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Standing Committee on Agriculture and Industry
29/01/2016
Agricultural innovation

CLARKE, Ms Irene, Senior Policy Manager, Australian Dairy Farmers Ltd

FITZGERALD, Ms Paula, Manager, Biotechnology and Strategic Initiatives, Dairy Australia

JOLLIFFE, Mrs Simone, President, Australian Dairy Farmers Ltd

JONES, Mr Tyran, Chair, Policy Committee and Director, Australian Dairy Farmers Ltd

[11:38]

CHAIR: I now welcome representatives of the Australian Dairy Farmers and Dairy Australia. Although the committee does not require you to give evidence under oath, I advise you that this is a legal proceeding of the parliament and therefore has the same standing as proceedings of the House. I invite you to make an opening statement for two or three minutes and then we will proceed to questions. For your information, the committee visited a dairy farm yesterday in the Alpine Valleys project, which was very interesting and very informative.

Mr Jones : Thank you, Chair. I will make a brief opening statement followed by Paula Fitzgerald from Dairy Australia and then our team here will be happy to answer questions.

What is innovation? In recent months it would appear that the word in today's language is almost trending. I suspect it is a bit like many other words that have become popular that have different meanings for different people. Some define innovation as 'a new method, idea or product'; others suggest innovation means 'changing a business model to adapt to changes in the environment to better deliver products or services.' Wikipedia, along the theme of being in the present, suggests that in 'fields of practice and analysis, innovation is generally considered to be a process that brings together various novel ideas in a way that they have an impact on society.'

For the purpose of today perhaps it is not necessary for us to agree on one definition, but, having read a range of options, I am confident that the Australian dairy sector relies on innovation. As an industry we utilise practices and deliver products that are innovative. Australian dairy farmers are enterprising and resilient. Australian dairy is a $13 billion farm manufacturing and export industry, and over 6,000 Australian dairy farmers produce more than 9.7 billion litres of milk a year. Our industry directly employs around 43,000 people on farms and in dairy processing, and we are the fourth largest exporter in the world. We could not have achieved this without innovation.

As CSIRO rightly points out, no single technology is likely to transform Australian agriculture. In dairy we need access to multiple tools and technologies. We have witnessed and will continue to see advances in bioscience, delivering improved pastures and animals, and we are starting to see the potential for digital technology, such as animal tracking systems and remote sensing. We are utilising robotic technology and we are also likely to see advances in material science such as seed coatings for germination control.

From a farmer perspective, it is important to note that innovation does not simply mean the generation of novel tools and technologies. It may also mean new ways of doing business, and we are exploring and witnessing new farming systems and farming business models emerge.

In our submission we have noted that research, development and extension have provided the basis for productivity improvements over the last 20 years at an average annual rate of 1.6 per cent. However, this productivity has started to stagnate. Continuing innovation and its adoption is essential to a sustainable and profitable Australian dairy industry. Australian agriculture, notably dairy, continues to attract media headlines and is poised for growth, particularly as a result of the growing demand by middle- and upper-class consumers in developing nations. That said, our areas of growth are no secret and we will face tough competition in many markets. Australian dairy operates in an open and highly competitive international marketplace, so continued productivity gains are essential. As our Prime Minister, Malcolm Turnbull, said in a recent address in Washington DC, we want 'to make volatility our friend'. New science, tools and technologies have an important role in making us more efficient, competitive and able to minimise the effects of volatility that is out of farmers' control.

As we have highlighted in our submission, Australian dairy needs ongoing investment in research, development and extension, both public and private. Some of our farmers still need access to basic services like power and telecommunications, which we have heard about in some detail this morning. We want to ensure that government red tape is reduced through the removal of unnecessary regulations, inconsistencies across jurisdictions and bans that are not backed by science. We would welcome incentive programs from investments and capacity building, the latter particularly in areas around data interpretation as we embrace the digital and big data era.

We agree government support is needed for a strong operating environment and market confidence for farmers and processors to have confidence to grow and invest, but how to ensure agricultural innovation is embraced and capitalised upon? All this effort goes to waste if our consumers—our customers—do not have a modern-day view of and accept agriculture. We want to partner with government to build a narrative around modern agriculture. Australian agriculture, like other sectors, such as medicine, uses and will continue to rely on modern, cutting-edge tools and technologies, yet our consumers, while embracing technologies in medicine, seem wary of these tools in our supply chain. We need a partnership with government to increase the understanding and acceptance of innovative agriculture. I refer to a statement made by our recently retired Chief Scientist, Professor Ian Chubb, who said:

Our need to increase yield might well mean we have to do so in ways that we presently don’t have to think about.

