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# Theme music On Landline today - caught in the cross fire dairy farmers of the supermarket price war on milk. as the solution We don't see a short term grab of milk in this country. to long term sales and volume perspectives We hear some agricultural on the science of climate change. It's sort of a win/win we do for economic efficiency because most of those adaptations are actually also carbon friendly. paper that's in for the long haul. And 100 not out, the popular rural welcome to Landline. Hello, I'm Anne Kruger, In a week when everyone, it seemed, about the price of food. had strong opinions

true competition really How can you have blow for blow, where they match each other price reduction for price reduction the collateral damage and really it's case or other independent retailers? in terms of dairy farmers in this of competition that is very welcome, There may be a temporary outbreak third party pressures they're not many on those two on their prices.

from other players There's not many constraints the prices down permanently. that would keep of the duopoly. We're still at the mercy

just as much as everybody else. I like a bargain in the supermarket We're all trying to make ends meet for our families and provide a good lifestyle that we will end up paying for this but at the end of the day I think as consumers as well as farmers. Some of them, of course, forecasting commodity prices make a living out of in Canberra to compare notes. and this time of year they gather

weeks it's hard to remember As we've been reporting in recent

across the board. when the outlook was so positive those who are left in the industry, It's been an amazing journey for and we knew that product it's passion that has driven us at some point in time. and the timing was going to happen at this point in time So the stars are aligned and it could not be better. that no matter what Look, we always take the view whatever throws at us the environment, the government,

to be made in farming. there's always opportunities the ABARE's outlook conference Kerry Lonergan will have more from a little later. of lively discussion this week There's obviously been plenty that broke out over summer. over the cut-price milk war and many fear A decade after deregulation

by Coles and Woolworths that the drastic discounting of struggling fresh milk producers. could result in another shake out And as Kerry Staight reports, more keenly felt nowhere is that anxiety

Queensland's Atherton Tablelands. than among dairy farmers in North like ideal dairying country Tropical Queensland may not sound but on closer inspection it's clear has some distinct advantages. the Atherton tablelands It's perfect, it's perfect. in the tropics We've got a subtropical climate above sea level because we're 750, 800 metres into a subtropical paradise so really that puts us which is ideal for dairy farming. We've pretty well got water laid on, and we do that pretty well. we can grow grass around Malanda, south-west of Cairns, The undulating lush land

of North Queensland's dairy industry has been the home

for around a century. in the local drop. And there's a lot of pride

in the Atherton Tablelands This region up here in Australia is the only tropical dairy area tropical dairy area in the world. and probably the most successful It's our life, it's our livelihood. Means everything. It's our future, hope to be in the future. it's where our son and our grandkids one of the biggest dairy operations Ray and Donna Graham run in the region. and milking between 750 and 800 cows. Employing 10 people It's not an easy life. You get up at 4:00 in the morning, I don't know, 8:00, 9:00 at night. sometimes you don't go to bed till, because we want to be here. So we're here The people as a whole are positive. They keep overcoming. The big hurdle in the last decade of the industry in 2000. has been the deregulation with it by expanding. The Grahams grappled We hadn't until recently, stocked. bought a couple more herds, We'd bought another block of land, leased another farm. in this industry here? You saw a big future Yeah, for our family, yeah. for many of their neighbours. It's clear that wasn't the case there was 268 farmers here then. We came here in December '81, of deregulation we had 185 1st of July 2000 the day and today we're down to 60. And now even those still in the game more cobwebs than cows in the future fear their dairies will house

an increasingly marginal business. as market forces turn milk into is substantially less The price of milk now than it was 10 years ago.

driving trucks in a mine I've got a daughter that makes more than my wife and I. off, we're here seven days a week, She works two weeks on, one week she nets more than we do together.

where there's a massive uncertainty We've moved into an era now with supermarket contracts,

our processor requires from farmers with the amount of milk that

turned the lights down really so yes, people have that is probably world class. on an industry produced on the Tablelands Most of the milk goes through this factory at Malanda.

