Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Education, Employment and Workplace Relations References Committee
01/02/2012
Higher education and skills training for agriculture and agribusiness

LEVERS, Mr Ron, Operations Manager, Grain Producers Australia

MAILLER, Mr Pete, Chairman, Grain Producers Australia

[11:45]

CHAIR: I welcome representatives from Grain Producers Australia. Thank you for the submission you made to this inquiry. I invite you to make a short opening statement, at the conclusion of which I will ask for questions from my colleagues.

Mr Mailler : I will make a brief opening statement. Grain Producers Australia is the current representative organisation for the grains industry, providing oversight to the GRDC under the PIERD Act. I guess GPA is stepping through an evolution in advocacy in agriculture to try to create some pathways for more direct engagement of primary producers and to improve the relationship that we have in Canberra with that grassroots community.

To the issue at hand, listening to the previous presentation and the questions asked I really saw a glimmer of hope. Underneath the issue we are dealing with are fundamental issues around productivity and profitability of the agricultural sector. We talk a lot about competing for workforce. We talk a lot about our ability to provide remunerations on the same capacity or basis or level as competing industries. The thing that we see as front and centre and as being of prime concern is the fact that we are in fact working on declining terms of trade, very tight margins, with a huge amount of pressure to reduce our input cost. For a long time the primary production sector in terms of the farming community has been dealing with that, but that is now flowing through the entire supply chain. So increasingly we are hearing about post farm gate sectors telling us how much trouble they are in and how tight their margins are, which is putting a lot of downward pressure on one of our biggest inputs, which is labour. We actually have a fundamental issue to deal with in terms of how we present agriculture to the community, how society values it and how we then encourage a bit of a change in culture to improve the return to the farming sector generally.

That flows into a range of issues and we have identified the same issues. I am sure you have heard it all before: declining numbers of agriculture graduates, rationalisation of courses—it keeps going on and on. I think there is that gap of understanding about what we require, what career paths exist in the bush and how we apply skill sets that were not targeted or created for agriculture specifically to solve agricultural problems. I think really we look at the opportunities in terms of lifestyle in the bush and how that is valued and perceived. There is a major gap in terms of understanding of what can be delivered in a rural community. It flows back through to making those linkages to young people at an earlier age and making sure that they actually make the link between what they might like to do and how that might be applied in the sector.

There are another couple of things which are probably front of mind. Obviously when we talk about education and training in agriculture it is not a one-size-fits-all. When we talk about a level of competence which is required as opposed to a recognition of formal qualification and then we go through to higher education, where the formal qualifications become very important in terms of providing surety around the quality of service or skills that are being provided to the sector, it is very difficult to have a conversation that addresses all those issues at all levels. In fact it does not. As a primary producer my primary concern is competence on my operation on the farm; I do not much care about the piece of paper. But I tell you that basic numeracy and literacy is a major issue facing the sector. The fact that agriculture is seen as a safe haven for people who cannot read and write is a major concern and it is a major impediment to productivity. In the last year on my own farm I can put poor numeracy and literacy down to costing me about $100,000 in lost productivity.

CHAIR: Could you just explain to the committee how you have arrived at that sort of notional figure?

Mr Mailler : I had a 'competent operator' who failed to be able to read a chemical label and applied the wrong chemical to a paddock. Basically he put a selective herbicide to control grasses onto a wheat crop and killed the wheat crop in that field. That was an immediate loss of income—no recovery.

In just summing up the opening statement, I heard some of the comments I have heard this morning in relation to the role of agriculture in terms of the public good and the national interest. I think that is something that we have been struggling to try to communicate more proactively for quite a while. I a strong agricultural sector in Australia is actually a key security issue; it is about providing stable trading partners. We feed 60 million people. We only need to feed 24 million people at home but the other 40-odd million people absolutely require our product. The biggest issue we face is that no-one is prepared to pay for it. So we have a balancing act between the social imperative that says we have got to provide safe, affordable food to everybody and then we have the commercial reality in that the terms of trade have declined to such an extent that people are being chased out of the industry because there is no reward. So we need to work on profit drivers to encourage behaviours and provide solutions to workplace training and capacity. That is something that I think underpins the whole discussion at this stage, and I cannot divorce to in my head.