If a government has appropriate regulation, appropriate controls in place and the science is conducted ethically, then the future is probably going to require us to have GM food.

   …   …   …

I think it’s up to scientists to get out there and explain more carefully why they do what they do, how they conduct their research, why that research might be important.

Professor Chubb also noted that science 'must always trump make-believe'. I also refer to the Business Council of Australia's recent Agrifood report, released last December, which said:

Government and industry need to continue to build consumer understanding of genetically modified foods and cultivate consensus across the supply chain. This should include providing factual information about genetic modification to the public to assist in building an evidence base and addressing any consumer concerns.

While this statement refers specifically to gene technology in agriculture, it is just one method of innovation that provides an opportunity for collaboration where agriculture, business, the science community and government can collaboratively tell the story. We need to communicate about bioscience and other technologies in our affluent societies. We need to bridge the gap between today's modern innovative agriculture and our consumers as the gap between our rural and urban communities widens. We are inviting government to join with us in collaboration to create the narrative and communicate with our consumers and customers about agricultural innovation. Such a partnership could deliver at least five outcomes: firstly, support continued research and development as well as new approaches to extension to drive innovation; secondly, provide a confident agricultural environment for potential investors, both farmers investing on farm and external parties investing in Australian science and agriculture; thirdly, ensure we own the debate rather than it being driven by major retailers some of whom place constraints on production systems and technologies, as highlighted by the Australian Farm Institute; fourthly, increase our market opportunities and competitiveness in-market; and, fifthly, promote agriculture as an exciting career path attracting a young, passionate and new skill base into the industry.

In closing, I want to emphasise that to make a difference we need real action, new action. Scientists will continue to research new technologies and industry will continue to promote new tools and adoption, but if Australian agriculture is to take the leap and really embrace innovation, it is not all about researchers and industry—it is about the Australian population that makes the decisions or influences the acceptance of that innovation. Parliament represents that population. This committee now has the opportunity to really tackle this communication and acceptance issue. This requires new initiatives and new commitment. We need a new strategy and actions for how the government will work with industry and our science community to address this critical challenge. On behalf of Australian Dairy Farmers, the national policy and advocacy organisation, I thank the committee for giving us their time today and introduce Paula Fitzgerald from Dairy Australia to make a short statement.

Ms Fitzgerald : I thank the committee for their interest in this subject. Dairy Australia is the national services body for dairy farmers and the industry, so we work to help farmers adapt to the changing operating environment and to achieve a profitable and sustainable sector. We operate across three strategic platforms: profitable and competitive dairy farms, protecting and promoting our industry and growing capability and skills. We survey 1,000 dairy farmers annually, and from last year we know that 87 per cent of respondents agreed with the statement, 'I often make changes to my systems to improve the profitability of my farm'. We are highlighting, I guess, farmers' appetite for innovation. We know that 65 per cent of our respondents agreed with the statement, 'I prefer to see the impact of adopting new ideas or new technologies on other farms before adopting them myself.' Again, that is reinforcing the need for information sharing and extension. Sixty-five per cent also place high importance on decision support tools that assist with them running their dairy businesses. We know that 56 per cent of them reported last year making capital investments in the last 12 months, and 52 per cent indicated that they wanted to in the next 12 months. Lastly, a significant number, more than 90 per cent, actively look for ways to reduce the environmental impact of their farm. So we believe Australian dairy farmers do have a culture of innovation—many apply it every day—and we want to build on this culture to give our dairy farmers the confidence to invest in their farms and so Australian dairy farming can be seen as an attractive investment opportunity. The culture and confidence will help attract much-needed capital and potentially bring new skills and young people to our industry.

For our dairy farmers to be able to take advantage of the growth opportunities, they really need to be producing more from existing resources. Research, development and extension are critical to achieving that. Yet, despite our farmers wanting to embrace innovation, a gap really does exist between our innovative farmers and those buying many of our products. So we certainly welcome a collaboration with government to help address this gap, and we welcome your questions.

