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Rural and Regional Affairs and Transport References Committee - 20/02/2015 - Marketing and research and development levies in the agricultural sector

SNOOKE, Mr John, Chairman, Western Graingrowers Committee, Pastoralists and Graziers Association of Western Australia

[12:05]

Mr Snooke : With your permission, I have an exhibit I would like to display to the committee today.

CHAIR: Absolutely.

Mr Snooke : It is a little bit of on-farm—

CHAIR: I saw you had something heavy in the bag when you said that.

Mr Snooke : I did worry how I was going to get up the stairs with it, but I had no problem. It is just a piece of farm machinery, but I would like to refer to it a couple of times.

CHAIR: You can refer to it. We are pretty relaxed on this committee, as long as you.do not throw it at us!

Mr Snooke : My wife did say that—'John, don't throw it!'

CHAIR: She is a wise woman. The committee has received your submissions as submissions Nos 54 and 87 respectively. Would you like to make any amendments or additions?

Mr Snooke : No, thank you.

CHAIR: Great. You know what to do now, Mr Snooke. Fire away.

Mr Snooke : Firstly, thank you to all the senators here today. We always enjoy being able to give evidence on agricultural issues. As an organisation, we think this inquiry is a good start to looking at agricultural levies. Secondly, I have an apology to make. My colleague Mr Leon Bradley, who is the main author of our submission, is sick. He is recovering from a fairly severe illness at the moment, and he sends his apologies to the Senate committee today. This area is a real passion of Leon's, and he is disappointed he just could not get up for it. So I am standing by everything that is in our submission, but I wanted to make it clear to the committee that I am not the author. I will do my best as a farmer and a levy payer.

I also want to state that the PGA's position is that we do not want to be critical of individuals who volunteer their time to the GRDC, and we do not want to criticise the employees of the GRDC. It has problems; there is no doubt about that. But we believe it is a system problem that needs altering. I want to put that on the record, because other organisations seem to think they can shuffle deckchairs and solve the problem. We do not believe that is the case.

In my opening presentation I would like to raise a couple of issues that I have learned in my farming career about innovation and also about the inflexibility of the GRDC. This exhibit here is a spade from a spader. That is a glorified rotary hoe. On my farm, I have lots of sand-plain country, which has been challenging for my family for generations. About eight years ago, a very leading innovative farmer in South Australia was trying to incorporate clay into his sand to improve the structure. That has been hugely beneficial to sand-plain farmers across the nation, but the problem is that incorporating that clay to a depth has been a big challenge. It seems something very simple, but it is a big challenge, and the networks throughout the farming community are always trying to solve this.

Mr Roger Grocock from South Australia employed a Danish chap who was trying to incorporate this clay with an old scarifier. They had been in the workshop innovating, and it was not working. He had got off the scarifier that night and he said to Roger, 'You need a spader.' They went to his house and got on the internet, and there they were for sale in Europe. A week later, Roger Grocock was in Europe and he bought a number of these spaders. I am the owner of one of these spaders. It has revolutionised my farm.

The point I want to make is that there was no GRDC involvement in this. This was innovation at the coalface, and spontaneous networks developed. We all spoke to each other. We all worked out how to solve the problem. Roger got the machine here, but that is just the start. It is putting it in the field and getting it working. This has made sand-plain country on my farm hugely profitable, to the point where I am now doing the due diligence on my neighbour's sand-plain farm. I am that confident in farming what has been a hostile soil in the Western Australian wheat belt, which has challenged my mother and father and grandfather for generations. So we are solving problems.

The GRDC has come in late on the issue. We have done all the work. We have got it to a point where it works in the field. I used my fertiliser company to do independent trials. I paid for that myself. I verified what I believed I was seeing. I did that myself. I did not need the GRDC to do it. But, as method of tillage has become popular and it has become more accepted, mainstream, we are all the time seeing the GRDC starting to claim it. It is even going against what they were inherently advocating, and that is no tillage, because this is not no tillage. But I am a vehement supporter of no tillage, because it lessens the erosion in the wheat belt and all those types of problems. We have moved on from farming in the way we did in the 1950s and 1960s. We have tillage on farms and we have no tillage. We have this combination. It is a comingled system. We are always trying to see the best remedy for the problems that face us. But it was not the GRDC that did this. This was just farmers at the coalface doing what we have always done, and that is building on our knowledge and looking and trying to discover new ways of doing things every day.

