on advanced farm technologies, water use efficiency and adoption of R&D for example. The fourth theme is around overseas markets which has been mentioned as well, critical for us. We've got new agricultural councillors in Vietnam, Malaysia, Saudi Arabia, China and Thailand. All those markets are emerging markets and they supplement the people we have in existing major markets for us. FTA is getting FTAs in place of one thing but we in agriculture know that's only half the story. The other half is actually making sure that we don't have technical barriers such as quarantine barriers that are restricting our access and these people are very much targeted at that. As the minister also said, biosecurity is a critical part of that as well because biosecurity helps us to maintain our animal and plant health in Australia and that provides us the access into those overseas markets. And then the fifth area in the white paper was around an approach to drought and risk management and importantly while there's quite a bit of focus on the short term measures in the white paper, there's also some longer term measures and to try and get farmers to make sure they manage the risks associated with drought going forward. So things like changes to the farm management deposit scheme but also some incentives for taking on insurance products going forward. So they're the five main areas and since the white paper's been released, we've been working very hard to make sure that those various measures in the white paper are being implemented and that we can get the benefits out of them that was intended. And closing, while the government does have a role in getting the environment right for growth and reducing uncertainty, addressing infrastructure and reducing overseas market barriers, ultimately, as I mentioned earlier, the government only has a role in setting the environment, getting it right, it'll be up to the individual decisions of those thousands of decision makers within agriculture that will determine the sector's future. Thanks very much. Thank you very much. Thanks, panelists. Okay, before I open up, now we have got microphones situated around the room across there and in the middle. It's actually a little bit hard to see from here but we will see the body shape so I don't know if we need the lights but before we start on the questions and I do have some as well and I would encourage you to come forward and ask them, I thought it'd be interesting for the panel and also for me to see actually who are the stayers, who's left in the room, where do you represent? So what I'm gonna ask you to do, can we see with the lights if they can go up a little bit? I'm just gonna ask you to put up your hand if you represent these different areas. So put up your hand if you would, just by yourself, as a government representative here today. Can I just see how many are in the audience? Okay, what about if you're representing from academia or research? You might have more than one hat and that's perfectly acceptable. A few, okay. Industry, and we heard there's many industry across agriculture. Can we see panellists sort of? A bit of a, yes. What about if you'd represent yourself as a farmer or a grower if you'd most identify as that? Okay, or a representative from international, so from someone residing outside of Australia? Have we got any international representatives left in the room? Okay, so a bit of a mix. It's just interesting to see who we're talking to. So if nobody has a question at the moment, as I said, you're welcome to come. I'd actually like to pose a question because I've been attending all of the sessions today and some yesterday and I've been really interested in the discussions around productivity and there's some broad statements around where productivity is failing, but then I've heard lots of positive stories about increased productivity, which is more at the micro level, perhaps with individuals and industries, I suppose. And we hear a lot about the innovation agenda for which the government has. So I'm interested to think, how can we capitalize on this? Because a lot of it seems to be around startups, but how should the agricultural sector capitalize on the innovation so that it's front and center? We've heard a lot about R&D to help improve productivity. If there's anyone that would like to respond. They seem to all be looking at me. I'm here, everybody. Well, from the government's perspective, I mean, we obviously see that the major way that we can stimulate productivity and for us, productivity is not just about, you know, growing more or producing more. The most important thing that we think that we can do is to actually improve the returns at farm gates. So farmers are actually making money because unless our farmers are making money, there's no incentive for them to do anything better because they spend all their time just trying to keep their heads above water. So for us, the investment in R&D and the encouragement for industry to continue to invest in its own R&D probably is the pinnacle for that particular, you know, for productivity. And as I said, I was quite astounded but modelled by APES, so it must be true, that, you know, a $12 or 12% a 12 times return on every dollar that's invested in R&D in agricultural research and development in Australia is just a phenomenal return on investment. So unless anybody can come up with a better idea about how we can better stimulate the opportunities for increased efficiencies and productivities for the farmer, I think the best thing the government can do is to continue to support R&D. But one of the programs that this government came up with