CHAIR: Thank you very much. Is Dairy Australia a registered development corporation?

Ms Fitzgerald : Yes.

CHAIR: I thought so. You touched, Mr Jones, on unnecessary regulations. I am always interested in what they are, because we are sort of receiving a bit of a mixed message here. Firstly, it is very important that Australia concentrate on value-add, that we sell our clean, green image, that we sell the traceability of our product right back to the paddock and that we can guarantee what we are selling out of Australia—and a lot of that comes through regulation. But, on the other hand, we also hear that there is too heavy-handed regulation. Can you point any out that are particularly driving you nuts? Yesterday, a farmer raised this in the dairy and said, 'I'm sick of regulation,' but he said a couple of things. He said, 'We had two audits in the one day in the same dairy. One was a milk audit and the other was a meat audit, and they could have been done by the one person,' and they could have been, perhaps—I do not know. Is there anything that you would really like to turn on in your industry and say, 'This is where it's driving us nuts and holding us back'?

Mr Jones : In the context of the biotechnology space, we have a range of rules and regulations over the various jurisdictions around the country, so it would be nice if they were uniform if we want to have a scale that is attractive to commercial companies to come in and—

CHAIR: Are you particularly focusing on GM product here?

Mr Jones : That is the focus here. Ms Fitzgerald can probably answer that with a little more detail.

CHAIR: I think we recognise that and I do not know how we fix it. We are looking at a couple of fairly intransigent state governments at the moment.

Ms Fitzgerald : I do not think we are probably at the answers point yet, but one of the things Dairy Australia has recently done is commence some work in the space of looking across all jurisdictions, across all our dairy-operating regions, to try and understand what the different regulatory frameworks are, particularly across state government barriers, ranging from planning to environmental to, as you have just pointed out, types of audits et cetera farmers might need to adhere to. I guess it is something we have focused on and, while we do not necessarily have the answers to that yet, I just make the comment that we certainly have uncovered an enormous number of inconsistencies or differences as we go across those regions. So I do think there is opportunity for them to be harmonised and, again, I guess, we would also suggest for science based or evidence based systems, where they exist.

CHAIR: Certainly the alpine valley farmers mentioned planning as being one of their big issues.

Ms Fitzgerald : Yes.

Ms Clarke : In response to your first comment, Chair, we are not saying that there should not be regulation, because regulation is very important for the dairy industry, particularly in the food safety area that you touched on. We recognise the need to have regulation, but it is more about the streamlining and getting that harmonisation. For example, on the audit issue, audits are more of a state based regulation and in some states they do streamline them into one audit. So, again, it is about making those kinds of opportunities more available across the board.

CHAIR: It is not just in this inquiry. The government has made a thing about trying to reduce regulation and I have a lot of people, in all kinds of contexts, complain about regulation and interference, but I always say, 'Can you point me to them?' It is very easy to give a spray off; we need to understand that sometimes these rules are for our benefit and for the benefit of others. So, while I am very keen on reducing regulation, we need to make sure we are focusing on the right ones. I think we are all open to good suggestions coming from industry when they see the problem.

Ms Fitzgerald : Can I add to that and make the link, I guess, to what Mr Jones said in his opening address. We certainly do support regulation in the dairy industry. We also recognise federally, I think, that we have probably some of the best world-class regulatory systems in the world. You made the point that we rely on our clean green image overseas. I guess our comment about a communication partnership with government is: wouldn't it be incredible if some of our regulatory agencies were a little more engaged in the consumer space, actually talking about the great regulatory systems we have, that they are world class. Underpinning that, I guess, is building confidence in our communities here but also in our overseas markets about the products we produce and about the fact that our farmers are using innovation and that innovation is producing safe products that do have a checking system. Our regulators are at the cutting edge of innovation. They are looking for what is coming along and at how they need to manage that. There is a great opportunity there for them to be engaged in the dialogue about some of the new technologies coming onto the marketplace.

CHAIR: I think the public has a fair understanding of that—certainly some of the stuff. We will see that coming in the next few months with the country-of-origin food labelling. This committee prepared the report which the legislation is basically based on. It did identify that Australian consumers feel very comfortable with Australian food. Of course, we are giving them the opportunity now to say quite clearly: you know where this is coming from.

