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Comments: 1

THE RAMIFICATIONS OF UNDERINVESTMENT IN AUSTRALIAN AGRICULTURE

7 May 2014 12:37 PM - Article and submission to Australian Reconstruction Development Board written by Ian Joseph

What underinvestment in Australian agricultural industries and agribusiness infrastructure has meant for producers and supply chain operators, is very pronounced.  A jawboning effect in erasing our competitive edge on the global trading stage is now translating into a material economic and social opportunity cost for the future well-being of Australia citizens. 

The summary and attachment is a recent submission by Ian Joseph to the Senate Enquiry relating to the Australian Reconstruction and Development Board highlighting and addressing the many issues prevailing today in Australia’s agriculture and agribusiness related industries.

Please read on to follow the Executive Summary, then click the DOWNLOAD button at the bottom of the article to read the FORMAL SUBMISSION. 

We'd love to hear any comments you may have on the issue.  Please click on the COMMENTS button at the bottom of the page if you wish to.


EXECUTIVE SUMMARY

To really understand the present, we have to sometimes, look at the journey, to see why we are in the predicament we are in today. It is not rocket science, those involved in farming, agriculture and agribusinesses in regional and rural Australia and even those in the cities, who have an appreciation for, and a love of, all the things our farmers produce each and every day, have known why, for a long time.

What we are seeing today, is the consequence of continuing underinvestment in the agricultural industry (infrastructure, education, technology R&D etc) over many years. In the past though, there was a fall-back position with Farm Management Deposit’s (FMD’s) where in good times, tax effective liquidity could be put aside for those times when seasonal conditions were less than optimal.

The hardiness and durability of the great Aussie spirit was enough to carry people through any drought, fire, or rain, but unfortunately it seems today, after such a long period of harsh exceptional circumstances, (political and seasonal), that our farmers have used up much of their reserves of resilience and resources which means that now, this past underinvestment is coming to bite the industry on the backside.

It is the lack of ability for our farmers to gain access to appropriate levels of liquidity (suitably priced) to expand, restructure and re-equip now, after such a long harsh cycle, that is of greatest impact and concern.

Without doubt the current state and condition of the entire agricultural industry (the cornerstone to a healthy and sustainable Australian Economy) has been a long time in the making. Made even worse by the harsh seasonal conditions since the middle of 1990’s and the unwillingness or inability of industry bodies or government policy to understand the impact the past is having now on our present 135,000 farming families and their communities.

If you look at the ABS data there have been 10 farmers and their families leaving the land each and every day for the past 30 years. Obviously some leave because of many varied and different reasons, age, economies of scale, consolidation with their neighbour, an offer too good to refuse, but probably they also leave because they have waited for so long for the industry issues and concerns to be addressed in a coordinated, unified, collaborative and bipartisan political way, that they just don’t want to fight any more.

That is why the “Economics Legislation Committee” wishes to investigate how to address the liquidity issues within the industry, by looking at a new board within the Reserve Bank called the “Australian Reconstruction and Development Board”.

And that is why it is so welcome and long overdue.

 

Comments: 1

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Investment reserves

16 May 2014,8:38 AM - Anne
During the past 15 years the balancing scale of income against expenses has dramatically swung to expenses outweighing what income comes from our produce.Rural people are mostly town shoppers and therefore the impact is widespread and retail suffers.
The farm gate prices have not increased to match CPI so therefore each year the producer is forced to cut expenses which will either be infrastructure and little or no savings put aside. We are continually at the mercy of the 3 big processors that through industry representation dictate terms and prices for our produce and are making record profits for the exported carton beef.There must be a floor price of some sort as many will go to the wall and not be able to sell or pass on their properties .What then?
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