was the R&D for profit program, so that it was R&D that was specifically targeted at profitability and obviously productivity and profitability go together. And finally, the real core component of this is R&D for R&D's sake is a complete waste of time. It's about making sure that we focus entirely on the outcomes and we drive to the outcomes and that there's constantly, we keep looking at how we're translating our research and development into positive on-the-ground outcomes for our farmers so that that then translates into productivity. So that would be, you know, my answer to the number one thing that I think the government can do to assist industry in this quest for as efficient and as productive industries as possible. Okay, did anyone else? Kim? I think we've been blessed over the last, whatever it is now, 25 years, I think having the rural R&D program in Australia, whereby there's a dollar for dollar matching of government money for what farmers levy themselves to invest in that area. But as Minister Rustin said, the rates of return from that research is still extraordinarily high by all the estimates I've seen in all the different industries that those sorts of studies have been done for. So it raises the question, why don't growers invest more? Why don't they levy themselves more for that? And you can understand when their profits are low that they're not willing to vote for an increase in the levy. But if we're going into a period now of relative prosperity for agriculture, this is a time I think for the industry bodies to think about levying themselves more. And even to go above the 1% of the gross failure of production limit that provides the dollar for dollar support, the government doesn't need to put in more there. There's a huge rate of return to be had from that. Of course it takes time for that to happen, but we heard through this program these last two days that most farms are still family farms. So if they're going to be passed on to the next generation, well, the next generation will get the benefit from that investment. So if we're going to remain internationally competitive, we've seen that total factor productivity growth is the main driver for increased output. If we're going to keep doing that and remain competitive, we just have to keep investing there. And in the interim, while ever we're choosing not to go down the GM route for lots of, for almost all products, except cotton and canola, then we're handicapping ourselves because the Americas and others are adopting GM technology and doing it much faster than we are because of that. And we saw some graphs today of the extent to which other countries have grown their exports much faster than Australia has. We proudly showed charts on the first day of how rapidly our agricultural exports have grown in recent times, but they were in Australian dollars. If you put them in US dollars, they haven't grown so fast in the last three or four years when the Australian dollar has depreciated. And in fact, we haven't been keeping up as much as other countries have. So this is the time to do it. Thank you. Take some more on investment in this area. Thanks, Paul. You have one comment, and then I'm going to go to the floor here or something. Yeah, just very briefly because there's other questions, but just a slightly different angle to the productivity question. When you think about Australia, we're a very advanced agricultural economy, and that means that we're largely on the production frontier of known technologies, known innovations out there. For us to actually advance and go forward, there has to be new inventions, new ideas that come forward and push out that production possibility frontier for farmers. Other countries are well behind that frontier. So when you talk about a lot of the developing countries, they're well inside that boundary. And so that means they can actually adopt things that are already well known, that we use already in Australia, and can advance their productivity at a much faster rate than we can. So that's one challenge we have to compete against that these other countries have got more possibilities to expand their production. Secondly, we're a relatively high cost country as well compared to a number of these countries. And so in order to compete with them, we need to think beyond a commodity mentality and start to think about the types of products we're producing, how we present them to the market. So that doesn't mean not producing wheat or anything like that. It actually means thinking about the types of wheat we produce, making sure that we're well targeted to end markets, making sure our beef is sort of targeted to the particular consumer markets. And because we're a relatively small, total supply to Asia, so if you think about Australia, we feed maybe 60 million people and then there's billions of people in Asia that we're actually supplying to. We really do have the opportunity to supply those sort of higher valued markets and target those in the future. So in terms of thinking about where we target our R&D in the future, it's got to be in terms of advancing the productivity or production frontier. And it's got to be thinking about the innovative products and how we meet the markets of the future. Okay, thank you for that. So I'm going to go to the floor. If you could introduce yourself. You're pointing to the person up in the shadows there. Introduce yourself where you're from and then he'd like to pose your question to you. Thank you. James Walker from Longridge-Nuffield Scholar. And yeah, thank you very much for your addresses here today. And I'd first of all like to commend the R&D