Ms O'NEIL: I have a question for our two farmers here. Can you tell me about what the process of dairy farmers bringing innovations into their farm normally looks like—so, thinking about from the identification of a problem right through to the implementation of a new solution. How do you think farmers are going through that process? Where are they hearing about the ideas of innovation? Where are they getting evidence from about what works and what doesn't work?

Mr Jones : There are probably a couple of streams. One is solving a particular problem and trying to work out how to do it themselves or with their mates or with whatever services are around or available to them at the time. The other is around productivity issues, which are probably the focus of broader industry research development and extension activities. So, in that context, the researchers will come up with a best practice or a technique or a technology which can then be moulded to fit a number of different dairy production systems. Then groups of farmers of like mind will get together and work out how they might mould it and bend it and twist it in terms of plant management, animal management, grazing or irrigation. There are a whole range of different subjects.

Ms O'NEIL: How would the farmers hear about the new technology?

Mr Jones : A lot of it will be through publications which the information seekers find online or in research journals, through participation in managed discussion groups, which, in the past, have been run to a large extent by state government extension officers. A very significant and important vehicle for information sharing, practice development and practice change has been through those discussion groups and extension groups.

Ms O'NEIL: What about making the leap from hearing about technology and that interest and making the change on the farm? We heard that farmers like to see other farms doing it successfully first. Is that a 'within community' kind of discussion? You want to see your neighbours putting something in place, or do you think evidence in journals is going to sway farmers about the benefits of different techniques?

Mr Jones : Evidence in journals will sway and attract some. They will grab the technique or the process and put it on their farm and then to their discussion group or their neighbours. There is a lot of 'looking over the fence' and 'What did you do and how did that work?' and 'Okay, so if I do it, what do I need to do to make sure that I don't have the two years failure you had' or 'You've done a really good job there. How do I make it work?' and 'I have trouble making it work.' So discussion groups, extension groups, extension officers and consultants—

CHAIR: Because, conversely, while there is quite a large group that like to see it done somewhere else first, there is a group of farmers in any given district that are always the ones who go first. So the developers of the technologies, the sellers of the technologies, go to them and use them as their trial platform, because they know they have got the ability to grasp the concepts and to operate them. They want to have a go and see if they can make it work.

Ms O'NEIL: What do you think of that as a basic model? Is there anything that you think the government could do on a policy side to make that more swift or get information out there more quickly and readily?

Mrs Jolliffe : I think part of it is that there are always going to be those leaders that will step out. I think those farmers are sometimes even in front of industry with some implementations. I think something that actually restricts our industry is the availability of some of the access to the support, and even robotics has had limitations because of electricity supply in certain regions. So, sometimes there are actually things outside the particular farmer's appetite that he or she cannot control.

Mr Jones : So, we are seeing a significant change in the extension model at the moment: state governments have essentially all pulled out of farm extension activities, and that gap is being filled a little bit by the private sector but to a large degree by the RDCs, particularly in Dairy Australia's case. Dairy Australia are picking up the slack, so we need to make sure that we recognise that and at least maintain the current level of investment in the RDCs in recognition that not only are they doing the R&D and the market research work but also they are now picking up additional work.

Ms O'NEIL: Perhaps I could just ask you quickly about a specific example. Your submission talked about the adoption of automated milking as an example of this. Are there any findings from that research that will help us understand barriers to adoption of new technology? What has it shown you so far?

Mrs Jolliffe : I guess other than what I said—that there are some people who have shown interest, and I guess it is one of those things that will start to pick up, is the capital investment, I think, and it is the confidence to actually make that investment and make that change. There are a lot of different reasons, if you went and investigated with those people, why they have gone that way. It has not been a single reason, which is probably a good thing for a really varied industry—that that opportunity would exist. But certainly I think when it has come to electricity supply and also because our industry is so broadly spread out—the servicing, the ability to have the innovation implemented on your farm and then serviced. Even internet: I know you need the high-speed internet, because a lot of it can actually be done from overseas. So, if there is an issue because it is all computers based, they can dial into your robot and potentially resolve a problem from the other side of the world. But that requires us to have access to those kinds of things.

CHAIR: Just on automated dairies: how long has this been a viable technology?

Mr Jones : It has been running for quite some time. It has actually followed the traditional extension developments of the program—

CHAIR: Would it be 10 years, do you think?

