As consumers, we all have skin in the game

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One of the golden rules in journalism is to never make assumptions. In particular, when writing about a topical subject, one should never assume that people know the background to the subject. In other words, SPELL IT OUT.

It is an adage that we might well apply to farming.

I was reminded of this when sorting through a pile of reports in my office. One was a survey undertaken for the Primary Industries Education Foundation a few years ago.

This study confirmed that Australian students don’t know where their food comes from – which was no surprise to those of us who work in the agriculture sector.

In this world, milk doesn’t come from cows; it comes from the supermarket. Less than half the students knew that everyday lunchbox items such as bread, cheese and bananas originate from farmed products; three quarters of Year 6 students thought cotton socks were an animal product; and more than one quarter thought yoghurt came from plants.

These figures were reinforced by a survey released this week by the major media group, News Corp Australia.

This showed that a quarter of youngsters think fruit and vegetables come from the supermarket, and 6 per cent think they come from “the fridge”. Only 1 in 10 children knew that they are grown from seeds.

Only 22 per cent of children aged 6-8 years could identify 5-6 vegetables in their raw state; and 12 per cent could only identify 1-2 raw vegetables.

All this when the OECD says Australia is the fifth fattest country in the world, and one in every four kids is classed as overweight or obese.

Nation-wide polling commissioned by the National Farmers’ Federation last year could well explain why this is so.

This study found that Australians have grown disconnected from where their food and fibre comes from.  More than 80 per cent of those surveyed described their connection with farming as ‘distant’ or ‘non-existent’.

It also found that most people are totally unaware of the economic contribution farming makes. Presented with a list of six industries, only 4 per cent of respondents correctly identified agriculture as the fastest growing sector.

This result highlights a real urban myth – that agriculture is a thing of the past, a sunset industry. In reality, it is a cornerstone of Australia’s economic future. In fact, nationally the industry is on track to be Australia’s next $100 billion industry, having reached a record $60 billion farm gate return last year. The industry also supports 1.6 million jobs across the supply chain.

According to Fiona Simson, President of the NFF, the problem is that people simply don’t know they have skin in the game.

Most people assume that the industry only benefits people in the bush. In reality, the bulk of jobs supported by the farm sector are in the city, in fields like retail, food service, logistics, finance and more.

“Farmers don’t just grow your calories, they grow your salaries,” Ms Simson said.

While food and fibre production is largely ‘out of sight, out of mind’, farming produces all the essential ingredients in every meal on our plates, every natural fibre on our backs, and many other important facets of our lives.

This growing disconnect between town and country is serious – and it really can’t be ignored any longer.

We live in one of the most urbanised countries in the world. Food is relatively cheap. Everyone takes it for granted and we’re quite complacent about our well-being.

The end result of being so separated from our food is that we really don’t place enough value our farmers. People should understand how far their food travelled, how it was produced, and the value of farmers and farmland in our communities.

Australian farmers are efficient producers of food and fibre, and in many areas, we export more than we use domestically. However, there’s no guarantee that will always be the case.

There used to be a bumper sticker around some time back that said that ‘if you’ve had a meal today, thank a farmer’. And we should.

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Rainy days and droughts …

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It’s time to change the community conversation around droughts, floods, cyclones, hail storms … the range of weather events that create havoc in our farming communities.

After every natural disaster in Australia, those in authority consistently avoid questions about why these things happen and what could have been done to minimise the impact.  “Now is not the time for that conversation,” they say. “It’s just too early.”

The best example of this is drought. Over recent years, we’ve seen more and more communities affected by prolonged drought, often barely recovering from one ‘worst case’ drought before falling into another.

Government support for Australian agricultural businesses is as regular as drought – a sure thing every few years.

Yet everyone agrees that current government responses to such circumstances are out-dated; everyone agrees that we need new approaches; but the time never seems to be right to have what is inevitably going to be a difficult discussion.  So we really never come to grips with issues that need to be seriously considered in ensuring appropriate responses and preparation for drought and other natural disasters.

