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Parliamentary Science Briefing on the National Land and Water Resources Audit,\nParliament House, Canberra.



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SENATOR THE HON. IAN MACDONALD Minister for Forestry and Conservation

 

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Parliamentary Science Briefing on the National Land and Water Resources Audit

Parliament House, Canberra, 20 June 2002

Mr Chairman, as you perceptively note, I am not Warren Truss.

I’d like to say that I’ve got more hair then he has, but I can’t even say that too much these days, but I do bring an apology from Warren Truss.

He’s been fairly busy with beef quotas as you can imagine so unfortunately Warren can’t be here with us at this time to introduce this Parliamentary Science Briefing but he will be along to close it and to field the question time I understand later on.

So ladies and gentlemen it’s my honour, Ian Macdonald, the Minister for Forestry and Conservation, to welcome you all to this Parliamentary Science Briefing.

The briefing is entitled Dollars and Sense, People and Profit in Australian Agriculture. In today’s session, I hope we’ll involve you closely and that you’ll find it very valuable and it will provide some significant insights in various aspects of Australian agriculture.

There will be three speakers, well two others now. I’ll be starting off with a presentation, that’ll be followed by Ian Thompson, who’s the Director of Natural Resource Management within the department of Agriculture, Fisheries and Forestry Australia and, finally, Colin Creighton whom most of you would know is the Executive Director of the Land and Water Resources Audit, who will take us through the key messages of the report.

Warren Truss will be here later onm and Warren will be releasing the report that we’re going to look at and that the other speakers will speak around and he will be doing that formally later.

But before I start my presentation, I do publicly want to acknowledge the work of the Audit staff over the past five years, I particularly want to thank the Chairman of the Audit Advisory Council, Dr Roy Green and even more particularly the Executive Director of the Audit, Colin Creighton.

Those of you who’ve received emails from Colin, and I suspect there’s a few of you, will note that at the end of every email he adds the words ‘a ship in harbour is safe but that’s not what ships are for’ and as the person at the helm of the Audit since it was launched five years ago, Colin has seen some fairly stormy seas.

I think, and I know this view is shared very widely, that he’s done an excellent job steering the Audit. But the voyage, I think everyone will agree, has indeed been very worthwhile.

So, Ladies and gentleman, full credit to the people who have made the Audit happen.

I did want to introduce in my presentation, ladies and gentlemen, to say the obvious and that is that our farmers are our frontline natural resource managers. Our farmers manage over 60 per cent of the landmass of Australia.

If we’re to support these resource managers we need to understand the social and economic fabric of rural Australia.

We need to understand the changing size of rural businesses, their profitability and all the various influences on these land managers as they go about their business of managing what is, as they say, a very substantial part of Australia.

Complex array of decisions

The first point I wanted to make is that any well-run business has to plan and undertake many activities.

Our farmers are no different. They make a complex array of business decisions, often within differing time scales.

There are many influences on these decisions. For example, the farmers need to be aware of climate forecasts and likely commodity prices while still undertaking the day-to-day management of their operations.

Increasingly, farmers are being asked to factor natural resource management into these decisions. In the past the decision on what crop to sow was taken largely from a climate perspective. It can now incorporate issues of soil and ground water management on how to use the available moisture in crop production and to limit leakage to groundwater.

Farmers have to evaluate things such as when best to apply fertiliser to maximise plant productivity while limiting fertilizer losses that can contribute to poor water quality.

These are fairly complex issues — they’re not easily explained and they’re the sort of things that farmers have to do. There are other complex ideas about efficiencies.

A key challenge for us all is how we link natural resource management requirements to productivity decisions. We can talk about three interlinked goals:

the first of these is about productivity — our farmers are constantly seeking the right set of activities and schedules to maximise their productivity; ●

the second goal is about maintaining our natural resources on-farm in the best and most productive condition. There are issues here, for example, about soil health, about things like acidity, about soil moisture; and

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the third goal is about minimising off-farm impact. For example, there are issues of salinity and minimising recharge that might mobilise salts and affect another farmer or a drinking-water supply a bit further downstream.

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Overall, of course, we’re seeking a healthy and productive landscape — and this landscape involves social and economic components as well as natural resources.

I want to now turn to an overview of what has happened economically in recent years.

Terms of trade

The past 30 years have seen some substantial changes in emphasis within our economy.

Australia is recognised as a ‘developed economy’ and this is because agriculture and the commodities it produces, while an important part in regional economies, are no longer the sole contributors to our economy.

There has been a marked shift worldwide in the terms of trade for agricultural commodities.

While prices fluctuate, overall there has been a steady decline in the return to farmers for unit effort.

Some of our farmers, like some of the older members of the audience, and myself I might add, can well remember the ‘good old days’ - the '60s, and before that, when returns where much higher than they are today.

Agriculture’s response to the declining terms of trade has been to consolidate and increase productivity.

Some good examples are detailed in the Audit’s Agricultural Report that Warren Truss and I both discussed at the OUTLOOK Conference earlier this year and, I again understand, that many of you would have been at that.

One response has been to increase inputs of fertiliser and water.

Australian agriculture has markedly increased its net primary productivity since the 1960s through the judicious use of water and fertilisers.

Irrigated lands now account for about 50 per cent of our productivity, clearly demonstrating the importance of water to agriculture.