Mr Jones : No, it would be more than that.

CHAIR: Yes, I thought it had been around awhile, and yet 50 million litres out of nine billion; that is about 0.6 of a per cent. That is a pretty slow lead time, if it is a good technology, and I suspect it might be.

Mr Jones : There are a number of issues around that. One is that it requires a complete reset of the farm. The systems that we have been designing here have been autonomous management, so the cows move themselves around the farm.

CHAIR: So, sometimes our farms are too spread out to make it run efficiently?

Mr Jones : Well, farms in Australia were designed initially as: the dairy is there, the cows come as a group, and then they go away after milking; whereas with the automated system, the self-motivated animal movement, you actually have to have two tracks running in each direction and one-way gates and all those sorts of things so the cows can actually move themselves at will around the farm through the grazing and feeding management process.

Ms O'NEIL: So, it is a completely different way of farming.

Mr Jones : It is a completely different way of farming. So, there has been a lot of work done. It started at Camden, and there was a farm that set it up in East Gippsland; that was the first one. But a lot of work was done at Camden, and actually trying to work out how these things should be set up so that they—

CHAIR: So, it is a lot more than just the platform and the robots.

Mr Jones : Correct. It completely redesigns the farm systems and management.

Mrs Jolliffe : Big steps have been. The original ones were what we called a single-box unit. One unit only has the capacity to milk 50 to 70 cows per day, if they are returning up to three times a day, whereas now we have started to move—and correct me if I am wrong—I think there are three implemented now, which are the rotaries, which have a bigger capacity to milk larger herds, milking herds of 800 cows, versus if you wanted to milk 300 cows: you would need five single-box robots, and it is that capital investment. It is still a capital investment for farmers who might have a perfectly adequate dairy. I guess the decision is made when people say, 'My dairy needs an upgrade. Where do I want to invest my money?' It is a really large investment when you start to consider upgrading your dairy.

CHAIR: Do you get an increase in milk if the cow chooses to be milked three times a day?

Mrs Jolliffe : Yes. The productivity gains for three-times-a-day milking is about 20 per cent. You would probably be scratching to get three-times-a-day, particularly in our pasture based systems. Robots have tended to stay with that kind of management system, but they certainly seem to be getting 2.6 to 2.8, so there are definitely productivity gains from them presenting more frequently to the dairy.

Mr Jones : Assuming everything else to support it is there.

CHAIR: Yes, I understand. It is interesting to me. It follows the typical update. I reckon 20 years is pretty much on the slow slide and that runs the risk of petering out before it gets going.

Mr Jones : The initial robots were designed for farm systems in Europe. They were brought over here—

CHAIR: That is interesting. I would not have known that.

Mrs Jolliffe : Some people are starting to adapt robot technology into existing rotaries. I have not seen that, but there is some movement. I have only heard that in the last couple of years.

CHAIR: You would think it would be quite obvious, wouldn't you, really?

Mrs Jolliffe : Yes. People were starting to adapt on farm.

Ms McGOWAN: I want to change the track to education. We had a very strong presentation yesterday about the work that has been done in north-east Victoria around getting into schools. In my electorate I have 17 schools and three of them do agriculture. There is a project happening at Tallangatta to do that. I am interested in your thinking as an organisation around what you are doing. It was not just about educating the kids; it was also getting the community to understand all the things that you are talking about. The other topic I am really interested in is the skills base we need for our farmers and the processes we need to put in place for our farming businesses. What are the skills that we need to have? Can you give some thought to both of those questions? I think you are in the Yarra Valley.

Mr Jones : Yes.

Ms McGOWAN: What do you think needs to happen with education? You are in—

Mrs Jolliffe : Southern New South Wales.

Ms McGOWAN: Wagga?

Mrs Jolliffe : Yes.

Ms McGOWAN: What is happening in those systems in terms of links with schools? How is that going? Is there anything we could do to value-add to that?

Mr Jones : Dairy Australia has a number of initiatives. You may have heard of Cows Create Careers, which gets calves into primary schools. They go through the whole process of teaching them what dairy is all about and try to generate a longer term interest in the students in dairy in particular but agriculture in general. There are a number of initiatives. There is the National Centre for Dairy Education, which is a TAFE program that has been essentially run all around the country.

Ms McGOWAN: GOTAFE?