As a very brief background, I hold a Bachelor of Agricultural Science and I regard myself as a farmer. I certainly do not think that the way I operate my business fits the stereotype of farmers—and most of the people I work with it does not fit either. We have really got to get a whole lot better about how we present that. Anyway I will take questions. I am more of a questions person. Thank you for that.

Senator GALLACHER: To go back to your point about the lower levels of formal education. What are the solutions there? What do you see as improving that?

Mr Mailler : In terms of graduates and courses offered?

Senator GALLACHER: No, I am talking mainly about employees with low levels of formal education. Are there any training packages, web based training or anything that is going to improve that situation?

Mr Mailler : There is actually a problem in that people do not necessarily respect education—not just employers; there is an issue that a lot of people do not think they need it. We really struggle with that. It is not anything to do with agriculture; it is actually a fundamental issue around education—how it is valued and where people see it might lead. The linkages in terms of pathways to careers and opportunities, we need to do a better job in terms of helping people understand why you need to learn something. I strike it all the time in young people who come through our farm. They do not recognise that they need to be able to do basic things. Basic skills are not required to drive a tractor or do some fencing or do whatever it is that they happen to want to do. When you look at a lot of the RTOs, they are actually based on providing education to people who do not meet the minimum requirement for numeracy and literacy. We have actually set up a culture saying it is okay not to be able to perform those basic tasks. It is not an agricultural issue. It is a fundamental issue.

Senator GALLACHER: I actually asked this question inadvertently of the previous submitter. 'The shortage of graduates affecting the ability of grain farmers to make necessary productivity gains.' Can you elaborate on that?

Mr Mailler : I certainly can. Recently some stats have come out that suggest that there are 4,000 positions advertised and is only 1,000 graduates. We know there is a shortage. What we are seeing is that some of those positions that are graduate positions are being filled by people with diplomas or less. There is a lack of key understanding about the fundamental process involved in some of the decisions that need to be made. Whilst I do not necessarily regard my training in plant physiology as being front of mind, I know that when I talk to someone who has not got that basic training they don't get it. It is a problem in terms of understanding how to manipulate the system and how to make well-informed decisions.

Agronomy is probably one of the key areas where we are seeing a major shortage of I will not say 'trained' people, that is not the right word, because I think there are very competent people out there who do not necessarily hold a degree, but there is a lack of depth of understanding of the issues at hand. At a producer level that is a big issue, but a far greater issue facing us now is that we do not have access to bright minds in the R&D sector in the way we should. We have a major issue in retaining those bright minds in Australian agriculture, including the agricultural sector. In terms of productivity losses it is not just the immediate farm management issues that we are trying to resolve but also the long-term solutions to the problems that we are striking and how we continue to drive productivity or at least protect the level of productivity that we have.

One of the big issues that I see is, to get into the jargon, the gen Y attitude that you have a transient career and you can try all these different things and you have eight different careers in the span of your life when, in terms of the provision of services to agriculture, you need a journeyman type attitude. The plant pathologist or entomologist or plant breeder does not pick it up in six months and change in two years; these people hone their skills over 30 or 40 years, you get the best value out of them after 20 years and then you spend the next 10 years trying to train the next guy through so that you do not step back. The risk to agriculture is huge because we do not get that clear pull-through, and, typically, the way we fund a lot of that work, because of the decline in government investment in the R&D sector in particular, is that these people are funded on projects and have two-to-five-year tenures, and you cannot get a 30-year career that works on a two-to-five-year tenure.

We fundamentally need to rethink how we ensure that we have access to those resources. The private sector is doing some of that but not enough, because the Australian agricultural industry is not big enough collectively to muster the resources. So we are really trying to piggyback off international investment where there is an economy of scale which allows that investment.

Senator GALLACHER: What would be the single most important outcome that could come out of this inquiry?

Mr Mailler : I think a broad awareness of the nature of the industry. The disconnect between producers and educators and policymakers is something we need to try to pull together, because I do not see that there is a simple solution to this or a short term fix, and I do not think that throwing money at it is going to solve the problem in the short term. We have to get a fundamental shift in what is public good for investment in agricultural careers. Who is the primary beneficiary of it? The reality is that it is not farmers but the community as a whole and, if we cannot get that recognition into the discussion, we are not going to get a solution.