Originally in the hands of farmers players in processing it's now part of one of the biggest Lion Nathan National Foods, brewing giant, Kirin. which is owned by Japanese about 70 million litres a year. The plant churns through

to produce fresh drinking milk The company's priority is for the domestic market dairy industry revolves around. which is what Queensland's is made into cheese or butter. Anything it can't sell in fluid form for the milk that ends up in bottles Farmers get higher tier one prices for what's turned into blocks. and lower tier two prices is the company has reduced The problem for producers

the amount of tier one milk it wants. At the moment we have oversupply and Western Australia. in Queensland, New South Wales structure alignment. There needs to be some more of structure alignment There's was tremendous amount come out of deregulation back in 2000. I think we're in a situation where we need to continue that structure alignment. At the moment National Foods is trying to negotiate a deal for even less of the top drop in North Queensland after losing a supermarket contract

to the other big milk processor in Australia, the Italian dairy giant, Parmalat. We started to work out how vulnerable we were. We could have these large volumes of milk either come our way or be taken away from us. That was 11 million litres wasn't it? It was 11 million litres in North Queensland that the southern processor got that's now being trucked into this area. I think some of the scary part about that is that we're sort of getting a signal that oh well, we want you to turn the milk on and turn the milk off. Now to survive under the conditions that they're asking us to some farms, including us, may have to sell our fat. If we sell land it'll be sold as lifestyle blocks and we'll never get that back. We won't dairy off that ever again. North Queensland's production costs are among the highest in the country partly because the grass doesn't convert into milk as efficiently as temperate pastures. Still when demand peaked a few years ago there was plenty of cream in the industry. One industry report based on government figures found dairies made an average of around 7 cents a litre before tax. Last year that slumped to less than 1 cent

and this year it's forecasting a loss of nearly 4 cents a litre. My return on this investment is in the minus side at the present. If I was to just be on farm and not have the ability to work off farm I would be slowly going bankrupt. Allan Baldey had big plans when he entered the industry 5 year ago. The former owner of an engineering business set up Queensland's first robotic dairy. There had to be a better way and a better quality of life than getting up at 4:00 every morning, milking and then doing the same thing at night and then going to bed, 7 days a week. The idea is to keep the cows peckish so they return to the dairy for a feed. But the terrain, size of the paddocks, even the tropical grass varieties have created some teething problems for this high tech approach. Robotic dairies were probably more suited to flat country pasture where you can control the rate at which the cows access their pastures. He expected to double production and pay off his investment in seven years. Instead, he's now $1.5 million in debt and is seriously considering leaving the industry. While he accepts some of the blame, Mr Baldey says, the big players further along the supply chain also have a lot to answer for. I place the blame two places, the super markets and the processor. The supermarkets will say to the processor this is all we're going to pay for milk. The processor wants to make a profit margin and so the only person he's going to screw is the producer himself and at the end of the day if they don't get their return they will close this dairy. National Foods says it's committed to the region pointing to a recent $6.5 million investment in the factory. But admits it's not making much money from North Queensland's milk. So the returns on white milk we've been making haven't really covered our cost of capital. Does it make more than zero money? Yes, it makes more, but does it cover the cost of capital? No, it doesn't at this stage. So you're not making any profits from this factory?

We need to work on improving the profits out of this area. The more volume we can put through here the more viable the plant is. If you grow the market in North Queensland by 10% I have 10% more milk on the top tier. If the market contracts, I have more milk on the second tier. So yeah, my life is in their hands and I won't make any bones about it. One dairy farmer who has taken his life into his own hands is Rob Watson. Like most local producers he used to send his milk to the big factory in Malanda but when the industry was deregulated he and his brother decided to do the value adding themselves and set up the only other milk processing plant on the Tablelands. It's been very challenging all the way through, so sometimes I'd like to be like them and just have to produce milk but in other ways it does give you the freedom to be able to - you control your own destiny so therefore you're not relying on a big processor to say how much they're going to give you. The boutique dairy business Mungalli Creek first made a name for itself as a biodynamic milk producer. It recently launched another niche line Jersey cow milk. When we first started we were doing about 1,000 litres a week and now it's probably 60 or 70,000 litres a week

so it's changed quite dramatically, yeah. As well as bottling their own drop, they've now become price makers

instead of price takers. They source milk from several local farmers

and plan to increase their pool of producers if demand continues to grow. We felt with the global financial crisis that because our milk is so expensive relative to the home brand stuff that we'd lose market share and that hasn't happened. The people that are loyal to Mungalli Creek Dairy have kept on buying our product and our sales haven't dropped at all. But clearly Coles is betting on its customers pleasing themselves. In January the supermarket giant slashed the price of its home brand milk to $1 a litre. More than 80 cents cheaper than the average price of branded milk. Woolworths says it had no choice but to follow at a time when many of its customers are struggling with the spiralling cost of living. We've seen an increase in home brand milk sales of roughly between 5 and 6% and we've seen a moderate decrease in our branded milk sales but very minimal at this point in time.

