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Tuesday, 11 October 1983
Page: 1568


Mr CUNNINGHAM(6.21) —In addressing my remarks to the Committee's consideration of the estimates of the Department of Primary Industry, I wish to concentrate on the relative importance of the agricultural sector to the Australian economy. We need to look at where the agricultural sector sits in the Australian economy and at some of the changes which have taken place in it. We need to assess the medium outlook for Australia's major agricultural products. These are important issues which the Department of Primary Industry has to consider in the expenditure of the funds allocated to it.

In considering the place of the agricultural sector in the Australian economy, it is common to start from the proposition that the sector is declining. However , this is a misconception. The agricultural sector is growing in absolute terms. Since the early 1960s, the volume of agricultural production has been growing at 2.8 per cent per annum. However, total output in the economy has been growing at a faster rate. As a result, the farm sector's contribution to gross domestic production has dropped from around 13 per cent in the early 1960s to 7 per cent in recent years. It should also be stressed that, while it is no longer the dominant source of export earnings, as it was in the early 1950s, the agricultural sector earned $7.8 billion in export receipts in 1981-82 and accounted for an average of 45 per cent of Australian export income over the last five years. We must consider that this contribution was made by less than 180,000 farm enterprises and 7 per cent of the total work force-a very important sector of the economy. For members of the Opposition to consider today that the Government does not take the agricultural sector seriously is absolutely ridiculous. More people now sitting on the Government benches come from rural seats than there are on the Opposition side. The agricultural sector can be expected to remain the most important single source of export earnings for at least the rest of this decade and possibly longer. The relative decline in the economic importance of the agricultural sector is a common feature of growth in industrialised countries. Other sectors of the economy, particularly the tertiary sector, tend to grow more rapidly than agriculture. We must look at the directions of change in the agricultural sector to understand fully the importance of the Department of Primary Industry in the economy. Broadly, the contribution to the gross value of agricultural output of wheat and other crops- mainly coarse grains and oilseeds-of sugar and beef, veal and intensive livestock have risen. The contribution of the wool industry, dairy products, eggs and the fruit growing industry has fallen. There have been significant variations on these broad trends, particularly in the case of the beef and sugar industries, as a result of large, year-to-year price variations. The sugar industry, in particular, is suffering because of that at present.

Several developments over the past decade need highlighting. Prices paid rose rapidly while prices received rose at a slower rate. Upturns in world commodity prices twice brought about a substantial lift in the ratio of prices received to prices paid in the 1970s. But subsequent downturns caused the index to resume its overall downward trend. Generally, farmers have been able to adjust to the downward trend in the ratio of prices received to prices paid through sustained improvements in productivity. Farm productivity is something we need to look at seriously. It is an area on which the Department of Primary Industry has a big bearing by its services to the community. From the mid 1950s to 1968-69, the volume of rural output rose at a rate of 3.3 per cent per annum, while the volume of purchased inputs increased at the slower rate of 2.6 per cent per annum. Subsequently, the volume of output continued to rise, although the rate of increase dropped to 1.7 per cent per annum. The volume of inputs, however, has fallen since 1968-69. It has been estimated that, between 1952-53 and 1976- 77, the total volume of output in the sheep industry rose at an annual rate of 4 .4 per cent, while total volume of inputs rose at an annual rate of 1.5 per cent . Hence, productivity is estimated to have risen by 2.9 per cent a year.

Productivity gains have been achieved in a variety of ways. Capital has been substituted for labour. Larger machinery has enabled farmers to take advantage of size economies. Minimal tillage practices have been adopted in areas where they are suitable. The area sown to legume pastures has been extended. New higher yielding and disease resistant wheat varieties have been adopted. Farmers have improved their own management skills. These are only some of the sources of productivity change. Departments of agriculture right throughout Australia, of course, have had a big bearing on these productivity increases. It is vary important that we see the departments in their proper light. In the economic environment of the 1980s farmers will continue to be faced with strong pressure to improve productivity. Further gains can be expected despite a number of constraints such as soil degradation and salinity-two problems in which the Minister for Primary Industry (Mr Kerin) has taken a very active interest-weeds, pests and various plant and animal diseases. These gains will be strongly influenced by the level of innovation in Australian agriculture in the coming decade.

It has become clear that, over the last five to 10 years, there have been some highly significant technological breakthroughs which, although in come cases are still in the experimental stage, have the potential to enable farmers to achieve higher rates of productivity growth. Some examples are: The use of biological methods of insect and pest control, which could reduce dependence on chemical pesticides-a very, very important area for the rural sector and the community at large-further developments in such areas as high analysis fertilisers, systemic weedicides and chemical shearing; the greater use of small computers on farms and access to centralised information systems which offer powerful new aids to decision making. We have seen the development of new synthetic vaccines and the use of time release capsules for growth stimulants and parasite control. As a general observation, in the longer term, genetic engineering has the potential to effect significant changes in agricultural practices. I am sure that the Minister for Primary Industry, who is at the table, is fully aware of all the things that are facing the rural sector in the future and is quite aware of what his Department will need to do in the long term to see that many of these developments take place.

I would like to spend the last couple of minutes of my time talking about a few of the structural changes that have taken place in agriculture. Over the past decade there has been a marked structural change in the whole area. There are fewer and larger farms. Between 1969-70 and 1979-80, the total number of rural establishments fell at an average annual rate of 4 per cent from 195,100 to 179, 100. The fastest rate of decline was in the dairy industry, an industry which is established very strongly in my electorate. The traumas that occurred there in the 1970s were quite dramatic. At the same time, average farm size has been increasing by an average annual rate of around 4 per cent. Between 1970-71 and 1978-79, average farm size rose from 1,996 hectares to 2,670 hectares.

There have been adjustments in resources use on farms in response to changes in relative input prices. The major change has been a substitution of capital for labour. However, in the last couple of years there has been a slight upturn in that area. Employment rates in the rural sector are now stabilising and in some areas, even increasing. In summing up, I would just like to make a few comments on the shadow Minister's approach to the debate tonight. He set out on his usual approach of attacking the Minister over promises, an approach which was very negative.


Mr Kerin —He has scuttled and run.


Mr CUNNINGHAM —Yes. He has left the House and is now not even here for the rest of the debate. I am honoured to be part of the Government which has the responsibility of administering agriculture in Australia. I believe that only good can come out of it in the future. I am sure that the Minister for Primary Industry at the table is fully aware and knows quite well how to handle the administration of this very important department.

Sitting suspended from 6.31 to 8 p.m.