Senator GALLACHER: What is the role of Viterra and similar organisations from your perspective? Should they be more proactive in this area?

Mr Mailler : I think they should be. One of the things we highlighted is that the breadth of skills required in the sector is huge and that these guys—some of the bigger corporates and particularly the multinationals—have an excellent ability to identify the breadth of skills that are required and to highlight them. When we talk about agricultural training we are not just talking about down on the farm; we need people who are competent in commerce and people with skills in a whole range of issues which do not necessarily meet initial primary production concerns. The Viterras of the world have the ability to provide a commercial pull-through there. They can identify value, and, because of the diversity of their business and the synergies they have, they can create pathways and career paths for people. I think that is really valuable.

Senator BOYCE: I am also interested in this area of the shortage of graduates. You say that there are 4,000 jobs advertised for agriculture graduates but less than 1,000 students graduating each year. You have mentioned people with lower qualifications going into jobs, but, if you have 4,000 jobs and 1,000 people, what happens in reality?

Mr Mailler : People shift—they will go from one job to another, and they may not necessarily be replaced in the role they leave. One of the big things we have seen is that government agencies used to house a lot of agronomy capacity, but that has been wound down over time and a lot of those guys have gone to other jobs. It is the same with a lot of the R&D providers and the way that that works. There has been a general shift from public sector jobs to private sector jobs.

Senator BOYCE: So in fact it is not just this year's graduate crop that has been taking up those jobs.

Mr Mailler : Filling the positions, that is correct. What you have got is an ageing population out there, and you can only shuffle the deck so many times before you run out of cards—and that is where we are at. It is not just an ageing farming population; it is an ageing population, in terms of skills and competence, providing services to that farming community. That is a big issue.

Senator BOYCE: You have given us some examples of productivity. One example was of something that might have happened by error. I am not talking about that particular example but it is possible that someone would just grab the wrong bottle or bag in a different circumstance. I am trying to get to the bottom of why someone with lesser qualifications assisting on a farm is going to affect productivity on that farm .

Mr Mailler : I could fill up the whole session talking about that. One of the biggest problems we have is that often there is a need for basic labour. Quite often I find that, if there is not a basic level of competence in the people employed to do the job, I spend a lot of my time helping those people to do the job, which means that I am not able to get on with the work that I need to do. When we have a reasonably high turnover of staff for those kinds of jobs we find there is a lot of micromanagement going on to make sure things are done well. That is a problem.

Senator BOYCE: So the lack of stability of the workforce is part of the problem.

Mr Mailler : It is, and it does not just exist on the farm. For example, retaining diesel fitters for services to agriculture is a major issue. Every time our local mechanical service have to replace staff they then need to retrain those people on their systems and how they work, so that is lost productivity straight away. Typically they are being lost to the mining industry—very much so. So there is that issue. Also, when you are actually managing the day-to-day operation of the business there are incredible gaps in terms of the competence of the people and what they can and cannot do, not just on the basic stuff but also on the more advanced issues about how you manage situations. So if the primary operator is not there, quite often things just stop, though stopping is probably better than having them keep going.

Senator BOYCE: The primary operator being the owner or manager?

Mr Mailler : Yes. So that is a big issue. On top of that we are seeing productivity losses particularly as farms have got bigger and we are seeing a bit of an increase in the amount of contracting services being provided, outsourcing operations. A couple of years ago the cotton industry was terribly exposed because it did not have the capacity to harvest the crop, so the picking season was extended by several months. If we have a big season right the way down the east coast again, what we will see are problems with harvest. We saw that two years ago: massive crop losses because we just could not move machines and get the job done. So lack of capacity—

Senator BOYCE: Was it your submission that mentioned losses of up to 10 per cent?

Mr Mailler : No, it was not our submission, but I would support the assertion. I have not quantified it but it certainly presents major issues for us. Just being able to access people to get jobs done in a timely fashion is a problem, especially when we have issues with timeliness, which is very valuable.

Senator BOYCE: Timeliness is an issue for you in a way it may not be quite so much in some other areas.

Mr Mailler : That is correct. The grains industry particularly is exposed to that harvest risk. Also, for every day you delay planting, for whatever reason, there is a significant loss in production on the basis that you have shortened your growing season; it flows through. I guess we took a more anecdotal approach to the proposition; if you want that sort of data I am sure GRDC would have some pretty useful figures.