And as certain as creeks running dry, natural disasters bring plentiful media coverage of the heartbreaking reality of farming families losing stock and crops.  The stories are the same, drought after drought, just the names of stricken farmers change. If the television cameras are really lucky, they’ll focus in close and find tears on a brave farm woman’s face.

As the crisis passes, and the media moves on, those affected are left dealing with the aftermath – and they find that no-one wants to talk about these issues when there is no active disaster scenario.

These pictures of devastation inspire a desire to help, some of it personal, some from corporates, most of it via government. This has been evident in recent weeks as kneejerk reactions from governments directed have more and more funding towards drought-affected communities. Many corporates have also become involved in fund raising, and garnered much positive press as a result.

However, farmers are not all welfare cases who need handouts. Many of them are modern, resilient and sophisticated businesses.

This is clearly demonstrated by the fact that the nation’s farmers had a record $6.6 billion in farm management deposits (FMDs) at the end of June 2018.

Uneven income is common in agriculture because of things such as natural disasters, climate and market variability. The FMD scheme is a risk-management tool designed to help farmers deal with uneven cash flows by setting aside pre-tax income in years of good cash flow to draw on in years when the going is tough.

There’s one more tool that would provide farmers with even more options for managing drought and other natural disasters.

There has been much talk about the need to sharpen the focus on disaster recovery from government assistance to risk management and mitigation. Yet it is virtually impossible for Australian farmers to insure for losses when disasters strike. If this insurance was available, the public cost of disaster recovery would be much lower than it is now.

Multi-peril insurance schemes underwritten by, or subsidised by, governments are common in many other countries, including the United States and many of the Euro-zone nations.

The nay-sayers point out that such programs would be expensive – and that’s true. However, the cost would be far less than the current case-by-case response to repeated natural disasters.

Nationally, it is estimated that we are spending less than $50 million pa on natural disaster resilience – at a time when the public costs of disaster recovery programs are mounting rapidly into the tens of billions of dollars. Yet experts have estimated that every dollar spent on prevention of, or preparation for, natural disasters saves four dollars on reparations and recovery assistance.

If multi-peril insurance was available, farmers would be expected to do all they reasonably could to prevent losses due to disasters. If insurance were available on reasonable terms, and a landowner was not prepared to put their hand in their pocket to take out that insurance, there should be limited recourse to public assistance when they suffer losses.

Most farmers would readily make that commitment as a sensible business decision.

Many farmers I know find the ‘poor victim farmer with starving stock’ image distressing. They argue that, if that remains the predominant narrative, the urban population can’t be expected to respect what they do and support their ability to make good land management decisions.

Governments have repeatedly told the industry that it needs to be better prepared for natural disasters. Perhaps it is time they heeded their own advice.

Free trade numpties need a reality check

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I try to be a glass-half-full type of person – I really do. However, all too often I end up being ‘not happy, Jan’.

“Paying an extra $150 million a year to protect growers? That’s bananas!” boomed the headline on an article last week by an associate professor in economics at a respected Australian university.

The opening paragraphs saw my blood pressure rise …

“No international traveller can miss the impact of Australia’s quarantine restrictions. Loud posters at every international airport instruct you to dump your fresh produce or face large fines … These restrictions impose a cost not just on international travellers but on Australian consumers. Anyone who’d like to consume overseas fruit is not quite as well off as they would be if they didn’t have to comply with Australia’s quarantine restrictions … We estimate the banana import ban has a total annual welfare cost of about $150 million. That’s more than $250,000 per grower per year.”

And rise – to the point of apoplexy …

“Does the risk of not being able to grow our own bananas pose enough real danger to Australia that we should spend $150 million every year to fend it off? Or is there a subtler but larger danger lurking in our quarantine laws – the invisible siphoning of Australia’s wealth to a tiny group of protected mates, through policies sold to us wrapped in our national flag?”

Where to start?

