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Standing Committee on Agriculture and Water Resources
04/11/2019
Growing Australian agriculture to $100 billion by 2030

HANCOCK, Mr Nathan, Chief Executive Officer, Citrus Australia

[13:52]

CHAIR: Welcome. This hearing is a legal proceeding of the parliament. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I now invite you to make an opening statement before we proceed to discussion.

Mr Hancock : Thank you to the committee for the opportunity to speak on behalf of the citrus industry. Citrus Australia is a peak industry body prescribed under some legislation to do certain roles for industry and is also a voluntary membership body. In total we represent over 1,500 growers across the nation, but we have membership of around 300, including a number of affiliate members who aren't growers but may be in the supply chain.

The citrus industry grows in five states and in the Northern Territory, and we have over 26,000 hectares under plantings. We produce 750,000 tonnes, on average, and our largest sector is the orange sector. It's also our largest export type. Mandarins have been growing in area and also in exports and are becoming a significant part of our industry. Indicators are that the area of production will grow in the next five years by 25 to 30 per cent nationally. This is driven by demand from Asia—in particular, China—and we've seen a growth in exports to China since 2012, when we exported 500 tonnes, to over 75,000 tonnes in 2018. When you take in the entire China market, that's over 110,000 tonnes to China, Hong Kong and Taipei.

We list the five key aspects that will prevent us from reaching $100 billion by 2030 as access to market, access to modern agrichem, access to water, access to labour and protecting our production areas through biosecurity.

CHAIR: Thank you very much. We'll open it up to discussion now. The citrus industry went through a tough time a few years ago when Brazilian oranges—was it Brazilian oranges?—came in. It was certainly the pulp. It seems to have recovered from that.

Mr Hancock : No. The wheels have come off, essentially, for the juice industry since the introduction of concentrate juice from Brazil. You can see from our statistics that we run for the industry that the investment in valencia plantings, which is the juice orange, basically stopped still about 20 years ago. The market has been very tough. It's a domestic market that is dominated by the retail chains, and we've seen a real cap on the investment in that area.

Apart from the Riverina, which is the largest citrus-growing region and has the largest valencia-growing area, each other area in Australia has actually removed its valencia trees, because they're not profitable compared to export varieties such as navel oranges and mandarins. We are, as an industry, trying to focus on developing export markets for our single-strength juice—so, 100 per cent Australian orange juice grown in Australia and exported to key markets such as China, Korea and Japan—but that's in its fledging, early stages at the moment as a last-ditch effort to try and save the industry.

CHAIR: So the focus is on the high-value, eating type citruses rather than—

Mr Hancock : Quite simply, for a very long period, the returns on juice-growing varieties were barely more than what you could pay someone to pick the fruit. There's no incentive for growers, except in an extraordinary year when there's not been much production. The 100 per cent juice that's sold by retailers here does drive the price up, but it's not sustainable.

Mr BRIAN MITCHELL: On the issue of the juice, you mentioned the retailers—we won't name them, but we know who they are. What impact are they having on the citrus industry in Australia and that price depression?

Mr Hancock : Particularly around juice, there's the ability to set a price and everybody else has to take their margin from under that. The last place that pays for everything is the tree and the grower. The grower is the one who is—pardon my pun—squeezed in terms of their ability to make a living from this.

CHAIR: Are you able to quantify the impact they're having?

Mr Hancock : It's simply by setting a price that doesn't allow profit within that price structure. I can't give you an exact figure, no, but the only way forward that we can see is for industry to break that ceiling and look to open up the markets and go to other countries.

Mr BRIAN MITCHELL: I mentioned the pressure from the retailers is, 'If you don't supply to the price we want then we'll go to the imports.' Is that—

Mr Hancock : They're already bring imports in. They bring in concentrate—not directly—through suppliers. They have access to concentrate product which is largely sold in what we call the 'ambient shelves', so it's on a shelf, not in a fridge. They've also been moving to supply that ambient temperature fruit in the cold sector, so that's a little bit confusing for the consumer who comes in assuming that what's in the cold store is a fresher product, when actually it's a concentrate product and it's generally not from Australia. That's a confusing issue we'd like to see cleaned up.