for profit that the minister highlighted before and also the work that Paul did in constructing the white paper. I think there's some really good things that came out of that. In terms of actually improving profitability at the farm gate, I mean there's, you know, that we've been trying to do that for, you know, for years and years and, you know, and it's limited. And one term that's been thrown around a little bit is financial literacy behind the, you know, in terms of, you know, farmers. And as you said, a lot of family farms there. So there's not that sort of corporate, you know, business focus. It's more operationally focused. My question to the panel is, what can we do now and how does it look like with a financial illiterate? Well, how does, with your R&D for profit, how do we address financial literacy? What does it look like and how are we going to change from what we've done in the past to create something new so that we can compete and sort of engage with the international, you know, FTAs and things like that? We'd like to respond. Okay. Thanks very much, James. And very much, I've very much enjoyed meeting with you in Longreach when we were up there for our consultations. We had lunch with James and his family and we had a very nice time up there and learned a lot about the local area. Look, in response to your question, James, yes, that was an issue that was looked at very closely as part of the white paper process. So I think it's partly financial literacy, but it's also thinking about alternate business models as well. And that was something we thought about in terms of, well, what models are out there that farmers can think about, whether it be cooperatives or collaborative farming or other types of models and whether they provide advantages to farmers going forward. An example would be the collaborative farming model, which people have probably heard a lot about where you can actually make sure that you maintain the family farm in the ownership of the family but actually operate collectively with other farms in a more of a corporate structure sitting over the top and that provides advantages of scale while keeping the family farm intact. And so those sort of things are very much in our mind when we were working with the government on the white paper and it was the ideas around that that led to the policy on the program in there around cooperatives and business models. So we're working at the moment to get that launched and hopefully through that program there'll be more information provided to farmers. As I said, it's up to them to make the decisions. We're not going to make the decisions for them, but at least it'll provide more information and help them to sort of understand how these models might work and whether these models would be suitable for them. Just to add to that, probably thinking somewhat further down the track, I'm a great advocate for industry associations and I believe that one of the things that we can do as government is to try and I suppose set the narrative around that we support industry associations so that they actually can get back the strength that they used to have, particularly if you're talking about specific industry sectors and the particular skills that a farmer may need within that industry sector. I think the people that are probably best placed to collect and it comes back to the collectives that are in the white paper is if we can create enough interest and enough enthusiasm and energy within a collective and that collective may well be partly driven by your industry association so that the tools have a channel through which they can funnel themselves to be able to get out to the majority of people. I feel maybe one of the problems of the weakening of industry associations within that space is actually the weakening of the capacity for governments or any other groups whether it be R&D organisations to be able to channel the information back to the industry in a quick and easy and efficient way and given modern technology and the use of obviously the internet and the like for communications, I would be very keen to say to industry associations, prove your worth, get out there, get stronger and then we can start using you more as the conduit and I think if you do that, the industry associations get stronger and then the capacity to access the kind of information and the resources that you're talking about, we've got a method by which to deliver them because at the end of the day, governments constantly looking for ways to cut costs because the role, governments have only got so much money and they're always competing interests so if we can create a model that allows industry to be self-sustaining in the provision of those resources and that information, then it will obviously is more sustainable into the future. Thank you for that. Thanks, James, for your question. Can I go to the front? Thank you. Thanks very much to the panel for being here and presenting and talking about the future of farming as the last session. Shinal Basmika is my name, I'm the Chief Executive of Northern Territory Farmers Association. My question is really around domestic markets. There's been a significant amount of focus on FTAs and international markets. Now, just to give you context, Northern Territory, our plant industry is, you know, we're around $200 million industry and the majority of that is actually domestic market. We send very, very small volumes of things internationally. There seems to be an inadequacy in our focus on domestic markets. So, particularly around some of the tropical products and things that we produce, you know, we've got romptongs