Mr Jones : yes, GOTAFE was the initiator—under contract with other providers all around the country. The systems are there, but trying to get up-take—

Ms Fitzgerald : I would like to make a comment. This is not necessarily a Dairy Australia comment. I am involved in another project at the moment. In that project, without giving away our game plan, if I can say that—and we are making a presentation about it in April—the government has had a big focus on STEM: science, technology, engineering and maths. What we are trying to do is say, 'Could we get agriculture into STEM?' When our students have a focus on science, technology, engineering and maths, could we have in there agricultural case studies so that, when you do maths, this is how agriculture fits into it and this is how agriculture fits into science—not only in the classroom, but can we help upskill our teachers in that space as well? Agriculture could almost deliver them material to fit into the other core subjects. That is certainly—

CHAIR: How is that being received?

Ms Fitzgerald : At the moment, this is a project that we are pitching, if I can use that word, to a group of entities later this year, around Easter. It is certainly something we have thought about. Particularly with the government emphasis on STEM, wouldn't it be great if agriculture was underpinning a lot of those things?

CHAIR: With the things I have seen like that in the past—like Farmer Jones saying, 'It's three chooks,' or whatever—they really want to get away from that stereotype and have a very modern farm.

Ms Fitzgerald : I think perhaps we were hoping it would be a little bit more sophisticated than the three chooks or the three cows! Cathy, in relation to your question about farmers and skills base, I just make the comment that we, at Dairy Australia, recently ran a pilot 'Are you investor-ready?' workshop. We brought a small number of farmers from our large herd group, so our bigger operators, and ran a one-day pilot for them. I guess, on one level, you would argue that not all farmers are interested in being investor-ready or would go away seeking investment, but we also saw it as really being basic business management skills that could underpin an operation, whether you were looking for investment or not. We have a range of activities where we invest in upskilling our farmers, but certainly we have had a newer focus, if I can use that word, around the investment space with the interest in dairy and how we actually give our farmers those farm business management skills they need for this new operating world.

Mrs Jolliffe : Just on the education in the schools—it is a bit separate to dairy and what we have had happen at home—it was originally federally funded and the funding was pulled nearly 18 months ago. It was run through compact and partnership programs. This last year we were able to source funding through Local Land Services, but it was very difficult. There was a lot of volunteerism from councillors and educators and farmers that sat. The program was targeted at high school students and we have run it for two years now. It was about introducing them to agriculture. They did a program where we had them in a room for a day with guests, and then they went out and they got to choose, and 'dairy' was, for both years, the most popular program. It was not so much about being a farmer. Obviously they went to farms and they saw different farms, but it was about the people that we use, the scientists and the full array of agriculture and what it means to be involved in agriculture. You do not have to be a farmer to play a really critical role. But, at this stage, we will not run that program next year.

Ms McGOWAN: Are you in the Riverina LLS, or is that Murray?

Mrs Jolliffe : Riverina.

Ms PRICE: Chair, we have touched on our visit yesterday, but I would not mind exploring the innovative way in which they have all come together. So forget about the technology; I am interested in how communities come together to improve their regional output. What we see with the Alpine Valley is that it is not just the producers; they have actually got local government representatives sitting on there, and I think there were a couple of other services that have all come together. Listening to Cathy McGowan, who says, 'I've got six other valleys out there and they could all do with exactly the same process,' I want to know, from an organisational perspective—you represent Dairy Australia—if you are looking at these models. That, to me, is innovation from a community perspective. I was quite fascinated that the local governments quite liked being a part of it, because it was a two-way street: they were learning about what the industry needs from a local government perspective and they understood what the planning implications were going to be if, all of a sudden, we have a whole bunch of small plots of land that are now available for those dreadful lifestyle farmers—so understanding the complete system. I am just interested: do you see this as a way forward for your industry and, if so, what are you doing about it as representing that industry across Australia?