Mr BRIAN MITCHELL: Are you able to quantify in any way the role for Citrus Australia given that the terms of reference for this inquiry is about growing agriculture to $100 billion by 2030? What role do you see for Citrus Australia and how do you get there?

Mr Hancock : As we've referred to, the real growth sector is in table fruit—in particular, table fruit that we can export. Of the 750,000 tonnes that we produce in Australia about a third is consumed by Australians domestically, a third is juiced and a third is exported. Of the product that we send overseas 90 per cent goes to 14 markets, and 12 of those are Asian nations to our north. We have access to over 50 markets and we trade within 34. We don't trade with some of those markets because we don't have favourable terms or because they are at the far end of where the product can be shipped to and arrive in good condition. Through the advice of the department, we work on improving our terms of trade or in encouraging research and development in post-harvest treatments that can, for example, extend the life of the product.

CHAIR: You have obviously had interaction with DFAT—Austrade—in developing markets. Have you had satisfactory help there? Is the system working? Is it going to be done better? Can more be done to assist producer groups like Citrus Australia to access markets?

Mr Hancock : In 2012 or 2013 some announcements were made about cutting red tape and green tape in agriculture and making things simpler. Since then, exporting has never being more expensive or difficult. We put that largely at the feet of the Department of Agriculture. They have an overbearing approach to the way market access is managed in our country. In terms of their ability to negotiate on our behalf, there are a lot of positives—although we do have questions about how they prioritise which market's access to work on. I'll give you the example of irradiation treatment of persimmons going to Thailand. It took quite a period of time to do that. It has been approved for two years now and not a single carton of persimmons has been exported to Thailand. When there are issues in an industry with thousands and thousands of tonnes of exports on the line, we need to make sure we can open and improve market access as much as we can when there is real trade to be done. How they justify prioritising some of these other market access issues before our industry—and the table grape industry as well—beggars belief.

The main gripe we have with the Department of Agriculture at the moment is the intensity with which they audit processes in Australia. We believe it is really the responsibility of the importing country, by looking at our product in that country, to determine that the protocols they have asked us to meet have been met. We find a lot of the work that the Department of Agriculture does onshore here is overbearing. Our position is that it is fine for our Department of Agriculture to work on imports in that way but not exports.

CHAIR: Could you put in writing some of those examples you've described there?

Mr Hancock : We do have a submission. It's a little bit late, but we will put it forward.

CHAIR: You can submit that and highlight those particular areas. These are areas where, if there is a will, government can make some changes. Gavin, do you have some questions?

Mr PEARCE: What component of industry levies do you take?

Mr Hancock : We don't take any levies directly. We are a service provider and we apply for funding through Hort Innovation like any other service provider. We have been successful in our applications. We would be one of the bigger portions of the levy—as would New South Wales DPI, which is the lead agency for horticulture.

Mr PEARCE: Most industry levies have an R&D component for the future growth of the industry. We see a lot of seedless varieties now. With the way you go about your business, the type of fruit you grow now is different than 10 years ago. How do you control that as an industry? Do you see where I am coming from? How are we going to move that forward?

Mr Hancock : Our peak industry body is run by a skills based board. We have moved away from a federated model and we have people with a skill set in mind for driving the company and the industry forward. Through that mindset, we look at the big things on the horizon that we can work on. I have recently come back from Spain. The Spanish industry is 500,000 hectares and we are only 26,000 hectares. Their market is Europe, and the market conditions, for want of a better term, are set by France in particular. This is around the use of agrichemicals. To meet the requirements of both the regulators and the retailers in those countries, the Spanish industry has moved to being able to apply agrichemicals in such a way that there is no residue at the end of the season when they pick the fruit and/or has moved to new technologies that don't have any residues at all. The point I am making is that we are looking out as far as we can to try and bring back information to our industry to feed into the R&D, to feed into the grower industry and to say, 'This is the future and this is the way we are going to need to work.' Some of those things might be only a couple of years away—like the impact of those types of regulations. They seem to feed off each other across the markets whereas seedless varieties are something we have been talking about for quite a number of years but it takes a lot of research and development to develop those varieties. So we go out and collect as much information as we can and then feed it back through the R&D system.