There is another point I just wanted to make on the GRDC. Just in the last week an issue has really brewed up in the wheat industry, and it is around coeliac disease. This has been a little pet concern of mine for a long time. I would like to say to the committee that coeliac disease is a genuine concern in society. One per cent of the population have it and it is debilitating. But we are seeing this spillover. We are seeing in cafes the gluten-free muffins. It is daily in our face. What is happening now is that 28 per cent of the Australian population believe in some sort of gluten-free diet, whether it is just buying a gluten-free muffin once a week or a more rigid following of a gluten-free diet or somewhere in between. It is happening and it is affecting domestic wheat sales.

An individual out of Melbourne, Dr John Williams, is coordinating some research into this area. The problem is the peptides in the wheat. There are 20 of them and they are what causes coeliac disease. Those peptides can be mitigated by a lengthening of the fermentation process of leavened bread. That is the culprit there. The GRDC does not want to know about it. It is going down a different path. It believes that Australia needs to produce higher protein wheat, which would then exhibit more of these peptides. There is demand from Asia for higher protein wheat. I do not discount that, and, yes, we need to service those markets, but we cannot ignore what is happening in consumer world. We produce a product that competes on the market with many consumables. That is to me a classic example of the inflexibility of the GRDC.

Just this week Dr John—when he was originally told the project would go ahead—has been stonewalled because he decided to take matters into his own hands and survey growers directly. I helped him by sending the email and his document to growers. It has really agitated the GRDC, because they do not want the growers surveyed—because the grower has come back and the grower is concerned about coeliac disease. The grower is concerned about the backlash, because it has spilled over and it has become a trend. The grower wants some research done in that area, but the GRDC will not do it because there is a whole heap of bureaucracy that has got to be gone through. It is focusing on a different direction to counter coeliac disease. The GRDC says a vaccine is coming out next month to help coeliacs, but that is not going to alleviate the fear in society about these peptides and wheat products.

They are just two examples of my concerns with the GRDC, about things I am involved with. But I do want to state again to the Senate that we just do not want to criticise individuals who volunteer their time, because it does become highly charged, this issue around levies, and we maintain that it is a system problem, and we need to sort that out so farmers have more control over their resources and can allocate their funds to best benefit their farming operations. Thank you for listening to my presentation.

CHAIR: It is honourable that you do not want to attack people who volunteer. That is very important. But if there is a heap of money going into a body—not elected, but positioned, placed or whatever we want to call it—that is responsible for spending other people's hard earned money, maybe someone will get caught in the firing line. So I am asking you, with both your Pastoralists and Graziers Association hat on and your Western Grain Growers Committee hat on, if your organisation has frustrations dealing with GRDC on raising issues of transparency and how the money is spent? I want you to tell us about your experiences there. It has been raised this morning.

Mr Snooke : Our committee's experiences have been that we have participated in consultation days with the GRDC. We have not done that recently because the GRDC will get the state farming organisations together and have a session where there is lots of butcher's paper around the room. They have farmers and industry there and the problems are put on butcher's paper ad nauseam. It drives you nuts. It is this whole butcher's paper process, but nothing gets done.

In 2009 I attended a consultation day just before I became chairman of the committee, and the number one issue in the WA wheat belt was some sort of frost tolerant wheat. Frost is a huge problem in the wheat belt. It really devastates farming communities. To this day all we ever get out of the GRDC is a glossy magazine claiming that they are doing something in this space. Those consultation days are frustrating.

CHAIR: So you do not attend?

Mr Snooke : We do not attend. That is the best way to say it. The PGA has always maintained that we need to have an independent audit of the GRDC to independently analyse whether or not the levy has been successful, and the governance of the GRDC. To our knowledge no-one has done that yet. We think that is maybe an area where our politicians could somehow force a situation where the GRDC has to go through that process so that we can lift the lid on this organisation and have a look in so that we thoroughly know what we are dealing with. We do not believe that the levy benefits any of our members. My members tell me that they want to spend their money on lime. Acid soils are a big problem in WA. The tightening terms of trade have ensured that farmers are not spending money on that important resource.