Senator BOYCE: I think we have been given evidence on that but, if not, we can follow that up with you, thank you.

Senator McKENZIE: I want to follow up the comments you made about how we fund research in this country. It is a particular passion of mine so I am glad you raised it—it has given me an excuse to do so. I just wanted you to expand on those comments. I think you made that comment in relation to developing career paths as researchers so we have that sort of knowledge for the public good. I want more of an explanation about that and also about the role of government funding. Can you tell us about the way we fund it, the types of research, what is researched, the role of industry in making those decisions and the role of pure research aside from that—thinking of the things we haven't thought about before? Who does that work, who pays for it and where do we have the critical mass of thinkers to do it, particularly those focused on our climatic conditions, soil, topography, culture et cetera? I am happy for you to take that on notice if you would like, or you can speak now.

Mr Mailler : I can provide some comments. The grains industry has just been through a strategic planning process, so there is a national RD&E strategy in place around what research needs to be done, identifying how we fund it and what we do with it. What we have seen over a significant amount of time is a massive decline in public funding for research generally. As I said, we have gone to a project type scenario and we see that researchers are looking at cost recovery operating models, which is a real challenge for a lot of researchers because they are not typically running business units. They are researchers and there is a different skill set involved.

I think the national RD&E strategy is a very valid attempt to resolve some of the issues we face. It is really a case of assigning core competencies to key regions and trying to provide stability for research around particular fields of expertise in one location on an ongoing basis. I think that is a good start. The problem is that we still need to address the total quantum of funds being allocated. When we talk about the RDC model, there is a certain amount of resources—money for growers—being allocated there. Growers need to be involved so we get the best bang for our buck out of that. But managing an RD&E investment portfolio is like managing any other portfolio. You have a certain amount of high-risk, long-range investments that you hope might pay off one day—that is the blue sky stuff that we have not done yet—and it goes all the way down to capacity building and making sure that we provide training packages and things that meet immediate requirements to protect productivity on the farm.

At this stage the RD&E strategy being rolled out requires ongoing commitment from state agencies and coordination with the federal bodies as well. It is problematic. Hopefully we can keep that on track and salvage what we can out of what used to be. People refer to the golden era of agriculture still coming. I think 20, 30 or 40 years ago, because of the investment and commitment to agriculture, was probably our golden era.

Going forward, we need to resolve this issue of who is the primary beneficiary. That was one of the biggest challenges we had in the RDC Productivity Commission review. There was this assertion that farmers were the primary beneficiaries of everything, and the reality is we are not. The consumer is the primary beneficiary of every bit of agriculture research we do in Australia and we need to make that recognition stick. I did not really answer the question completely, but I think the challenge we face is how we provide stability around the research centres that are being established to create a platform that encourages people and provides a career pathway.

The other thing we need to be doing really hard and fast is trying to attract a level of competence from overseas to provide enough mentoring and guidance to the next generation of researchers, to make sure that they are in fact world class and are not impeded by staying in Australia and working in Australian conditions. Australia's ag sector has been punching well above its weight in terms of innovation and its capacity to solve problems that other people do not have, and also to solve problems that other people do have, because we have solved our problems. So the support we provide right through the developing world is, I think, pretty important and, indeed, some of the work we have done in terms of conservation farming systems is making a huge difference in a broad cross-section of other countries.

CHAIR: With regard to your comment earlier about returns to the farmer, you have quoted one of the speakers at the Australian Grains Industry Conference late last year as saying, 'Strong growth in food, feedstocks, biofuels along with increases in the middle-class populations in China and India should keep agriculture commodity prices high for at least the next decade. Australia is in the box seat.' We know that we have got 1.9 billion more people to feed in the Asia-Pacific region by 2050. We know, as this particular keynote speaker had said, that diets are changing in those two populous countries and that the staples they once relied on are not going to be relied on anymore. It all looks very bright for Australian agricultural producers including grain producers.

You are quite rightly identifying these developments at the moment—and obviously we know the reasons: currency value et cetera—but can you give us your views on how you think grain producers are going to meet this challenge of feeding this huge extra number of people, let alone the ones who are there now, with their changing diets given all of those restrictions we now know we have got that we did not have in the green revolution of the sixties?