Dr WEBSTER: Do you see a future for juice in Australia?

Mr Hancock : Unless we are able to very rapidly access and build an export market for juice, the trend we have seen—the removal, or top working, of juice varieties to other types of citrus—will continue at a rapid rate. As I mentioned before, the Riverina is the largest region for juice varieties. We are seeing on very large farms the technique of chopping the top of the tree off and then inserting another bud which grows a different variety. We are seeing that happen rapidly; many, many hectares are changing. The only hope we see is for the potential development of an export market to China, Korea and Japan, where we think there will be the right type of consumer who is looking for a healthy product, with good provenance, in a single-use product like a small container. That is an idea we are developing. We have a project application in with Hort Innovation to try and make that work. The next five or so years will determine whether we have a niche Australian juice market or continue to be a dominant juice market.

Dr WEBSTER: How is our workforce for citrus?

Mr Hancock : We have the common issue within this area and across Australia in terms of the different categories of labour and their requirements. On a seasonal basis we need workers to come and pick the crop and do some pruning. We access the Seasonal Worker Program and the Pacific Labour Scheme. We always have a reliance on backpackers, holidaymakers, though that is lessening. We rely on those people. We certainly felt the impact of the backpacker tax. But we have taken up, in large numbers, the Seasonal Worker Program. But we are finding that that is becoming more and more onerous on smaller growers and approved workers. That is something that concerns the peak industry body and our members.

CHAIR: What do you mean by 'more onerous'?

Mr Hancock : Because of the linkages to the aid program, with many of the things where we step back and say, 'Hang on, why are we being asked to go to such lengths?' it is because these people are deemed vulnerable citizens or vulnerable people. So there are a lot of extra requirements that you need to do for people in the Seasonal Worker Program that are not required for an Australian employee or a holidaying backpacker, for instance. So a lot of stewardship is required, over and above other labour types.

There is an ongoing need to attract that seasonal workforce. I overheard a question to the previous speaker about why can't we get Australians to do it? Seasonal workers that do work in those areas are motivated by other means. It is because they are new to Australia, they will take whatever work they need and they are not proud. They will come and work hard—I'm talking about new migrants. You will get seasonal workers in the worker programs I have mentioned who come because they can make good money and return to their homelands and make great changes for their family, so there is a different motivation. Holidaying backpackers get to see more of Australia and spend longer here, so there is more motivation. Getting up in the morning, swinging out of bed thinking: 'I can't wait to go and pick six or eight bins of oranges or mandarins today,' is not something that really springs to mind for anyone who wants to do some work around this town or any town along the Murray River or up in Queensland. The motivation is not there and they are further demotivated by our department of employment—or whatever the term is—that controls the purse strings by saying: 'You have worked a little bit; how is that going to affect your dole payment?' That is probably not what it is called anymore.

Mr BRIAN MITCHELL: I am pleased you came to that point. I wanted to go to that point. Former Senator Xenophon struck a deal with the government in the last term that didn't really come to come to much—I think it was a little bit complex—where, if people on Centrelink benefits, not just unemployed but maybe pensioners who are fit, retirees, can get seasonal work—and it would be restricted to seasonal work—for example, go fruit picking for three or four months without it affecting their Centrelink entitlements, do you think that would be of benefit? The critical point would be taking Centrelink out of the equation because it is the complexity of dealing with that agency, the compliance issues, the nightmare of being on the phone and all that which often probably demotivates people from seeking the work.

Mr Hancock : I think it is a very complicated problem and dealing with it in the way that you are talking about ignores the fact that people may need to travel to be in a place like this. There is not enough accommodation, not enough infrastructure and then the person might be away from children or a partner who may need support. It is too simplistic a way of dealing with it. If you were to invest in infrastructure in the towns that have the work available, you could say there is nearly a year's worth of work across the different industries in this region, for instance, to build a body of work from picking citrus, working through table grapes. There are certainly migrant groups we talk to on a regular basis about relocating to this area because they think there is enough work to do that. Once again, it comes down to motivation. It comes down to properly understanding what the benefits of getting a job and doing some of this sort of work might lead to because there are opportunities. I have heard many times about people who have begun as pickers on farms who have ended up getting a different job and becoming a permanent worker on a farm if they show a bit of nouse and a bit of work ethic.