CHAIR: If I am saying something wrong here, pull me up. When you have these frustrations, or inactions or answers to your queries not coming back, I am trying to decipher whether it is the fault of the system or of the personnel. Coming from my background, if someone went crook at me and told me that was the problem, I could not blame the system if I did not do anything about it. Is it the system we need to change? How do we change it to appease the growers in Western Australia who you represent? Or, when do we finally say, 'Enough is enough.' What has come out today—and GRDC will be able to defend themselves—is that there is no fair election, which is my take on it. Not only that, as a levy payer you cannot have a say on how your money is spent. What we are finding out on a number of RDCs is that when questions are asked about how the money was spent and what the programs are, it is very similar to the MLA—this big monster that just does not want to tell you. They have all this glossy stuff on the internet, but by crikey, 'Don't ask, because we just do not want to tell you.'

Mr Snooke : Our organisation looks at the results. We look at the productivity that is not happening in the grain industry. The GRDC came about in 1989, I believe. Since that point our productivity has flatlined. That is what our members look at: where is the next leap in productivity? It is not coming from the GRDC. That is the number one concern. When we have put up research priorities, they are not listened to.

 

Coeliac disease is a classic one. I am not saying that the GRDC should look at that issue, but it does not have the flexibility to adjust. Groupthink occur in the GRDC and they go off on their own tangent. The grower does not have a decision—as you know—so that linkage is lost between the grower and the scientist, and that is the linkage that we need to join up again. We have a distortive administrative body sitting in between, and that is where the problem lies. Once upon a time, the scientist would be in the paddock with the farmer. We had this hands-on engagement in the paddock. That has all been lost in agriculture. The scientist has to abide by the GRDC, because that is where the pot of money is. That is the problem. We are looking at the results that they claim are there, but when you look at the hard data they are not. We have a flatlining productivity in the grains sector, and ultimately that is going to affect the viability of our farmers in the country.

CHAIR: Do you see, as the PGA, that there is a need for a representative body that will listen to the levy payers and will have far more input but that that is not the GRDC as it stands now? Is that what you are saying?

Mr Snooke : I will go a step back. It is difficult because these institutions become embedded in industry, so it is a tough argument. Our goal is to head it off in the right direction. Our members ultimately would like the GRDC to be put under a test of a voluntary levy and let the market decide whether it provides a benefit or not. But it is a very difficult thing to get the industry on that path. So we are saying to reduce the levy, retain the GRDC, lessen the burden on the grower and make the GRDC more focused on what it was intended to do—and that was to improve on-farm productivity of Australian farmers. I think the intention was good in the early days, but the reality is that it has not worked.

Yes, I admit I would prefer a voluntary levy—that is the ultimate test—but it does worry some people; I will admit that. The GRDC has become some sort of institution in agriculture, and people think that we are not going to be able to survive without it. I admit there are some in the industry who think like that. We are just trying to head it off in a different direction, not more of the same. That is our concern. We could have another 10 years of the same outcomes.

CHAIR: On that note, for the purposes of consistency, I always have problems with voluntary, because I find that the people who really want to make a difference chip in and the others will duck and dive. I am not saying that would be the case with the grain industry here in WA or Australia, but I just have to keep consistency.

Senator LEYONHJELM: You have said, 'Somebody else's good idea ought not to become everybody else's financial commitment.' Could you just elaborate on that.

Mr Snooke : That point is made around the socialisation of an innovation. Occasionally, we do see within the GRDC that it does fund, maybe, a mechanical innovation, but it is not proven in the marketplace. Because it is a popular mechanical thing that may solve a problem, the GRDC will commit everyone's money to that So it is not facing the true market test. That worries me, because, on occasions, the development of that product has gone well beyond where the market would have taken it.

Senator LEYONHJELM: Where do end-point royalties sit in that argument? The proposition put to us is that levy funds are involved in developing varieties, proving them and all that sort of stuff—so growers have paid for them. Then when they are put on the market they have to pay for them again with end-point royalties. What is your response to that?

Mr Snooke : There is a concern. Whilst we have not gone into that particular issue deeply in our submission, that is an area of concern—the double-dipping. With the end-point royalty system, those who develop technology need to be repaid—there is no doubt about that. But the levy payer needs to own some of the intellectual property, and that does not seem to occur. The breeder ends up with the intellectual property that has been paid for by the levy grower and then charges the levy grower when they put a product in the marketplace that is worthwhile. So that particular issue does need looking at.