About 1% to 2%. Landline understands that gap is widening

but neither Woolworths nor Coles would disclose precise figures. But even before the price war, more and more no frills milk was finding its way into more fridges, accounting for at least half of supermarket milk sales. So much so that it's become an important part of business for large processors like National Foods. But the real cream for the middlemen remains the more expensive branded lines and with those losing ground, the company says its profit margins on white milk for the domestic market are now less than 2%. It's very difficult for us while our house brand is selling at such a cheap rate. Somehow we need to look at being able to share the margins that are in the price of milk more equitably across all of us. It's taken 405, 407 million a year out of the market

by selling generic milk products versus branded. The price of milk is too low compared for the cost and the amount of time involved in it and there needs to be a balance in here, Kerry, that's the point, put some balance back in the game. Coles says the price it's paying processors should offset any shift from branded to budget. We're funding the price cuts ourselves, we also gave the milk processors who we deal with a large pay rise in January so we don't believe there's any reason down the track for these price cuts to have a negative effect on dairy farmers. Woolworths have also promised not to pass the price cuts on to processors but concedes the discounting could still damage the industry. I think the concerns may be less milk production in Australia over the longer term.

We don't want to see that. We think that the reduction in shelf prices may also mean that processors will no longer invest in the category as well and we certainly don't want to see that. So, we do share those concerns. We don't see a short term grab as the solution to longterm sales and volume of milk in this country. The real damage to us has been by government action. The deregulation of the industry, there's only two buyers in the market in Australia. 85% of the food market in Australia

is held by just two supermarket chains. I mean they can pay us anything they like and no-one can lay a glove on them, not the least being the Government. The local federal member Bob Katter quit the National Party a decade ago

mainly in protest against dairy deregulation. Minister, don't these realities prove that advocates for the free market in this place are loathsome hypocrites

and those parading themselves as Santa Claus have done so quite literally over the dead bodies of Australian farmers. The Independent is among a number of politicians now putting pressure on the Government to intervene in the milk war. What we recently saw in the Senate was a Senate inquiry which has been set up to look at just this issue. The Government doesn't oppose that, I think it's an opportunity to ensure and hold them to their word. Joe Ludwig is also considering the recommendations

from an earlier Senate report into milk pricing but farmers in North Queensland doubt Canberra will actually take on the supermarkets. If the Government decided to do something about it like cap the percentage of the market, the Woolworths and Coles can take they're going out of government. Every person that owns a managed share fund has Coles and Woolworths. Everyone who has a super fund has Coles and Woolworths. Any Government who moves against them in a big way they're going out of government. The Government split Telstra up. They saw they had the power to do that in the interests of the consumer why don't we see the same result for agriculture?

I don't believe the will is there. As the political storm over milk continues to brew, Atherton tableland farmers are mopping up after another storm, Cyclone Yasi. Allan Baldey's robotic dairy was out of action for 48 hours and many of his cows developed mastitis. While Yasi didn't cause as much damage as Cyclone Larry, farm infrastructure copped a battering, some livestock was lost and milk production dropped up to 30%. We're on our knees now and I just think that this could be the death knell for some of them. The stress that we're seeing between the farmers at the moment is open. The stress in the associated industries is very, very similar.

The businesses that we deal with are struggling because we're struggling, you know - passes through. # This is Malanda the town we all love

Milk is certainly at the heart of this community # The home of the big old wooden pub The local rugby league team has even produced a calendar with a dairy theme and written a song about the industry. # These are the farmers asking for a fair go There's a lot of blokes in the team that are dairy farmers' children or they're relief milkers or they've worked on dairy farms or they're electricians connected to the dairy industry, they're mechanics that fix tractors. There's a an interesting stat in our calendar that for every dairy farmer in the Malanda community it generates about 6 jobs. And if the Malanda Eels team is anything to go by don't expect this community to go quietly. Last year was the first time the town fielded its own senior football team in 3 decades and it made it all the way to the grand final. Captain Anthony Ball says farmers are also far from finished. We haven't been beaten yet. We've had deregulation, we've had a lot of challenges along the way and I think there will always be an industry here. I'm not sure whether it will be as big as it was back in the day but I think they will make a good go of it. We're proud of you Malanda. To our news summary now and Coles has also bought itself a blue with beef producers over its ban on meat containing growth hormones. Hey, this is Curtis and I've got some great news. Coles beef is now 100% free of any added hormone. 40 leading scientist and academics have put their name to a letter opposing the retailer's stance. They argue the ban is not based on science,

will cripple the beef industry and push up prices. The impact of removing this form of production could impact to the point where the farmers would lose about $210 million a year. For its part Coles says producers aren't being shortchanged