and some of the pomelos and things that you don't get to grow anywhere else in Australia. So my question is really around what more needs to be done to develop markets domestically for some of the products that we grow here that not many people have an understanding of or actually have ever even tried, but there are small volumes of it grown for consumption, to specialist markets, but what more needs to be done to make it a broader, give broader domestic market access? Thanks. Who'd like to take that sort of growing domestic market access for some of these niche products? Kim or Stuart? I would say that I don't believe that that is a role that largely belongs to government, so I'd probably be interested in hearing what you guys might say about it. Yes, it's a small industry problem, I guess, but the Northern Territory's already in there in a big way in some of the established industries and it benefits from infrastructure, I guess, to be able to truck that stuff down to the southern states and we've already seen huge growth and refrigerated trucking of fruits and vegetables from the main highway, so I guess it's already happening. Probably these niche products are like any small industry, they require a lot of investment in promotion to make people aware of their availability and so on, but it's an expensive upfront cost and it can only be done collectively, I guess, by the pharma groups as the minister says it's not really a government responsibility to do that, it could be assisted perhaps by rural industries, R&D, corporation doing some investing in the productivity of those new industries if they look like they've got promise, but otherwise I think just trying to make sure that those channels for transportation are available and then doing the best you can in promotion. Stuart, did you want to add anything there or...? I suspect part of the answer is working with the buyers and establishing the value chain as well as the infrastructure aspects of the coal chain and to a certain extent I'd say that's part of the answer to the question around productivity as well, in that we have an R&D system in Australia that's done a tremendous job of bringing various stakeholders together from landholders to researchers to government agencies, but in dealing with transformational technologies such as GM or with wholly new products has perhaps not been quite as successful and engaging with the large buyers because the buyers are the stakeholders, the gatekeepers into the consumer market, maybe what you need to do there. Paul? I guess I'm much more positive about the consumers in Australia, perhaps, than the question may have implied, and that's because of the diversity and the range of fruit and vegetables and other products that are now available on the supermarket that weren't available 20 years ago. I can remember I first tried dragon fruit in Vietnam in 1996 and had never seen it in Australia and yet now you can see it in supermarkets throughout Australia and other sort of types of varieties and fruits and vegetables are just generally and widely available for consumers and I think consumers' tastes in Australia are developing quite rapidly and it doesn't take or doesn't need government to get in the way of that, it's sort of happening. Interestingly, a lot of the food programs on TV and even having the food network on TV are actually exposing people to more and more of these products and people want them and once they see them and want them then supermarkets and the other suppliers, small convenience stores and so forth will start supplying them so I think the market will drive that pretty well over the next little while and it's already happening. I see a lot from horticulture innovation in Australia promoting a lot too so I don't know what role they would have in that. Now we've got a question up there in the shadows, thank you. Yes, Jim Prattly from Charles Sturt University. I have to admit that I cringed when the minister said that R&D for its own sake was a waste of time. We have a situation in our R&D system now where we're totally focused on short term, quick fix, incremental type research. We're running out of the capacity to do strategic research. We see CSIRO largely leverage now on its research effort. We've seen the climate change scientists get cold and they were on central funding. We've seen the state agencies in decline and they now, if they still exist in research, they only do research that's at least co-funded. You could say that while the Australian Research Council will fund the universities, we have a look at the data. There's almost no agricultural funding from ARC anymore. It's been in decline for the last decade and it's almost zero. So the question that I have for the panel is if we're going to increase productivity, then we're going to have to also have transformational change rather than or in addition to incremental change. And at the moment we don't get funding for research unless we actually know the answer before we start. And to me that's totally ridiculous. We've got to take some risks. At the moment our whole system is risk averse and if we look into the past, there are plenty of examples of research outcomes that weren't predicted but have had a great impact on productivity. So my question really is who's actually going to do this long-term strategic transformational research in agriculture? Thank you. Well, I'm glad I made you cringe. Obviously you were listening. But a couple of things. One is I agree with you entirely. We have become so risk averse that we actually have almost caused complete inertia and I don't think that's necessarily just related