Mr Mailler : I could really go to town on this one. As a farmer, I have a bit of an issue with the supposition that our job is to feed the world. There are big challenges ahead in terms of how we feed the world but it is counterintuitive to suggest that what we should be doing is producing more and more and more in Australia.

There are several schools of thought about the opportunities for Australian agriculture. One is about differentiation and providing a better quality product and extracting a premium for it. The situation we have at the moment is that we cannot get our product out of the country in a timely fashion without major investment in infrastructure and logistics networks and the whole gambit. So the idea that we are going to lift productivity on an ongoing basis is pretty flawed at the moment with the current thinking.

I think the solution to agricultural decline in terms of trade in Australia has, for a long time, been to lift productivity—so we just produce more. Eventually you run into a wall, and I think that we need to start thinking very carefully about how we position ourselves in terms of feeding the world, and regional security and stability, because I do not think that we can sustain the kind of productivity gains that are required at the moment without a significant shift in what drives that productivity.

The reality is that profit is the major driver for productivity and we are not seeing that happen. I think that the same commentator would argue that current grain prices are quite high. I know that in real terms the current wheat price is no better than it was in the late 70s. So we have got a bit of a fundamental problem in how we assess what is a good grain price and what is a good return to producers. If we want to attract sharp minds that are going to solve the productivity dilemmas that we face into the future, we need to make this somewhere that is attractive to be and, whilst I accept that there is an increasing demand, one of the reasons we are seeing low wheat prices at the moment has nothing to do with the currency—it has to do with the fact that the countries that typically buy our product just cannot afford it.

I do not see that problem being solved in the immediate or medium term. I think we have some more fundamental issues about how we support production in the country. These issues underpin our ability to create pathways and encourage specific agricultural training. In the short term we have to be smarter about how we find those talented people and how we apply them to agriculture. I am not trying to be dour and down and say that there is no future here. I think there is a bright future for agriculture—in fact I would not be in it if I did not—but I do not think that the way it is discussed at the moment is really highlighting what that opportunity is or providing any pathways to the solutions that we need.

CHAIR: So if we take the combination of the things that you have been talking about—the erosion of those laterally-thinking brilliant minds, the perception in urban Australia of agriculture, the costs of inputs such as fertiliser—there is a body of thought that suggests we have the opportunity to rethink a lot of soil science and agronomy. We know from strip grazing and cell grazing et cetera in livestock production that we have opportunities for increasing soil fertility and increasing the amount of organic matter and carbon within the soil when we apply different techniques to crop production—broadacre and others. From where you sit in the whole process, is this an area that we need to be examining? Does there need to be industry and government investment that has a multiplying effect, including better profitability for farmers and a better perception of the way in which farmers husband the land in the minds of the urban communities?

Mr Mailler : I think that you are talking about a systems approach to production. We are doing that pretty aggressively and pretty innovatively now. It needs to be extended and support for it needs to be extended. It is a really big challenge, though, because we are talking about a very dynamic system and how to attack that is a major issue confronting research agencies across the board. It is mammoth in terms of the interactions. How we break that down into components and then build it back up again into a systems approach is a difficult question to answer. The challenge I throw to people quite regularly is that we are already doing what is essentially best practice on the farm because they are the most profitable practices. We know that minimising fertiliser requirements, pesticide inputs and disease are keys to driving profit to our business. Profit optimisation is not maximising productivity or production. Intuitively, people are moving that way. We probably need a better understanding of the system and some more validation research to help guide things.

One of the things I struggle with is that there is a perception out there that there are these greedy farms doing bad things. That is completely wrong. The live cattle trade was a great example. A large number of people referred to greedy farmers doing bad things to cattle. That is just not the case on the ground. I do not think that anyone who I know goes to work with a view that is that short term. We are all looking for long-term solutions and strategies. What we do not see, though, is that married up in terms of investment strategies or policies. That is just not there. When we look at government projects or programs to try and improve sustainable farming systems, they do not put in place in any of that structure, policy or strategy any kind of discussion about the driver of practice change, which is profit. We are running businesses. We have been taught to run businesses. We have been told that the government is committed to market based policy. But then we get increasing levels of intervention and regulation that runs over the top of that. Then we are told that we have to provide affordable food. The two do not quite marry up. We are pretty well off topic now.