and in the end it's about keeping the customers satisfied. We are paying our beef producers more to reflect the added costs that they're experiencing growing beef, naturally. But conversely, we're also not charging customers any more for that beef. South Australian Independent Nick Xenephon has negotiated a deal on future natural disaster relief in return for his support for the Federal Government's flood levy. His vote was needed to get the bill through the Upper House to help rebuild Queensland infrastructure damaged in floods and Cyclone Yasi. Senator Xenephon says in future states will be unable to gamble billions of dollars of Australian taxpayer funds because they haven't taken out proper insurance for their assets such as roads, bridges and schools. Never again will we have to have a situation where there will need to be a levy for a natural disaster because these arrangements will ensure that State Governments

have to behave prudentially and responsibly. As the politicians argued about whether there should be a tax at all. Independent climate change adviser Ross Garnaut this week

made a case for agriculture to be included in Australia's carbon abatement scheme. It first should apply as an offset which means that all of the emissions, the negative emissions aren't counted but farmers can opt in and the carbon price should apply if they opt in to the scheme. The scheme would be limited at first but with a longer view. You could only take away those limits in the context of a comprehensive scheme in which the agriculture sector played its full part. But at this stage it sounds like even the Greens

are only lukewarm about that idea. We are listening to the advice we get from contributors including Ross Garnaut to the debate. We'll continue to make the best consideration we can about agriculture in any other area and as you know from Ross Garnaut and others it's very difficult to measure agricultural output at this stage of the game. To New South Wales and a setback this week for the green energy sector when one of the most ambitious cogeneration power projects ever attempted in Australia went into receivership. While technical problems at two sugar mills and bad weather didn't help most of the blame has been levelled

at the Federal Government's botched policy which caused a crash in the value of renewable energy credits. We dropped something like $8 million out of our cash flow simply because the Government introduced this scheme. It's been an expensive lesson for 600 sugar growers who had backed the cogen project in northern New South Wales. There's no doubt we had other problems in cogen. It was the first of its kind and we did have some other problems but if the renewable energy certificates had of stayed at $54 as they were at that time the program could have carried on and we could have sorted out the other problems. To Tasmania, where the historic agreement to faze out most native forest logging

is also at risk of collapsing. At issue is a binding commitment to lock up 600,000 hectares of forest. Brian Green and the Premier have to understand that if they're going to sit back and allow this process to collapse they're missing a once in a generation opportunity to bring about an end to the most divisive debate in this State. The Tasmanian Government is now refusing to commit to a deadline, citing concerns over resource security. We need an agreed position to go forward with so as to ensure that we can meet our contractual obligations as well or Forestry Tasmania can.

It's looming as a major test for the Labor/Greens coalition. Nick McKim and Brian Green are at loggerheads over this. The agreement's on shaky ground and so is this Government. Back on the mainland but still in the forest and a showdown is looming between the Federal and Victorian governments over the reintroduction of cattle grazing in the State's high country on a trial basis. Federal environment minister Tony Burke is investigating whether the Baillieu Government's policy of grazing for bushfire mitigation is in breach of Federal environment laws. I don't know of situations where people go and visit our beautiful National Parks around Australia and say, 'It's pretty good, all it needs is some cattle.' Studies have been done for many years

and so far every study that's been done says that in a situation like this cattle do not reduce the risk of bushfire. Ken Heywood's family has been farming near Merrijig since the 1870s. He's one of six farmers taking part in the trial which he believes will prove grazing does prevent severe bushfires. At last we might get some answers or prove to the doubters that this does work. I mean we've been saying it for years. We know it works, but we've got to prove it to the doubters. To South Australia where flood waters have buoyed spirits and vessels involved in Goolwa's wooden boat festival. Waters back in the Goolwa channel and tourism's wheels are turning once again after low flows all but sank the event.

A lot of boats left the area during that time but they're coming back and today's a celebration of not only our wooden boat heritage but of the water coming back as well. # Advance Australia Fair Only 100 small boats were allowed in the festival two years ago. Now with the influx of flood waters, the number has more than doubled. And they were kicking up their heels at Condomine in the Western Downs and finally getting to celebrate New Year. Three, two, one - happy new year! Locals had to abandon their celebrations on January 31st as flood waters engulfed their town and just weeks later it was a ghost town again with a second flood causing even more destruction. Everybody's just patching things up, putting their lives back together. Most believe this community will emerge even stronger and more united from the experience. There was a major difference from previous years at last week's commodities talk fest in Canberra and it wasn't the addition of an S for Sciences to ABARE so it now comes out as the Australian Bureau of Agricultural and Resource Economics and Sciences the difference is confidence for the first time in years the farmers at Outlook 2011 were smiling. A good time to be a farmer in Australia? Always a good time to be a farmer in Australia. But is it the best for a long time? No, no, tricky year last year, too wet at harvest time but the summer has been good, I'm a summer cropper, summer's been good, drying off now, but it's still OK. Potential for next winter? Very good I think.