to R&D. I think that's probably a broad issue across the Australian society. And I think one of the things that we do need to do is we need to start embracing risk and accepting that some of the greatest things that we've ever learnt in our lives we've learnt because we've made a mistake. In relation to the recent innovation and science agenda that was announced by the Prime Minister, I think that one of the things that was really key in that that probably goes to some extent to your point is the fact that it really does encourage us to embrace risk and I hope that quickly rather than slowly that we'll start seeing a change in attitude and a change in culture. But unfortunately that takes time. I agree with you in terms of we do need to have transformational research as well as having research that is quick and outcome driven. But that doesn't mean to say that it's an untrue statement to say that we have created a research industry that research is for research's sake and also that much of research now spends most of its time filling out the applications to get the grants for the next round of research instead of actually focusing on the outcome. So I think the answer probably to your question is that we need to have two buckets that we look at for research. One of them is the blue sky stuff that looks into the future and the other one is about delivering those productivity outcomes that we need to i.e. the R&D for profit. But let's not forget that the government puts in $550 million a year into agriculture or RDCs. We've just increased that by another $200 million. Industry equally puts in to a large degree matching funding against that money. So there's a lot of money there being invested in this space and the decisions about what we do in that R&D is largely left to industry because it's industry money, it's industry outcome. So I'd like to hear what industry's got to say about how it deals with transformational funding as opposed to specific outcome-driven funding. And one of the areas that, with the Horticultural Innovations Australia, which has started to look at broader, bigger picture, cross-sector, cross-commodity research instead of focusing in on my industry sector put in $6 million into research and in that particular organisation. So therefore I want my $6 million back out again. I think the change from Horticultural Innovation Australia to two-pool funding, which says that one part of the funding goes to that commodity-specific stuff because they've got every right, they've paid the levies, they should have every right in saying how their money's spent. But the second pool of funding is about talking about some of the stuff that maybe is a bit longer term, you know, looking at things that don't necessarily have a predictable outcome, but taking a chance. So it's moving in that direction, but you're quite right until we learn to embrace risk. It's a difficult task. Anyone else, Kim, you wanted to say something? Yes, one small point. I think the ARC, I guess, has to look at the whole of Australian agricultural R&D investment when it's making its decisions. And agriculture is only 2% of GDP, so I guess it's not surprising if it doesn't give a lot of emphasis to it. So in the case of breeding for plants, for example, like wheat, you do need to have public expenditure in that area because otherwise it wouldn't exist. You can't patent the outputs of that sort of research, and so it's necessarily a public activity. But I think we do deny ourselves an opportunity in agriculture relative to, for example, mining by not being as attractive to foreign direct investment. Foreign direct investment brings with it not only capital, which would expand agriculture if we had more of that, but it also brings with it often technology. And if you look at where R&D spending is growing for agriculture around the world now, it's not in OECD countries and not in Australia. It's in countries like China and India, and that's where the dominant new investment is taking place. Those countries have lots of technologies they are developing that they could share with us in the same way that mining investors brought with them new technologies for exploration and exploitation in the mining boom that we've had over this past decade. Of that, the capital expenditure in Australia in the past decade was about 60% mining. Mining is about a few percent of GDP, but 60% of capital expenditure was mining and 80% of that expenditure was from abroad. So if we do have this reticent attitude to take in foreign direct investment into agriculture, we are denying ourselves some of that. Thank you. And Stuart's going to make a comment, and then I'll go up to the question. I think that... I agree. There certainly are benefits to importing technology, but I've put a couple of caveats around that. One being that I'd rather be the owner of the IP than the importer. And the other being that Australia has very unique agroecologies, and so there is a limit to the technology transfer. And this is an issue across a great deal of the world, not just Australia, but particularly through the tropical band where we have a lot of poor countries that need to increase their food production. And where the R&D expenditure is... Off the top of my head, I think it's 8% to 10% of the R&D expenditure outside the tropic zone. And the possibility of trickle-down technology transfer exists for some industries, but in agriculture those possibilities are far more constrained because of those unique agroecologies. So I think it's in our interest in a number of ways to be involved in R&D in a major way. I think there are a lot of strengths to the