Senator LEYONHJELM: I am personally highly sceptical of all marketing levies. The grain industry does not have them, but with R&D I am wary of them, and I probably share your views on that pretty much. If you did not have them at all—and you were referring to voluntary levies—how would R&D be funded? Would it be done voluntarily by major growers or by growers pooling together? Would it not get done at all? Some innovation can be quite expensive, as I am sure you know—there are lots of examples. How would that be paid for?

Mr Snooke : A level of innovation, I believe, will always occur. It is a question of at what level. It is a good point that we do need to discuss. We have concluded at the PGA that we accept as an industry what is volunteered by those who earn the money. That is the level of R&D. What direction that particular pool of money goes off in is up to the levy payers under the voluntary system. I will admit that the pool of money will not be as large as what is now—there is no doubt about that—but maybe, as a country that is fiscally struggling at a federal level, where the terms of trade are declining at an agricultural grain industry level, that is where we have to draw back to. Maybe the one per cent levy is just too much. It is a big burden for growers to bear.

Senator BULLOCK: I have a question about your interest in coeliac disease. What proportion of Western Australia's wheat is exported?

Mr Snooke : Ninety five per cent.

Senator BULLOCK: I have watched with interest the developing concern over coeliac disease, which was non-existent a while ago. It is something that concerns Australians. Given that 95 per cent of our Western Australian wheat is exported, do you know to what extent concern with respect to coeliac disease is an issue in our export markets?

Mr Snooke : It is growing. It is undoubtedly growing in the Asian market, though it is not at a level that occurs in the Western world, particularly Canada, America and Australia.

Senator BULLOCK: Do you think it is material in terms of promoting the export of Australian wheat into our markets? If you are going to do research, is this an issue of such significance that it will impact on our potential to export?

Mr Snooke : I do believe that, yes. It is important research because it gets back to this fermentation process in the leavened bread. Those peptides—

Senator BULLOCK: It might be something that we have the luxury of exploring in Australia, but, in developing markets, I might have thought that they would not put the money into addressing the fermentation of leavened wheat.

Mr Snooke : I do not think they are going to.

Senator BULLOCK: Neither do I.

Mr Snooke : In the emerging market, they tend to follow Western societies trends, don't they? It may be delayed, but I have no doubt that the Asian consumer will be looking at—

Senator BULLOCK: Do you think it is priority 1 for our research and development?

Mr Snooke : I am using that as an example. I do not know whether the GRDC should be doing it, but I am using that as an example of the inflexibility of the organisation. It is going down a different path, yet the grower that has been surveyed wants this work done because there is a legitimate concern there about market demand for wheat products.

Senator BULLOCK: I will not go further on this, but I just wonder if the currency of the issue in Australia may have led the grower to the wrong conclusion—but that is me just wondering. Thank you.

Senator BACK: Mr Snooke, I am very, very keen to see how that thing actually works, but I am sure you are going to tell us.

Mr Snooke : You are more than welcome to visit. In the next couple of months it will be in operation.

Senator BACK: Good on you, I intend to do so. I want a focus for a couple of minutes on some figures. They are USDA figures except for some of ours, from the Australian Bureau of Statistics. You have given us US winter wheat, China corn and China wheat, Canadian wheat and European wheat. Everyone else is going up except us, although in the USDA figures I found difficulty in believing that the Chinese corn yield would increase from 72 to 95 bushels per acre in 14 years or that their wheat would have gone up from 3.8 to 5.2 tonnes in that same period of time. But, when you look at Australia, everyone else is going up and ours has gone from 1.7 tonnes to the hectare to 1.5 in the 14 years. It does not say much, does it, for the millions of dollars that have been spent?

Mr Snooke : It is a real concern in our wheat industry. The small productivity gains we are getting are from the small changes we have made to improve our efficiency on farms. It is not really coming from breeding. We are getting some improvement in barley varieties and canola. But wheat is a laggard. It is just not happening in this space. Some of the breeders would sit here and say, 'There are some good things coming in the pipeline.' I appreciate that. They are positive and buoyant. They have to be. But at the moment it is flatlining.