There are, of course, many other responses. One of these is to change the scale of the business operation.

Farm numbers decrease and farm size increases

As in any business, the successful ones get bigger and, overall, the number of enterprises decreases and this is no different with Australian agriculture.

Where there were about 200,000 enterprises in the 1960s, now there are about 110,000. The farm size has virtually doubled in this same period.

These are of course averages and, depending on the industry, there’s been a range of responses. New crops and new markets are very much a part of the response.

In many areas, with irrigation, horticulture has rapidly increased in importance. Increasing export markets have further encouraged this rise in horticulture.

Diversification also extends beyond the farm gate. A good example of this is the increase in off-farm income.

Off-farm incomes

As with Australian families elsewhere, two incomes are now the norm. Most farming enterprises have supplementary incomes.

One of the key points to note here is the interface between the farm and regional towns, that are so very important to rural Australia.

Each exists because of the other, and building on healthy regional communities and services to support these communities is a key part of the Government’s policy, and we have a great number of policy units — a department primarily looking at regional services, two Ministers looking at regional services and that’s all about providing those regional communities with the support and services that they need.

Of course, these things do vary with the type of business — dairying, for example, is a highly intensive industry for farming families.

The question then to be asked is: just where across the Australian landscape does agriculture predominate as the economic mainstay of regional communities?

80 per cent of profit at full equity

Mapping productivity across the Australian landscape reveals some very interesting points.

We have heard mentioned that 60 per cent of Australia is managed by farmers.

Fifty nine (59) per cent of Australia is devoted to some sort of agriculture or grazing. But most of this is rangelands.

The remaining one per cent of the landscape is responsible for about 80 per cent of Australia’s

agricultural productivity.

These are key areas of precision agriculture — they include cotton, horticulture, irrigated crops, dairy, sugar and so on.

In these areas, continued investment to maintain high productivity is essential.

Particular attention is already being paid to natural resource issues such as water-use efficiency, nutrient balance and soil health.

Certainly, we can look to a partnership across farmer, agribusiness, science and government to maintain and, if possible, increase the productivity of these areas.

But we shouldn’t stop there — with smart water-resource and soil development we can add further to this listing of high productivity per hectare.

These are key areas not just for agriculture but also as part of the rural fabric, for biodiversity and other natural resource values.

The ability of our land managers to rapidly implement changes and improvements depends on the profitability of the landscape.

Australian farmers generally have a very positive and pragmatic attitude towards environmental issues. Of course it is easy to understand why they do because really their very future depends on that and they understand that.

Many factors determine adoption and motivation and capacity to change to sustainable natural resource management practices.

Adoption is enhanced by confidence in future income stability and low debt, management skills, technical knowledge, participation in training courses, landcare or similar membership and involvement with the particular relevant industry development.

Substantial resource management practices are more likely to be adopted if they provide economic and other advantages, are low-risk and are simple to manage.

Costs of resource use on agriculture — on and off-farm

At a broader scale, estimates of the cost of resource use on agriculture can improve investment decisions by farmers and governments.

For example, on-farm, soil acidity has a major impact on agricultural productivity.

The Audit calculates soil acidity reduces potential agricultural earnings by $1.5 billion a year, I will just repeat that $1.5 billion a year. Farmers can treat many acidity problems with the application of lime.

In contrast, dryland salinity reduced agricultural production by about $200 million a year, that’s substantially less.

Off-farm the situation is very different though. Dryland salinity can cause significant physical damage to local infrastructure and costs to water users through decreases in water quality and reduced quality of natural ecosystems.

Current damage to local infrastructure — roads and public buildings — caused by rising water tables, and salinity, is estimated to cost about $90 million a year. I think that’s a statistic that is not terribly well known or considered.

The Audit estimates that if water quality is reduced by a further five per cent, the cost of providing just drinking water would increase by about $500 million a year to treat salinity and nearly $800 million a year to treat turbidity from soil erosion.

These impacts are of primary concern to governments at all levels.

The value of this type of information is that it helps us understand our frontline managers’ needs a bit better.

It helps farmers to make decisions, it helps governments make decisions and it helps those who support governments in their policy direction to make better decisions.

For example, it helps governments make decisions about where to invest the money we’ve set aside in programmes like the Natural Heritage Trust and like the National Action Plan for Salinity and Water Quality.

It also helps us understand better how we, at the frontline of policy development, can better equip and support the land managers to deliver for Australia in accordance with community expectations.

Of course, regional circumstances and management priorities and trade-offs do vary.

As you can see, the information on the physical effects of salinity and acidity is simply not enough. The value of the Audit report is that it provides the social and economic context critical to government decision-making in relation to natural resource management.

To understand some of the complexities, the Audit work used as case studies several of our catchments and analysed how these regional communities might best meet the challenge of salinity.

Hand over

Ladies and gentlemen, to take you further along this line can I introduce to you Ian Thompson who, as I mentioned, is from the department of Agriculture, Fisheries and Forestry, Australia, and he’s going to detail for you some of the challenges facing Government and the community as we invest in natural resource management under the National Action Plan.

Ladies and gentlemen, would you now make welcome Ian Thompson to the podium.

   

Last updated 24 September 2002 URL: http://www.affa.gov.au/ministers/macdonald/speeches/2002/lwraaudit.html Commonwealth of Australia 2002