CHAIR: Not really.

Mr Mailler : This is one of the fundamental issues that we are wrangling with as an issue: how do we do this? One of the saddest things is that I see great opportunities for agriculture. It does have an excellent future. If we make good decisions now, it will have an even brighter future. But I know that probably 80 per cent of the people my age who I deal with—and I have worked as a consultant, so I have a reasonable network of growers my age—are looking for exit strategies out of the industry. That is a tragedy. We are seeing declining numbers of farmers and increasing numbers of corporate operations. While they have a place in the sector, the reality is that they do not deliver the kind of stewardship that people need and they do not necessarily provide the long-term solutions to production issues that we face. We need to engage and involve innovative and smart problem solvers. We need to provide them with the needed skills and support to make sure that we get there.

CHAIR: Coming back, if we can, to this question of skills, we have heard from other witnesses that the delivery of training packages particularly is just not flexible enough for the agriculture sector, given the seasonality and all those sorts of issues that we know confront agriculture. There are issues that confront other industries, they are different. Based on an earlier comment that you made, is there scope or demand for, let us say, modularised training programs so that the employer and the employee can sit down and say, 'On the one hand, this is what I need and, on the other hand, this is what is going to interest me and keep me in the game,' put them together and move towards recognised certificates on the completion of certain modules? In other words, it would be quite a different structure to the stratified structure we have in training.

Mr Mailler : I think it is already happening. The TAFE system and some of the certificate level training that goes on is particularly targeted at modular type competencies. Indeed, I went out and picked up modules through TAFE for welding capacity and things like that in my early days as a farmer to make sure I had the skills necessary to do my job. So we are already doing that. I think industry is demanding that. Even at as basic level as chem search certificates and demonstrating basic competency in components, it is all there already. I think there needs to be a bit more discussion about what the competencies are. It is pretty easy to teach people how to do something; it is really difficult to teach them why you do it. That is the thing that I think we miss a lot in training young people who are unskilled labourers. If they know why you are doing something you get a lot more competence around the job. So we spend a lot of time explaining to staff why we are doing something and why it is important to do it the way we have asked to have it done. That is something that we need to work a lot harder on. There is a bit of a propensity for training providers to get the numbers through and just get them out the door with a tick.

CHAIR: It is just about the how rather than the why.

Mr Mailler : Yes. I think that is a serious issue for us in marrying the delivery of those components and the competency we are trying to realise. Anyone can answer the question in the way the instructor told them to, but if you do not know why he told you to do it that way you are not going to go and change any practice when you go home. That is one of the fundamental issues. It is that basic level of communication we need in policy making and providing direction to the industry. It is really a question of why. If we can have the same level of understanding when we come and talk about what we need then we will get a much better solution.

CHAIR: Are you satisfied with the structures that are in place for transitioning from skills based vocational education training through to tertiary level higher education programs in the agricultural and agribusiness discipline? Are you satisfied that that is seamless or do you not see it as—

Mr Mailler : I do not think that it is seamless. I am probably not grasping the question exactly. Can you just elaborate on what you are looking for me to comment on.

CHAIR: There is a perception that agriculture is one discipline that should lend itself to a person being able to move relatively easily from an interest in it to a qualification in, say, the VET sector at a skilled level. They develop that interest and realise they have the nous, which they probably did not think they had earlier, and they develop a sufficient interest and want to get into more of exactly what you just said—the why rather than the how—so that if the opportunity presents and the way courses are structured lends itself to it they can move through to a higher education tertiary level qualification. Firstly, is there the demand and, secondly, if there is, is it encouraged and is it seamless enough?

Mr Mailler : I think there is demand. I can think of instances where people have taken vocational training and followed it through to tertiary studies and formal qualifications. I do not think it is seamless—not at all. It is as much an industry problem as an educator's problem. I do not think, broadly, people are fostered the way they should be. As an employer, if I identify that someone has a need or a desire to learn something I try to do something about that. But I think collectively across the sector maybe we do not do that well enough. Probably there is not a good enough awareness of what opportunities exist. I think there are increasing numbers of people who leave school with no ambition for any kind of post secondary school education who pick up different skills at different levels and find they do enjoy learning after a few years and maybe find their way back to part-time external studies and then turn it into something else. I think there are components and modules in core competencies that are offered that way now, and some of the universities are doing a better job with that, but it is not seamless and probably not well understood. That is a bit of an unqualified comment.