Australian R&D system, but research and higher education, which is a major provider of research, have become, I think, something of a political football. And I think there has been a fair bit of incoherence and policy change for the sake of it. It's a major issue that the lack of long-term certainty in base funding is a major issue. Squeeze in our basic operating grants is a major issue. Now none of these things mean the whole system is going to collapse, but it does put a lot of pressure on it, and it does lead to a lot of loss of very good scientists who have the capacity to move. Thank you for that. This is probably going to have to be our last question, but thank you. Hi, Anna Carr from the Department of Agriculture and Water Resources. I would like to pick up on some of the comments made earlier. I think, Stuart, you mentioned the nationality of money, and Paul, you mentioned the diversity of food and fruit and vegetables currently in the supermarket. So if we put ourselves into the long-term future and we are thinking from an international perspective, so this is both far away and in time and space, how do we identify Australia and agriculture's point of difference? And will that rely on or will it disrupt the view that we have had of Australia's agricultural past? That's a curly one to finish with, Anna. She always has good questions. Australia is a large and diverse place, and I think I'm privileged to live in one of the most cosmopolitan and culturally diverse parts of it. I don't think, off the top of my head, I don't have a comprehensive answer, but I suspect one of the points of difference would reside in regionalisation. And part of the answer will also will rely on the development of unique brands. We tend to think of always brand Australia, and perhaps brand Australia isn't always what's going to be meaningful. To follow on from that, I think that it depends on where your market is in terms of its level of maturity as to whether brand Australia works, brand South Australia or Victoria works, or whether brand Jacobs Creek works. So I think it's whilst the regional differentiation stands as something that gives us an advantage, obviously our clean green image gives us an advantage, we've also got to be careful that we don't try and think that one size fits all into our marketplace, because I would think if you're going into India with a brand that wouldn't work, we probably need to go into India with a brand Australia, but if you're talking about sophisticated markets of the USA or Japan or Europe, then maybe those regional differentiations and brand differentiations are going to work. Yes, Kim? I think an answer to Anna's question can be taken from the wine industry where it's probably at the frontier of what a lot of agricultural industries would like to be. That is, it has an aspirational product, it's one that grows in demand with incomes and can get to extremely high prices and get beyond the basic commodity. And what we've seen in the wine industry is exploitation on at least three fronts to try and show a point of difference. It's at the regional level, talking about Barossa or Hunter Valley or something. It's by variety, so distinguishing there, and that's getting refined now to talk about clones within varieties that might distinguish a particular bottle of wine. And it's by brands in the case of companies getting out there and then using a family brand to create levels of quality within that. And all of those things have been exploited. I think the additional thing that is being exploited currently is style, so we don't now just talk about Shiraz. We talk about various styles of Shiraz, a cool climate Shiraz, even distinguish it with the original name, Sira for making that clear that it's different from the warm region Shiraz. But those styles can be targeted to particular countries, for example. The American market is for a sweeter wine than what the Australian market is, so you modify that, and Rosemount did that very well in their efforts. So I think that provides a nice example of perhaps what could be done by other industries. Okay. Just in closing, I actually might go back to the panel because we've really sort of run out of time. I think we could go, there's so many questions, but I guess we've delved deeply into those across the last two days. If we go back to the title, The Future of Agriculture, Resilient Industries and Communities, I guess it would be interesting just to get a one-minute sum up from each of you. What you think is going to be one of those key things that needs to take us forward into the medium term. Okay. One of the things that hasn't been mentioned here today, which I really believe is going to be essential in resilient industries, but most particularly resilient communities is going to be decentralization. One of the things that has happened over recent times I think is it's really easy to centralize when you're looking for a budget fix, but it isn't always going to be the thing that's going to work in the longest term. So I think decentralization is absolutely essential so that we maintain the critical mass within our communities so that the school, the social fabrics don't break down. So if you lose somebody from your community, you don't just lose one person, you lose their family. So it's the kids in the school for the need to have the school or the need to have the extra doctor or the need for the hospital to stay open and do the additional services that a hospital of a size will do. So I think from one of the challenges that we face as a country because we've got such a huge land mass for such a small population, we have had