I think the commodity price is in the right direction. Our dollar's probably not helping us but still it's a great time to be a farmer. Positive time. I've always been positive about agriculture and like to see more younger people come into agriculture with commodities buoyant at the moment with the high dollar

and the projected outlooks

that we're seeing here in the last couple of days with ABARES are very positive time to be in agriculture. Now, is it a good time to be a farmer in Australia? It's a great time to be a farmer in Australia, Kerry. We've got lot of opportunity, we've got good prices for our grain at the moment and it's only looking better into the future.

We've got full soil moisture into the coming year and we're excited. We've always got droughts or floods or markets or something to look to so it keeps it interesting. But this is the best time for a long time? Yes, with a lot of the dairy industry sort of carrying a lot of baggage in the terms of debt from recent years, us included, but looking forward it's looking optimistic. A wonderful time. It's been a very long drought and exception goes out to the poor guys in Queensland and WA but effectively the heartland has got the rain and the seasons are turning. The best for how long? I guess I've been in the industry myself for all my life past uni so I'd have to say in the last 30 years at least

but going back long before that. I live on the Darling River or did live on the Darling River, 38 million litres going past our place per day means huge flood out plains and lots of water and commodities going in the right direction. I think it's always a good time to be a farmer in New Zealand it just depends on whether you make any money or not. So the outlook at the moment is pretty good for both dairy and sheep and beef with prices up. If that sounds too good to be true farmers rarely lose sight of reality. There are always problems over the horizon and issues to confront. Any problems or dark clouds on the horizon? No, the strength of the dollar continues to be an issue for us, certainly if it was back in the high 80s early 90 the dairy industry would be in great shape at the moment. Weather, weather, weather, weather. Possible problems could be potentially around we're unsure about what's happening with potential carbon issues and we don't have any security around grain prices into the future but I think things are generally looking pretty good for us. Where I live there's a few. Government regulation would be one and mining would be two and coal seam gas would probably be three. I mean imports are always one of our biggest issues in the pork sector and we'd like to see a minimisation of that.

Our industry has had great leadership last year with the resolution passed with the voluntary phasing out of stall. I see our industry taking some good steps forward to get some market share back from the imported products. It's disconcerting the public forum on wool of land ownership. I come here with a lot of academics saying effectively it's OK, foreign ownership is not an issue and that EU subsidies that needed protection during drought times are no longer needed. It's infeasible. I guess my argument would be if I put you in a sand pit for 14 years how long would you survive? Weather, weather, weather, weather. Putting aside the weather according to ABARES, exports of virtually all farm produce will rise next year in volume and price. Wheat, our biggest farm export will lift next year to $5 billion, beef and veal exports should rise 2%. Wool is also on the up, heading towards $2.6 billion While dairy should be steady at just over $2 billion and wine exports will also stay much the same, our strong dollar having a distinct negative influence. Perhaps the best overall news from the outlook conference was the forecast on the Aussie dollar. ABARES is tipping the dollar to average around 97 cents over the next few years before moderating gradually to average 90 cents by 2015/2016. The now the word I kept hearing at the conference in relation to that dollar forecast, was courageous. And I wonder if that wool export forecast was done

before the remarkable price spike of recent weeks. So let's start the price check with wool where it's been another cracker week.

to close above 1,300 cents. Buyers from China dominated and China also gave the Italians something to think about in the competition for the finer wool at Newcastle. Now, the other hot fibre is cotton and a volatile week saw strong export sales out of America push the price past $2 for the first time in a couple of weeks. Traders remain cautious, but there's also the awareness that world cotton warehouses are fast becoming empty. Another soft commodity traded in New York is sugar, where the volume traded was 37% down on recent averages. Nevertheless sugar firmed a fraction to stay above 30 cents a pound. And about 800 miles west in Chicago trade bounced nicely after the setbacks of the previous week.

Good overall economic news landed alongside concerns about stock shortages and hedge funds led the jump. Soy beans, wheat and corn all headed north. The May contracts are much more fluid than the closing nearby March number. Market chatter is all about supply and there's an undertone of the drought in China. Locally there's only light trading in our futures markets with WA wheat at a premium for the current crop but on par with east coast milling wheat for early next year. Local spot markets are soft with canola showing strength and following the Winnipeg price. And speaking of canola,

latest figures reveal the extraordinary take up of GM crops in Australia. On a world basis the area planted to GM crops increased by 14 million hectares to 148 million hectares, that's about 10% of the world's croplands. Now, moving to the sale yards and slaughter numbers are way up.