First of all, there are no subsidy payments to farmers as this article would suggest. This is a notional allocation, developed from a theoretical model.

Abolishing quarantine laws – oh, yes, that’s a truly brilliant idea.  Let’s open the floodgates to imported bananas, apples – you name it – from anybody, anywhere. So all the years Australia has spent protecting our farmland from imported diseases will have been wasted, sacrificed at the altar of free enterprise.

If we were talking about the meat industry, would economists be advocating opening the door to imports that could carry foot and mouth disease, or BSE or any one of half a dozen other nasties we can all think of? Will they be lining up to support farmers when they have to shoot cattle or plough in orchards affected by imported diseases? I don’t think so.

Then there’s the proposition that growers might be profiteering and exploiting Australian consumers.

Textbooks tell us that any market is the result of supply and demand. In an ideal market, the balance between supply and demand is what sets the price. But most farmers are price takers. They don’t set the price that they are paid for their products – they have to take what they are given.

Economists should take a look at the usual suspects – middlemen and retailers – to see who is making profits. As the supermarket price wars demonstrate – think $1/litre milk – the major retailers operate under a different set of rules to the market. Their rules.

Just for a moment assume that I can play the game –  and accept the logic in this instance and remove biosecurity controls on bananas.

The inevitable outcome of this hypothesis is that the whole of our biosecurity framework would soon be dismantled. Sure as night follows day, we would end up outsourcing all food production to the cheapest source, regardless of safety and other societal expectations. Those who grow and produce food in Australia – and those who rely on them – should go on the dole.

Furthermore, this seems to be just another example of selective analysis. If we’re seriously going to have this discussion, then ALL costs need to be taken into account before making any assessment. So not only biosecurity, but also opportunity costs and economic impacts. That would include quantification of employment impacts, re-establishment costs if it is determined that it is feasible for banana farms to move to other activities, and flow-on economic effects from downtime in periods of re-establishment.

Economic theorists may well be happy if we shut down all those industries where we don’t have a comparative advantage. However, it won’t satisfy the people who work in those industries – who vote. And I doubt if they appreciate being called rent seekers.

We have had nearly 50 years of our politicians and community acting on the simplistic highly value laden advice of economists and it has created significant problems. We need to push back against the self-serving arrogance that has become a hallmark of modern Australian economic input.

 

 

 

Fighting the fat epidemic

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As Australian children go about their daily lives, they are exposed to a huge amount of unhealthy food marketing. Food companies and fast food chains bombard kids with unhealthy food on television, on the street, at the shops, while watching and playing sport, online, and sometimes even at school.

More than a quarter of Australian children are overweight or obese – and that number is increasing. This serious public health issue comes with significant consequences for individual children, their families and our community.

Substantial evidence tells us marketing influences children’s food preferences and consumption, contributing to overweight and obesity.

Good nutrition in children is essential for their healthy growth and development which leads to substantial health benefits later in life. Establishing a healthy pattern of eating and drinking early in life can have far-reaching consequences including maintaining a healthy weight, reducing the risk of chronic disease and protection against premature mortality.

We all know that many children’s diets fall well short of recommended balances – children typically eat too many unhealthy foods and too few of the things that are good for them. Recent research shows that, while some areas are improving, others are not – and leaving this to chance is not working.

The food and advertising industries have continually failed to reduce children’s exposure to unhealthy food marketing, despite ample opportunity and increasingly complex regulatory frameworks.

But why has the system failed?

The food and advertising industries currently set their own rules for marketing food to children. In other words, food industry advertising codes are voluntary and many companies have not signed up. This is not surprising: the food industry’s ultimate goal of increasing profits by selling more products is in clear conflict with the public health goal of improving diets and encouraging people to avoid unhealthy food.

Furthermore, compliance isn’t effectively enforced or independently monitored for those who do sign up. Companies might be required to stop showing an advertisement found to breach a code, but there are no additional penalties.