this tendency towards centralization, particularly to our capital cities within our states and also to the east coast, that we need to really take a very strong hold of an agenda that says that it's okay for us to maybe cost a little bit more in the first instance to keep people in the country or to have our services more broadly spread across the country because if we continue with this centralization agenda, I think that's one of the greatest threats to the resilience and the future of our regional communities, where agriculture occurs. Thanks, Minister Stewart. Okay, thanks Peter. I was expecting at least one Dorothy Dixer about Northern Australia so I'll have to change my sum up to focus on that. And regardless of what that Dorothy Dixer actually said, the answer was going to be very much like the minister's answer in the sense that really the secret to developing the north is to stop all the silly Wild West frontier talk and the idea that somehow the north is undeveloped and to focus on the communities and the people and their aspirations and to go from there to understand the landscapes and the ecologies. And then with that kind of understanding then start to talk about where to invest and what sorts of partnerships with what kind of business, irrespective of the nationality of the money. We have a tendency to forget about the people who were there. A tendency to go chasing after whichever big project has a lot of zeros attached to it, no matter how fanciful. And to forget why we might want to grow an economy. Because in the end, agriculture, markets, these are all quite abstract things. What we are is communities of people and if we are not doing this for a reason, well then why are we doing it all? Thank you. Kim? If I could go back to James's question about how do farmers deal with the complexity of finances and so on associated with a business these days. And I think as we saw from the presentations over these two days that family farming is probably going to persist in Australia, and persist at a never larger scale, not only land-wise but financially. So I suspect that the survival for those families, their resilience is going to depend very much on their financial skills. And so the next generations of farmers are just going to have to invest in that aspect of whatever other training they do. They're going to have to become not just internet savvy, but savvy about how financial markets work so that they can decide whether they need to hedge in foreign exchange markets. They need to sell forward in commodity markets. They need to get involved in risk management instruments that will help them cope with fluctuations up and down and so on. So I think that's going to be the challenge for those farm family businesses. Thank you. And Paul? I think agriculture is already very resilient. So it seems strange to me to talk about resilience in the future because it's been resilient in the past, and I think it will continue to be resilient. It's one of the most trade-exposed sectors in Australia and in the world, and it's constantly exposed to changes in prices and has to respond to those, and those changes are often well beyond their control. There's also obviously a lot of environmental challenges in Australia, and agriculture has proved itself to be able to respond to those environmental challenges and adapt, change the way we produce things in Australia to actually suit that environment, and so has shown itself to be very resilient. To me, it's sort of more about how do we grow agriculture in the future if that's indeed where the economy and the money lies for us to expand the economy in Australia. There's three ways you can do that. One is either increase the prices of what we are receiving and those prices are determined on the world market, so that's quite difficult unless we actually think about the type of products we're providing, and that goes to Anna's question about thinking about those markets overseas that we're supplying to aim for the high-valued markets, think about the products we're providing into those markets meeting the needs of consumers, so that's one way we can do it. The second way we can do it is produce more with the same area of land and the same resources we've got, and so that's about productivity improvement. That's about investing in R&D. As I said, there's some possibility of that, but we're at the production frontier, so we have to do a lot of work to push that out to make sure we expand that. And then the third way is to actually look at expanding into new areas, and expanding into the north is where the great prospect is really lying at the moment, and that really requires substantial investment and sensible investment in terms of how we can control water in the north, and how we manage other factors such as transport infrastructure communications, making sure we can get product to market and regrow the right products and so forth. And so that's quite a major challenge, and one that the Northern Australia White Paper was trying to address and look to the future. Interestingly, in Northern Australia, if you look at the history of activities that have occurred in the north, in agriculture, often they haven't failed because of environmental or because of market reasons. They've failed because of financial reasons that people have either tried to grow too quickly, they haven't had a good business plan, or they haven't done their finances correctly and goes to James's point, if we're going to tackle the north, it's not just about environment, it's not just about markets, it's about getting the business models right in terms of how we go forward. Cheers.