If Queensland the February figure was 307,000, the highest on record. Processors and restockers were active in a market where heifer, yearling and cow numbers were down as producers looked further out. Trade cattle, JapOx and steers all headed north price wise of course

and cows were also in demand. A substantial buy for lightweight steers for the live trade also put some zing into prices. This has pushed the eastern market indicator above $4 for the first time in several weeks, well above this time last year and the year before. Here's how this crucial indicator has travelled. That first green line is 2009, you can see about March of that year it was about $3.10. Now the 2010 blue line and up and up it goes. In March of last year the indicator was close to $3.40 and you can see that brief red line for this year now above $4. And the lamb market saw numbers lift but surprisingly prices held. Mutton drifted a fraction, but that lamb price is now $1.64 above the price this time last year. I'll leave you with the news that the United Nations has declared that world food prices are now at a record high. The UN says its food price index has reached its highest level since the measure was started 20 years ago. And on that note that concludes the Landline check on prices. The opening shots have been fired

in the latest battle over introducing a carbon tax in Australia. It's led to some uncomfortable and unedifying scenes inside and outside Parliament but the really tricky part, of course, will be actually setting a carbon price. Agricultural emissions won't be taxed but that's not to say agribusinesses will be unaffected. And while the political response is largely driven by community concern about climate change, the recent weather patterns are a timely reminder of the issues farmers face on a daily basis. Like the weather itself the extraordinary range of conditions across the continent in the past year means different things for different people. For some, the extremes amount to climate change proof, for others it's a return to seasons past. This recent Melbourne conference brought together scientists and farmers so each could learn something from the other. It's very important in a very unemotional way to tell them what the science is doing in terms of what the trends are in temperature, rainfall patterns, telling those trends and then how we can adapt to it. Peter Whip's a beef producer near Longreach and he rates this the best season he's ever seen. The very notion of climate change is a difficult sell to people who must deal with the weather day to day, not decade to decade. Where we are in western Queensland,

I mean our climate, you know, is that variable already, you know, the last 100 years we've had droughts, floods, you know you name it we've had it and our management really has adapted to that. Peter Reading is just finishing a stint as CEO of the Grains Research and Development Council which uses grower and government money to fund its work. Peter Reading, with Government so uncertain in their response to climate change, what do you tell growers when they challenge the GRDC spending money on this area? Firstly, it's about telling them they are already doing a great job, they're really understanding the drivers.

So it's really about saying, OK, we have climate variability,

there is climate change, but they've already done a great job in terms of adopting and mitigating it, now, this is where it's going in the future and how we can help them address those issues going forward. The climate change proposition of a warmer, dryer future for grain growers quickly turns into an equation about productivity, doing more with less. You stress profitability and productivity, let's take productivity. What's going to drive that in the future and just how important is it? Well, a farmer's profitability is made up of two things - his productivity and his terms of trade. On the productivity there's a number of factors that drive it. Farm size, the outputs of R and D, etc. So what we're doing and analysing is what are the key drivers, where can we make most difference? The great growth in productivity we had in the 80s and 90s a lot of that was driven by the development adoption of minimum tillage, the use of grass herbicide. Now we're saying what are the farming practices, and hopefully coming through,

that can help get that productivity up? To be sustainable going forward our productivity delivers have to be greater than about 2% per annum. We're not there now, we used to be and it's about really focusing the attention on all the researchers, the investors with private and public capital about how we can get that productivity up to that sustainable level of 2%.

What's the potential in grain production to increase farm profitability through value adding? We've done quite a bit of research looking at where those potential opportunities will be. Australian grain primarily at the export level will continue to be used as a part process for milling. There are value add opportunities in terms of speciality wheats. We're doing work with high amylose wheat which has impacts of resistant starch which helps in things like health, colorectal cancer, etc. We're just working with CSIRO about commercialising omega 3 in grain. So that's a major advantage. However, the research so far shows that those opportunities, although significant, probably in themselves is probably not more than about 500,000 tonnes. So the key driver is still going to be, in Australia, a lot of export in terms of the Eyre Peninsula west and make sure that quality of the grain is good for those markets. On the east coast a lot is about domestic production and intensive livestock production and we're going lots of the work in terms of understanding what are the feed values of grain and hoping have suitable varieties to also meet that sector. You also stress the importance of making research and development really accessible for farmers but how do you do it? Well, this is a very critical part of the whole equation. There's no use just doing the research and moving on unless that research results in an output either a service or a product for adoption to use. It's not achieving anything. In Australia growers use consultants, probably 40 - the latest survey about 44% of Australian grain growers use a consultant. So it's making sure that consultant has the outputs of research and development and that he can translate that into how he pass it on to the grower, that's the first thing. The second thing is how we communicate directly with growers. Growers under 35 want all their information online. Growers over 55 want it all written. In the middle you're going to change. It's packaging the output. It's really about professional marketing of R and D. Conference organisers brought several dozen farmers to tell their stories, so scientists could hear from the people their research is meant to help. And for beef producer Peter Whip there was a lot to absorb. Peter Whip what are you getting out of this conference? It's really good to see what is happening, there's some really good stuff that's happening. Some practical on the ground stuff. There's a really good project with breeding bulls for reduced emissions I think that's real exciting and yeah some of that stuff. Even some of the stuff with consumer sentiments. You know how consumers see things, that's really good. But yeah, some of the other things are a bit - not scary but they're, you know, seems like the research is still