Surprisingly, a lot of marketing isn’t covered at all by food industry codes, including sports sponsorship, packaging featuring cartoons and familiar characters, in-store promotions, competitions and giveaways. And then marketing is only covered if it’s ‘directed primarily to children’. Media popular with both children and adults is unlikely to be covered eg mainstream TV shows and sports broadcasts. Oh, and no code covers older children, with age limits of either 12 or 14 years old. Furthermore, the codes don’t adequately protect children from digital marketing.

Food companies can decide which foods are ‘healthier’ and can be marketed to children. This is why we see foods including high-sugar breakfast cereals, ice creams and biscuits categorised as ‘healthier’ under the food industry codes.

The Obesity Policy Coalition, a group of respected health and research organisations, believes that the issue of our children’s future health is too important to be left to the whims of corporate profit imperatives. It argues that the federal government must regulate to reduce children’s exposure to unhealthy food marketing.

They are proposing the introduction of mandatory regulations that apply to all food companies and fast food chains.

These regulations should apply to all forms of advertising, marketing and promotion; all forms of media including television, cinema, outdoor advertising, radio, internet and print; digital media such as social media and mobile applications; and any new and emerging technology. The scheme must also cover promotional strategies such as brand advertising, product packaging, in-store displays, sponsorship of children’s sport, product placement, competitions and offers of free toys and giveaways. It would prevent unhealthy food advertising when kids are likely to be engaging with various media formats. Outside of these times, it should apply to any advertisement that uses techniques that appeal to children.

The new scheme would need to clearly define ‘unhealthy food’ by reference to an appropriate nutrient profiling model; and it should apply to children up to 16 years old.

Such a scheme should also impose meaningful disincentives and sanctions for breaches to content creators, publishers and broadcasters. Importantly, it should be administered and enforced by an adequately resourced independent agency.

We are clearly failing in our responsibility as a community to ensure our children have the best possible start in life. The current obesity crisis is slated to cost the Australian health system billions. Even on the basis of cost alone, it is time we had a serious look at this and other possible ways to address this seemingly intractable challenge.

Not in my backyard

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The great Roman poet Virgil died in the year 19 BC. He’s famous for warning people about the Trojan horse. “Whatever it is, I fear the Greeks, even when they bring gifts,” he said.

Move forward more than two thousand years, and now we are warned to beware of politicians bearing gifts.

We all know that, if they give you $10 in one hand, they will take $50 from the other hand. Unfortunately, they tend to give to some but take from others.

Egged on by vociferous green groups, the promise of ecotourism riches is the latest version of the Trojan horse. Namely, the lure of an economic revival from floods of visitors seeking out natural wonders in your neck of the woods.

Ecotourism seems to be the panacea for governments seeking to close or prohibit something. Shut the forestry industry, prevent the construction of a pulp mill, kick out the salmon farmers — all in the name of ecotourism.

When all the dust settles, though, it is not uncommon to find that very few jobs have been created; and the supposed new industry wouldn’t generate enough economic activity to keep the local corner store open.

Lots of people are not directly affected by these decisions and they can’t see what the fuss is all about. But if your job relies on those activities, then it can be devastating. Just anyone whose job five years ago depended on the forestry industry.

Very few places fulfil the ecotourism promise. Even some of our most famous and popular natural attractions require artificial visitor centres and displays to make sure the experience is top notch.

More scrutiny needs to be placed on the smokescreen that is ecotourism. It is a warm and fuzzy concept used to try to convince urban dwellers that they are protecting nature. In fact, much of the time, they are shutting industries, destroying jobs and harming local economies that have no hope to survive on a carload of backpacking tourists who may stop for a tank of petrol and a cup of coffee.

The latest Trojan horse being dragged into the town square is the turning the so-called Tarkine into a new national park.  As beautiful as parts of the area are, is putting up a new name and stopping logging and mining that has been going on for generations in places the vast majority of people will never venture into really going to produce a tourism bonanza? I mean, the beautiful bits are already there, so what is stopping the flood of tourists now?