Ms Fitzgerald : I will just make a comment. The particular Alpine project is not something I am overly familiar with, but it certainly is a project with support from an entity within the dairy industry and something we are looking at. I would make the comment, though, from a Dairy Australia perspective, that, while we may not look to formal models, if I can use that word, like the Alpine example, we have over the last 12 months been out there. We have a number of what we call regional development programs. In our eight key dairy regions we have an entity which is responsible for delivering our R&D and being a conduit of information et cetera. In the last 12 months, we have worked with a number of those to encourage them to engage more with the decision makers and others in their community, to be engaging more regularly and to be sharing the dairy story with local councillors and planning representatives relevant to dairy in that space. I would not say that is a formal mechanism. Our regional development programs, while all different, have I guess traditionally had more of a focus on just delivering to dairy farmers, so we are very good at talking to ourselves, but starting that emphasis to try to get them engaging more with decision makers in the community is certainly important, whether it be a formal mechanism or not.

Ms McGOWAN: Karen Roney is on your northern group, so she was there. One of the directors of Murray Goulburn was there. So all the players turned up to meet with us. I had not actually seen it as an innovation, but that is what it was. You could feel the power in the group as they worked through this business. You are talking about how they input into innovation, and how they have a problem and solve it. They had noticed how the productivity of the cows had fallen off over a period of years so one of the young farmers had got one of the industry partners and with some support from them had gone to America for two months and explored with the Americans what was happening with their productivity process. It is way outside this system, nevertheless they brought that knowledge back about what was happening and shared it with the whole group. I was so inspired by this community based collective model in a geographical area, with all the players together, and then working with education, schools, local government, with the factory, and everybody else together. Providing some way we could support it seemed to me a really clever way of getting this innovation on the ground quickly and efficiently. They had also done some of those dairy industry learning projects. I cannot remember the names of them—

Ms PRICE: If you wanted to be part of that group you had to have done two courses. One was basically how to grow your feed—pasture management—and the other one was the business course. If you have done both of those courses then you are in. That was driving people to get their education. The other thing that I thought was fascinating is that they shared all their information—nothing was kept secret. They were all trying to improve one another's output. If one was doing well they were all going to do well and they shared all that information. Where I come from in Western Australia—obviously we have dairy in WA but not in my patch; I have everything but dairy—I am quite critical of pastoralists for not all sharing information. But pastoral leases will be one million square kilometres and it is very difficult for them to get together, and here we are in the alpine valleys yesterday, and they are really only a stone's throw away from each other. But then I heard from Kathy that there are all these other producing areas and they do not do it. So, now I am less critical of pastoralists because it takes them a day or two to get to a meeting. Dairy farmers are much closer in proximity, and as an industry it would be great for you to be driving it. I see that as innovation. I thought the sharing of the information was just incredible.

Mr Jones : Discussion groups like that have always been the basis of the dairy industry's innovation and practice changes. There are small groups of farmers who get together every month all around the country to talk specifically about dairy productivity issues and share information. Interestingly, a similar initiative was also attempted in South Gippsland and in the Western District, and neither of them had anywhere near the success that the Valleys project has had. I think up there they already had a core of highly motivated people that were tapped into.

CHAIR: You need some local leadership.

Mr Jones : You have to have that local leadership and you have to have that local buy-in to make it work. When we tried it in South Gippsland it did not work, and in the Western District it did not get off the ground.

Ms McGOWAN: Leadership is really important. I know the dairy industry has invested hugely in leadership. Do you have any lessons for us on leadership within an industry and also nationally around innovation that you might like to share with us? What are you doing that is working?

Mrs Jolliffe : I guess the dairy industry does invest a lot in leadership, but it is probably one of those things I do not even think the industry—we recognise it as important, but the struggle often then is in capitalising on the skills that we have built and in maintaining the engagement. So I think it is about strengthening the alumnus and the networks so that we can maintain engagement.

Ms Fitzgerald : I would probably make a cheeky comment—it is probably a personal view. Sometimes in agriculture I think we look in our silos—I used to do a lot of work in grains, so I can say that. I guess a comment I would make is that we do invest a lot in leadership, but then do we always have a path for all of those leaders and is there an opportunity for agriculture collectively to look out of those silos a bit? For example, say I have been on the dairy leadership program and I have done a Nuffield scholarship and something else. Maybe it does not necessarily mean I have to keep thinking that my leadership career is going to be in dairy. Could we do better as an agriculture sector in sharing some of those leaders and in building some platforms. The reality is: not everyone can be the president of ADF or the chairman of Dairy Australia. So how do we utilise some of those skills that we have invested in?