in a lot of ways not that well connected with reality with all the stuff on the ground I think. What's your view about climate change? Not being a scientist, I mean somewhere along the line we do have to look at what the science is telling us and make some intelligent decisions about that and there's a lot of science out there that's saying things are changing. You know, whether that's a 200 year trend

or whether that's the way it's going to be -

I really can't give you the answer. but for me, I'm still going to adapt my business to what is coming along anyway, you know, and that means if - where we are in western Queensland if you're not preparing for drought well, you know, that's almost a no brainer, it's going to happen.

What are the principles that guide the way you run your beef operation and how do they relate to climate change? A lot of what we do, is based around efficiency. We're trying to run our beef business efficiently so that means for each KG of beef we produce we want to minimise our cost so that's the economic side of it.

And when we look at it - there's sort of a win/win because most of those adaptations we do for economic efficiency are actually also carbon friendly. Like they're reduced emissions, you know, or producing more beef for the same amount of emission, those sort of things. The things that we've changed is about managing our pasture differently so we're looking at a rotational and spelling program to sort of build the health of our pasture and actually make more efficient use of sunlight, looking after ground cover. For us in western Queensland, ground cover is the key. Whether you think it's going to be climate change or not, ground cover is the key. It makes you more profitable and it also help you be more resilient

to, say, more extreme weather events. Next week some of the science that might help Australian agriculture adapt.

People are experimenting with crops that are now called nitrogen use efficient or NUE

and some of these have shown the capacity to maintain yields with conventional culture harvest with only half the application of nitrogen. So the implications for this in agriculture are wide ranging.

Building carbon from the point of view of holding on to water and making more of the water that does fall accessible to plants

would be one way to modify the soil to help combat against any future drying that might occur. Soils, nitrogen and genetic, that's next week on Landline. 100 not out is a great knock, whatever game you're in. But given the enormous changes in rural publishing since 1911 The Land newspaper centenary is all the more remarkable. It's now part of the Fairfax media stable which puts almost as much effort getting its stories online as it does getting them printed on paper. The challenge for The Land and specialist rural papers like it is not only convincing rusted on readers to embrace the new technology but being prepared to pay for it. It's about providing vital information, information for debate, information for running farm businesses and also entertainment. I think it's been extremely important

in many ways it's regarded as the Bible of the bush in NSW.

I think we have to keep publishing a paper that farmers are proud of and proud to call their own. Through war and peace, boom and bust, drought and flooding rain

The Land has been a constant source of information and entertainment to country people in NSW. We're only here for a short time, a short part of The Land's history and like farmers we want to be a good steward of the land and if at the end of the day we can pass it on to the next generation in as good a condition then we've done our job. Sally White is the paper's first female editor but she's not big on accolades, just producing a paper that honours a history of high standards. Look, I think it's great, but I think it's more of an honour to be one of only 15 people to edit The Land in 100 years and I think it's probably like any job in Ag these days if you're male or female it doesn't matter as long as you can do the job. 100 years, it's a significant milestone why do you think The Land has stood the test of time? I think because it's still relevant. I think we still have that unique package of news and analysis and markets and those all important on-farm stories. I think it's because farmers are really hungry for information. We look back at what the founders talked about and they wanted to build a paper that was for the country, belonged to the country and was written for them and I think as long as we keep fulfilling that goal

they'll keep buying it. The Land has closely followed the trends of Australian agriculture reporting the changing fortunes of the trade. The Land's reflected every boom that's come along so in the '50s The Land was very much into the wool industry because the wool industry was booming. In the '60s the wheat industry was taking over from the wool industry so we were right into the wheat industry.