Senator BACK: Then you have a graph regarding the benefit of lime at one two per cent. To what extent was GRDC research undertaken to produce the information on the value of lime in our acidic soils?

Mr Snooke : Once again, the GRDC played little part in the early days of placing lime on farmland. That was done by an individual, Dr Lorelle Lightfoot, who is WA's leading scientist in that field. They developed those lime hits going up the coast. The GRDC has put some numbers behind it—I will grant them that—but people were liming well before the GRDC got involved. I would have to say that the ag department in Western Australia has done an extraordinary thing for agriculture, because they did some beneficial long-term trials north of Kellerberrin starting in the early nineties that we are now looking at with high rates—and that is where our data is coming from. It is coming from those long-term trials. They were fantastic. That is helping farmers. It is not the GRDC.

Senator BACK: Do you know if the Americans, Canadians, Europeans and maybe Chinese are getting these increases in yield? There are two things I want to know. First of all, what do those countries have as the equivalent of our GRDC? Secondly, do you have any idea what the producers are paying by way of levies or is it like the Americans where the taxpayer pays it all?

Mr Snooke : In America it is the taxpayer. There is no levy system, I believe, in America. The research is done mainly by universities, I believe. I do not think there is a centralised bureaucracy. It is really decentralised. Whether that has had an impact I do not know, but where I think the US has improved its productivity is in corn. Corn has had this massive genetic jump in recent decades, I they do not think their wheat is moving in a good direction either. But that is because farmers just are not growing as much of it in that country because they have other options, whereas in Australia, as you know, we are still a wheat belt. We dabble in barley and canola but it is a wheat belt and it will be for the foreseeable future.

Senator BACK: It is a pretty lamentable performance, isn't it? After all of this investment, time and effort, we have gone backwards from 1.7 to 1.5 tonnes in the last 14 or15 years. You just have to you ask the question: where is the value of the investment?

Mr Snooke : There is not really a return on investment at all, sadly.

Senator SIEWERT: Where do those figures come from? What is the reference?

Mr Snooke : The USDA figure?

Senator SIEWERT: No, the Australian figure.

Mr Snooke : The Australian Bureau of Statistics.

Senator SIEWERT: In your submission you talk about the fact that one of the issues is the transformation of R&D and marketing to increase returns. You say there is no point in undertaking R&D if it is not adopted and you talk about extension. Is that one of our issues? We were talking about this issue this morning as well. I am wondering if one of the issues we are talking about here is a lack of extension in its broadest sense to actually get some of the research out there. I agree with your point that there is no use undertaking it if we are not going to adopt it and get it out there.

Mr Snooke : It has been a perennial debate—how does the information get out to growers? There clearly has been a breakdown. I do not know the answer to that, but I do know that more and more farmers are paying for consultants. I have an agronomic consultant who gathers the information. I pay him to come to my farm and deliver that information, so I am not putting my time into that area. They have sort of taken over the role of the ag department and the GRDC a little bit. Farmers enjoy that one-on-one. When you have that trusted relationship with an agronomist it works very well. It is something I enjoy. The ag department and the GRDC do not do that one-on-one. They do not stand in a paddock looking at weeds, nutrition and disease.

The extension one from the GRDC is interesting. I am not so sure that it is needed now in the modern world of communication. It is not working. Growers are not really seeking a direct line of information from the GRDC. They are doing it through other channels.

Senator SIEWERT: I want to check a point you made I think in answer to one of Senator Leyonhjelm's questions about the one per cent. There was a suggestion this morning that we should come back to, say, $1 or whatever, a set amount, per tonne. I understand you have other issues, but would one of your issues be addressed if the levy were a set amount per tonne?

Mr Snooke : Absolutely, yes, because we would think that is turning what is not working around and heading it off in the right direction. The pool of funds is growing. The reserves at the GRDC are huge. Let us take the burden off the farmer and take it down to $1 a tonne and let them draw in and focus on what is really important—that is, on-farm productivity. They have gone out in areas that are not helping us on farm. They are trying to be all things to all people.