CHAIR: We have a couple of minutes left, so I thought that we might go into a different area now. In your submission, you talked about the payback period for new technologies. I think the quote is: capital cost of adoption is a barrier for farmers. It proposes incentives for manufacturers to reduce the payback period for their new technologies. Are you talking about things like patent rights? I am not too sure what exactly that is meant to mean. What would you like to do?

Ms Clarke : For example, we did some work looking at renewable energy technology and energy efficient technology, the investment required to install that kind of new technology on dairies, and the cost of it and the payback period—so how long it took for the farmer to earn the value of that capital investment back—and their electricity cost. So we did some work with dairy farmers looking at the different options. The result of that was that more than five years in payback was going to be a real disincentive. That is where if you had some kind of incentive for that up-front capital cost, then that could get over that particular barrier. So that was the example that we looked at in that particular bit of work.

CHAIR: These always come to great questions about the taxpayer's responsibility to private individuals and businesses. So that is what it means, anyway. At least I understand what you mean.

Mr Jones : That would be in the context of a very popular and widespread discussion about energy use, energy efficiency, renewables and 'solar this and solar that', and 'more efficient this and more efficient that'—just in the context of the current community conversation, I guess.

Ms Clarke : And also in the context of previous incentive programs. They are no longer available but had been in the past. In thinking, 'Is that going to make a difference to start—'

CHAIR: The other issue that I just thought I might quickly lock in towards the end is—and this has come up a few times—about technology lockout. This is where you have designers of different systems that do not necessarily talk to each other. It can be in the manufacturer's interest to actually keep their technology locked up, if you like, or incommunicado with other technologies, particularly if they are a big and dominant player. Do you have suggestions on what maybe governments should do about issues like this?

Mr Jones : It is a tough one because it comes down to commercial interests and whether or not they want to play with the rest of industry or not.

Ms Fitzgerald : If might give an example. Dairy Australia last year launched a program called DairyBase. So we are making an investment, in Dairy Australia, in terms of collecting data that, in this instance, will allow farmers to benchmark their own performance, compare their performance in the region. It will give us a better understanding of how our farmers are performing across the country and what is working and what is not in different regions. So I think while the commercial world will always be there and people will compete, it is also important that organisations like us continue to invest in that space to make sure that there are good data there and that we make them available to our industry.

Ms O'NEIL: That is pretty huge. So there is no way right now for dairy farmers to assess their performance against farmers within their region or nationally other than just their own discussions and things?

Ms Fitzgerald : There have been some state based systems. They are different. I am sure our farmers here can talk over the fence or look at different ways, but this is a way. Ultimately it requires our dairy farmers to engage with and participate in the system. That is obviously still a challenge, but it does allow us to have a national data storage area we can use. Ultimately we hope will build farmer capacity in the farm business management space.

CHAIR: Very good.

Mr ZAPPIA: Can I go back to the issue of regulation for a moment. Who is most of your interaction with—the state or federal government?

Mr Jones : The state.

Mr ZAPPIA: Are most of the problems arising from the fact that there is too much regulation and it is too time-consuming, or is it the case that the costs are also too high?

Mr Jones : That depends what you are talking about. If you are talking about the QA systems which were mentioned before with dairy and meat, that is a duplication of time, effort and frustration. If you are talking about the varying state regulations in the biotechnology areas, that is a barrier to the entire industry and to trying to attract investors to develop or commercialise new technologies in Australia. They just go elsewhere because the markets here are relatively small and if you suddenly find you have big chunks of the market denied access then there is no incentive for commercial players to get involved. So there are various levels of regulation and consistency that cause frustration.

Mr ZAPPIA: Has the industry ever put together a submission of some kind as to how regulations could be better streamlined?

Ms Fitzgerald : That is probably the report I referred to earlier. We have commissioned some work to look at a range of areas that are regulated across our dairy regions and what we might do with that. But, as I said, we do not necessarily have the conclusions to that. It has been complex because it is very hard when you work across the states to compare apples with apples. It is all very different. We have certainly started some work in that space. Ultimately that might result in something such as you have suggested or at least some comparison or understanding, maybe even teasing out which of those is the better regulatory system.

CHAIR: As there are no further questions, thank you very much. I do not think you have been asked to provide anything further, but if something occurs to you after you have left then please contact the committee. You will be sent a copy of the transcript of your evidence. You will have an opportunity to request corrections to transcription errors.

Pr oceedings suspended from 12:28 to 13:12