To finish my answer to your question, there are tiers of more specialised labour that we also lack. We need the government and industry to invest in attracting people from school into our industry. Itis not as easy as just going to TAFE and getting a trade anymore. It is a little bit more complicated to come out of school with some sort of qualification that is relevant to an employer. Maybe it is enough to show that they have got the initiative to take on that training and can learn some of the basic things of irrigation management, nutrition and those sorts of things.

CHAIR: We do have Sunraysia TAFE coming in afterwards and they did mention this morning they do have cert II for school kids and so on.

Mr Hancock : The disconnect between where does the tomato that is on the shelf in Woolworths come from to how did you grow that and where did it start from has to be brought back to school level. It is very difficult for industry to get a good news story into the media. The media loves it when something goes wrong for us because they can run that story for weeks and weeks. But it is very hard for me to come out and say, 'Hey we have had three or four years of increasing exports in both value and volume,' but no-one wants to hear that. That is not a bad-news story. It is tough for us to get that out. I say that because people see the name 'Citrus Australia' on my shirt and ask me: 'Aren't they pulling orange trees out? Aren't you in a terrible position? We shouldn't have American imports.' That is all news from the past, and I don't care about American imports. We only import 30,000 tonnes yet we export 250,000 tonnes. It is a trade-off. It is a world trade situation where we want to be able to export around the world but it is hard to get that message out that there are a lot of amazing things you can do.

To give you my personal story, I came into the industry because I lived in a country town. I wanted to do something in agriculture but I wasn't a farmer and I didn't come from a farming background. I saw the Muresk Institute—I think it might have closed down recently in Western Australia—and began studying agriculture there and went on to Curtin University. The point I was making is I saw this opportunity in a fair or something like that where they were showing what employment was available. We need help people like myself or people like Kerry behind me to get to more of these things and promote the industry as an opportunity to do lots of work in technology. You can see all parts of the world. There is a huge world citrus family who welcome you in to show you what they're doing on their farms. There is a lot of excitement being involved in the citrus industry and in other horticultural and agricultural industries. We don't sell that message well.

Dr WEBSTER: A point of call of clarification, how many months a year are workers required in citrus?

Mr Hancock : It depends on what level of person you are talking about. We have people who are employed all year round in certain roles and then we have a boost in requirement of numbers from about April, depending on the season. This year the valencia crop is short in this region, so the picking has almost finished but in other parts of the country there is still some picking going on. It can go right through till February and March the next year. It is almost all year round from April. You would have to move around to follow it but you could pick oranges or mandarins nearly all year round.

CHAIR: I also went to Muresk.

Mr Hancock : Did you really?

CHAIR: Yes, I finished in 1989, so I am a bit older than you, I think. Unfortunately this is the story we hear about agriculture. If you asked anybody in the street today about agriculture, they would say 'it's a basket case' and 'the drought' et cetera. We have got a lot of good stories in agriculture but people and the media are only interested in the hard-luck stories. The government and the industry more broadly need to talk about the good stories. Thank you very much for coming in.

Mr Hancock : I briefly touched on it but biosecurity is a huge handbrake to any initiative to grow agriculture to $100 billion by 2030. Every single commodity and type is affected by the risk to biosecurity. The government needs to use the borders that we have, being an island nation, to prevent incursions of disease and pests because they could pretty quickly sit us all on our backsides.

CHAIR: Absolutely. I know Minister McKenzie is acutely aware of that. With the Asian swine flu at the moment, we are on heightened alert. Thank you very much for your evidence. If you could provide your submission and highlight those couple of areas that the Department of Agriculture, you think, are missing the mark, that would be much appreciated. You will be sent a copy of the transcript of your any evidence and you will have the opportunity to request transcription errors.

Proceedings suspended from 14:19 to 14:27