Senator SIEWERT: I noticed that in your submission—and I understand the point. You talk in your submission about food security: for example, biosecurity and market access. I understand the point you are making about coeliac disease—and I want to ask another question about that—but you could say it is a health/market/food security issue in a way. You are arguing that the GRDC have not taken that on, but in your submission you are saying they are taking on these issues. I am guessing they would argue that that is connected to productivity. You have said yourself it is. And climate change: from my perspective, unless we actually have a system that is adapting to climate change, we are stuffed.

Mr Snooke : I absolutely agree with you.

Senator SIEWERT: I would argue that those are the sorts of things that the GRDC do need to look at. If we do not have varieties that are going to grow it in a drying climate, we are in trouble.

Mr Snooke : I absolutely agree with you. The problem with the GRDC has been that they want us to decrease emissions and that will decrease our productivity. It is a difficult one because, whether you believe in manmade climate change or not, we all agree that the CO2 levels are rising in the atmosphere. Our view is that that is a great resource for the Australian grain industry. Let us breed plants that utilise that CO2 to the plant's benefit.

Senator SIEWERT: There is some work to suggest that it cannot make that much of a difference to global CO2 emissions. I understand what you are saying, but I do not necessarily agree that that is the way the research should be focussed but I do think it should be somehow focused on climate change. Your submission seems to argue—and I apologise if I have interpreted it wrongly—that the GRDC are taking all those issues on board and that is not the main game.

Mr Snooke : That is right. We need improvement in on-farm productivity. The climate variability is something we face every day when we get up in the morning. It is not foreign to farmers.

Senator SIEWERT: A drying climate is not something you face every day.

Mr Snooke : I would challenge that. On my farm my records do not indicate that at all. My rainfall levels are very stable.

Senator SIEWERT: Maybe we should take this discussion off-line. It may not be on your farm, but are you saying that south-west Western Australia is not drying?

Mr Snooke : I am saying that it could be drying but I also believe that it may go through a period of being wetter. We face these cycles in agriculture. And farmers adjust to—

Senator SIEWERT: I hope you are right and I am wrong. Sorry, with all due respect, I am still getting mixed messages, because some those issues do relate to—

Mr Snooke : Profitability, yes.

Senator SIEWERT: So shouldn't they be looking at them?

Mr Snooke : I know that the GRDC needs a definitive charter. It needs from the farmer a definitive scope, whereas at the moment it is going so wide and is looking at things that just are not helping us.

Senator SIEWERT: You are saying, 'Look at those and narrow them down to certain things that everyone agrees to.'

Mr Snooke : Absolutely. The scope needs to be drawn in. If climate variability is something that a farmer believes needs really looking at, then that is one area for the GRDC to look at. But we have gone so wide. It is everywhere, and it is being ineffective because of that.

Senator SIEWERT: I understand what you are saying.

Mr Snooke : It cannot solve everyone's problems.

CHAIR: While we are on the red-hot topic of climate change, Senator Bullock, as an esteemed member of the environment committee, do you have any questions?

Senator BULLOCK: No, thank you, Chair.

CHAIR: Before you go, Mr Snooke, Senator Reynolds wants to ask one more question.

Senator REYNOLDS: I just want to know about your membership. Who are your members? What are your membership arrangements and governance arrangements for the PGA itself?

Mr Snooke : It is a small membership. We are not by any means the biggest lobby group in WA. Our membership is made of very much self-reliant members. They are progressive; they pursue new technologies. The structure is around—

Senator REYNOLDS: So how many members?

Mr Snooke : In my recent submission I said 600 individuals. I have to acknowledge that I am not completely sure about that. The PGA does guard its membership strongly. There is a lot of privacy around it.

Senator REYNOLDS: But the membership is of like-minded growers?

Mr Snooke : It absolutely is. They gravitate to us because they believe in a free market with minimal government interference. That is where our membership lies. They solve their own problems. That is what I really enjoy about being involved in the PGA. It is not an organisation where you will rock up to a conference and vote on a motion. You can sit around the executive table, you can raise an issue and, if you win the debate based on our principles, you can beat the other 30 people around the table.

CHAIR: I tried that in Broome with the bloody live cattle thing. That did not work.

Mr Snooke : It is sort of a think-tank type structure. It is not your traditional farmer group.

CHAIR: Mr Snooke, thank you very much for your time.

Mr Snooke : Thank you very much for the opportunity. I really appreciate it.