In recent times it's been lamb and beef so, The Land's had more emphasis on livestock than grain, I guess. It's reflected what's been popular in the bush all the time. Former editor Vernon Graham went back through a century of archives to write the history of The Land. The paper started life in January 1911 with a clear mission - to represent the man on the land. In the early days The Land was very much a paper that was the mouth piece of the Farmers and Settlers Association and Farmer and Settlers Association

was really fighting with governments, particularly Labor governments, and fighting to get a better deal for small farmers, small wheat growers, the so called cockies. So, The Land was very strident in its attacks on the Sydney press and the Melbourne press, anyone they saw that was putting up hurdles, obstacles or trying to harm those small cockies. It's been there for a long time and a lot of things have happened. In fact the birth of farm organisations really started about 1890, so we've had a long relationship with The Land as a communicating arm for us as well as obviously for the journal itself

and it's captured a lot of history which is great.

The nature of farming may have changed over the past century but The Land is still fighting for farmers to be heard. Nowadays the big threats are not just from governments. Not directly from politicians, more from lobby groups. The rise of the environmental movements and they've sought to put more and more red tape on farmers and what they do on their farms. There's a lot more scrutiny now of farming practices

and food production than ever before And I think farming's standing up to that but there's certainly a lot more interest and there is an increasing disconnect between the city and the country. You don't have city people with country cousins anymore who innately understand where their milk comes from and where their beef comes from. So if they hear something and don't quite understand it

I think it's created a lot of challenges for ag to explain what they're actually doing and that they are farming sustainably. For many readers though the paper captures the appeal of country life and French born photographer Michael Petey has been doing just that for 31 years.

What you call a perfect job because especially for somebody who was born overseas and came to this country. My job allows me to see the country and meet people. It's probably easier for me today than it was 30 years ago because I don't come from a farming back ground at all so I had no idea what I was doing but I knew the difference between a bull and a sheep. That was just about it. I had no idea about grades, but you learn as you go. According to Grant Cochrane the chief executive for agricultural publishing at Fairfax media the paper's focus on business and commerce is also vital to its ongoing success. There's so much to be gleaned from - whether it's classifieds or property advertising - in terms of making decisions about when someone was to market a property, when someone was to market stock. All of those sorts of things are vital to our readers' livelihoods.

We try to have stories that have a commercial bent to them that help people improve their gross margins and improve their profitability and basically endure as farmers. But just as farming is facing challenges like corporatisation and an aging work force, The Land must move with the times. Newspaper circulations are falling and a national broadband network will bring new pressures to compete in an online environment. Quite positively for niche publications and that includes rural titles like The Land, there is a stronger renaissance resistance coming through and that's been the case with The Land. And I think whilst we acknowledge the fact that we're more a business journal in a lot of ways than a mass distribution newspaper - but yes, there will be future pressures and that's where things, whatever the platform is, whether it's print, mobile, online - quality will set us apart from all other providers of rural information to ensure that we have a viable future. So investment in editorial, investment in news gathering, investment in market research. All of those sorts of things that don't come at a small cost are vital to the future of The Land. Well the Southern Oscillation Index, a usually reliable pointer conditions ahead is playing a little game. It's supposed to be fading but last week the SOI went up to consolidate a record average for February. Here's the latest, plus 22.

Up more than 3 points for the week, however the bureau remains confident the SOI and the La Nina conditions will ease through autumn. Now, rainfall for last week and once again the wet season in the north was dominant. Here's the national map and you can see massive falls in the north,

a really good drink for the Gibson desert and more rain for Queensland's channel country setting the scene for another blooming spring for Lake Eyre and surrounds. To numbers - and Windorah in Queensland registered 110mm. Murrurundi at the top of the Hunter Valley had 26. Victoria's Yackandandah scored 8. 11 was the reading at Rotherwood in Tasmania. Not much in South Australia, but Wolseley had 12, Rabbit Flat not far from Alice Springs, had 88 while Boodarockin in the WA wheat belt registered 22 mm. And while we're on water, our colleagues at Four Corners have been looking at the white hot rage in the bush over plans to cut water allocations to farmers in the Murray Darling Basin. Give me another one. This is what you can do with your plan. What you should do is go back to Canberra, take back the message of this meeting, draft your resignation letters while you're in the car. (Cheering) Now that man in the firing line at that meeting, Mike Taylor, took the advice and quit soon after. Monday night's Four Corners looks at what happens next in the Murray Darling reform process. We're coming to the end of another Landline. Next week Sean Murphy looks at the controversy over apple imports not from New Zealand, but China. Can you understand why some growers say there's no loyalty in commerce? No. Look, I understand the issues of the grower. Naturally they want to protect their own product, which is fine, but in saying that I think there's a window, an opportunity that we can import product from other countries

and which we have been doing for a long time - the likes of citrus, kiwi fruit - and will not affect our local market. Free trade fruit, that's one of our stories when Landline returns this time next week. I hope you will join us then, bye for now. (Closed Captions by CSI) an inner world, where only the most adventurous dare to go.