CHAIR: It tells me what I needed to know. Thank you.

Senator GALLACHER: Who is most at risk in this skill shortage? Who will be the first casualties if it is not addressed?

Mr Mailler : The first casualties will be the primary producers. Ultimately everything in the supply chain—and I call it a supply chain because I do not think we are really striving for extra value—passes back to the producer. Where you put more pressure on down the line on service providers and the margins are tighter, it just flicks back to what the farm gate price is. If we cannot resolve some of these issues and our productivity suffers, you will see attrition of farmers. Even to the level of encouraging primary producers to get better skills, there is just no room for it. There is no time for it. There are not enough resources spare. I think that is where it is crumbling a bit now.

Senator GALLACHER: Just quickly: what does the reputation of, say, the Yorke Peninsula for producing excellent grain or wheat actually mean? Do you get more loaves of bread out of it or do you get more consistency in a tonne? Do you get a premium? For what reason? I just do not know.

Mr Mailler : It is a great question. I think it is one of the dilemmas we face going forward. We can get into a whole discussion about the grain supply chain and marketing. Quality should deliver a premium. When people talk about excellent quality wheat, the reality is that millers have different requirements across the board, depending on what they are trying to produce, whether it is biscuits or different types of breads, flat breads, sweet buns or whatever it happens to be. Each area in Australia has the capacity to produce excellent quality wheat in terms of the fact that it is of uniform quality, it meets a particular market specification, it is dry, it is free of weevils, it is free of pesticides and it is free of all those things.

Quality is a really interesting idea, if you like. There is a quality of wheat produced in parts of South Australia that ends up making excellent frozen dough for Subways in Korea or somewhere else. All this stuff goes on. We produce wheat in the north that has a particular quality for yellow alkaline noodle production in Japan and demands a premium in the marketplace. It is a bit of an abstract thought because it depends on the market that you want and the quality of the grain that you have.

We have a serious problem in Australia now in that the integrity of the quality of the grain is not being realised and maintained and the value of that quality is not being captured well enough. There are issues there, and we need to do something about that to ensure that maximum value is achieved and that we provide a clearer profit signal.

Senator McKENZIE: Thank you very much. That has really provided a lot of springboard for our thoughts. I just want a brief comment on the use of offshore labour in the grain industry.

Mr Mailler : As long as there is a level of competence, we will take the labour from anywhere and welcome it. I do not know if that is what you are asking me, but I think it is something that we should be exploring.

Senator McKENZIE: I know that the harvest in North America occurs and people all rush to go over there—all the young ones love all that—but I am just wondering whether we have a similar sort of thing.

Mr Mailler : We do.

Senator McKENZIE: I do not know how many offshore workers we have working in our grain industry.

Mr Mailler : Quite a lot. At the moment you will find that the number of Irish backpackers out there doing that job is astounding. Irish labour is one of the biggest imports we have at the moment. Backpackers fill a huge role. It is not the best way to do it. There are some service providers out there who provide basic training to backpackers to give them some entry into the workforce. Typically, it is grossly unskilled labour. It is good for seasonal work. There are a lot of backpackers driving tractors at planting and driving headers at harvest time. It is not necessarily meeting all our requirements but it is the best solution we have at the moment.

Senator McKENZIE: That is backpackers, but what about a more organised solution? I was talking to horticulturalists over summer that have Pacific islanders.

Mr Mailler : There was some talk about extending the Pacific islander scheme, I think, to provide seasonal labour in the grains industry too. I do not know that it has been rolled out. I think there is definitely an opportunity there, in terms of bringing skills in to do the job, and we need to look at that. I think, though, that the issue I have talked about of a high turnover of staff and the productivity losses in that is a challenge. If you have contractors who take on those staff and then take them from the top of the country to the bottom in a work cycle, you do not lose that productivity gain, but as an individual farmer it is hard to get the best out of that system. I think there is a way to do it but we need to refine that a little bit.

CHAIR: Thank you very much, gentlemen. That has been most informative.

Proceedings suspended from 12:30 to 13:29