Tasmanians are hugely successful NIMBYists. More than half the state (54 per cent to be precise) is now locked into public parks, reserves and wilderness areas. There’s probably another 10 – 12 per cent in private conservation reserves. That doesn’t leave much space for economic activity.

Whilst there has been an increase in tourism numbers, surveys of visitors show these are mainly people coming for the food, the scenery and, increasingly, the golf. These visitors have not created a deluge of tourism-related jobs – and, in fact, in some regional areas unemployment remains higher than national averages.

At the same time, the urban green NIMBY class opposes any new economic development (like the proposed ecotourism resort on the east coast, or the Mt Wellington cable car) and continues to try to shut down some of the remaining industries (like salmon and the remaining private sector forestry industry). It’s not just Tasmanians, either – many of the people that push these lines are fly-in-fly-out professional activists.

Our apparent unwillingness to earn our keep has led to the accusations of Tasmania being a mendicant state. If the rest of Australia wants economic activity in Tasmania to be shut down to placate urban green groups, someone has to pay – and it should rightly be them too.

All the while, huge tracts of our state are unmanaged – no fire prevention, no weed control, no pest management, no fences. All the experts tell us that it will inevitably result in widespread natural disaster. The intensity of wildfires across the world over recent years tell us this is true.

So here we are facing increased risks from natural disasters and also the human disasters that follow from failed economic readjustments.

And we can’t say we haven’t been warned.

 

 

Don’t come the raw prawn

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The federal government recently announced an extra $137.8 million for further, new biosecurity investment over five years.

Good news, for sure, but is it too little too late?

The edge was certainly taken off the announcement by allegations aired by ABC Four Corners on Monday. This revealed a highly destructive virus has again been detected in supermarket prawns, despite tightened import restrictions introduced after a disease outbreak decimated south-east Queensland’s prawn farming industry in 2016.

The original incursion came as no surprise to those involved in the industry. Inadequate import requirements and haphazard defences at the border had long been a sore point.

While consignments were meant to be subject to virus testing in order to pass quarantine inspection, it was clear there were holes in the regime. Marinated or battered raw prawns weren’t required to be tested. Inspectors were overworked and ill-prepared – they didn’t even have warm clothing to operate in a minus 30-degree freezers peeling open prawn cartons. Importers were permitted to unload their containers unsupervised, which gave them ample time in which to fiddle with the stock before an inspector showed up.

A 2009 expert risk assessment found that, without proper safeguards, there was a high likelihood that diseases carried by imported raw prawns could spread to Australian prawn populations.

Then the inevitable happened.

In November 2016, white spot disease was detected in farmed prawns in south-east Queensland farms. Investigators believe it was most likely the disease was introduced into local rivers through infected imported bait from a local supermarket, where prawns are cheaper than in tackle shops.

Subsequent tests found more than 85 per cent of imported samples from retail outlets also tested positive for the disease.

Prawns worth tens of millions of dollars, which were being raised in ponds at five infected farms, were destroyed when the outbreak was confirmed.

Barnaby Joyce, the then agriculture minister, announced the indefinite suspension of green prawn imports into Australia. “Australia’s $358 million prawn industry must be protected and not put at risk by the careless and selfish acts of a few,” he said.

A ban was also imposed on imported uncooked prawns being used for bait, and samples from all consignments of imported green prawns were required to be sent for testing to ensure they were free from white spot.

In a damning review at the time, the Inspector-General of Biosecurity found the devastating outbreak of white spot represented “a major failure of Australia’s biosecurity system”.

“The department demonstrated a remarkable level of naivety about the potential for importers to willfully circumvent import conditions for any class of prawns that required viral testing,” the report said.

By the end of the year, the government had initiated action against nine seafood companies responsible for 70 per cent of all raw prawns imported into Australia in 2016. Only one has so far been charged, with the case against it not listed to be heard until 2019.

The ban was lifted in mid-2017, though import conditions were tightened.

But it was not enough.

In April this year, inspectors once again identified the virus in the wild in Queensland. In May, twelve consignments of imported prawns inspected under the new “enhanced” regime tested positive for the disease. Then testing conducted for the Four Corners report found traces of the virus present in 30 per cent of prawn samples purchased from a number of Queensland retail outlets.

However, almost two years after the original outbreak, white spot testing on marinaded, battered, or crumbed raw prawns is not scheduled to begin until September this year.

In the face of rapidly increasing international trade, scientists, industry executives, and former government officials have repeatedly said that Australia’s biosecurity defences are simply inadequate.

These revelations raise serious questions about Australia’s preparedness to combat a range of exotic diseases and pests that have the potential to wreak carnage on the economy.

As an island nation, we have earned an international reputation for high quality, safe produce. This is our key point of difference from our competitors who are plagued with poor regulations and major pests and diseases. If we are to maximise the benefits presented by emerging Asian markets, we need to maintain that safe, clean and green image.

As an island off a bigger island, Tasmania relies heavily on this reputation, and so we have even more at risk.

Any failure of our biosecurity defences potentially poses an enormous threat to our national security – and that means investment in these systems must prioritised by all governments.

Sunlight is the best disinfectant

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After a slow start, and more than 280 submissions in regards to rural lending, the Financial Services Royal Commission agreed last month there would be value in focussing specific attention to the interactions between farmers and banks.

Over the course of a week, the Commission heard about a very fraught relationship between farmers and financiers. Evidence was given of loan terms being changed without notice or consultation, over-stated property values, and unethical and heartless treatment of farmers once loans had been revoked.

Tasmanian cattle farmers Michael and Dimity Hirst were the first to give evidence.  They were forced into default when the bank cut valuations on their property by forty per cent in 2011 without warning.  In front of the Commission, five years later, an executive of the bank finally offered an apology for selling off their farm and forcing them into bankruptcy.

The Commission heard that banks pushed interest rates on loans up to extraordinarily high levels if a farmer was deemed in default to use as leverage. In some of the cases heard by the Commission, this was as high as 16 per cent. When Commissioner Kenneth Hayne intervened to ask what the leverage was for, he was advised this was to achieve a reduction in debt or sell a property. Sales of rural banking loan books also resulted in farmers being placed in default by the new lenders who didn’t understand their businesses.

The audience broke out in applause when Chris Wheatcroft from Rural Financial Counselling Service of Western Australia, spoke about the impact of ‘sending in the receivers’.

“There is nowhere to go once the receivers [are called] in. And in terms of value, farmers will see that hard-earned money, farm and asset disappear under a receiver like you’ve never seen,” he said.

“They would perceive the money is absolutely wasted and it would be hard … to say that’s not correct. There’s a massive destruction of value. And that sits deeply with people.”

Yet evidence presented to the Commission revealed forcing farmers from their properties is a no-win proposition – something that is not news to people in the industry.

Properties often take years to sell, especially during drought, and forced sales drive overall values down throughout the district. This then has a knock-on effect, as low prices on forced sales push other farmers into technical default because of low loan to valuation ratios.

Forcing farmers off their land and from their family homes actually reduces asset values. Farms left vacant and unmanaged rapidly depreciate. Infrastructure is not maintained, and incursions of weeds and feral animals contaminate productive lands. This too has spill-over effects onto neighbouring properties, and contributes to depressed community conditions.

It’s clear that, despite their crucial role, many banks still don’t really get the vagaries of farming. They don’t understand how different farm lending is – or should be – to commercial and housing lending. Not only do the central administrators in banks lack the information and expertise to question these assessments, their business models have encouraged overvaluation and over-borrowing as a means to grow their businesses. Worse still, they don’t seem to appreciate the broader social and economic dimensions of the role they have in managing farm risks.

Many of the problems in the evidence given to the Commission have resulted from a lack of communication between banks and farmers – and there is a clear pathway to resolve this situation.

One of the key recommendations of the 2017 Senate inquiry into primary production financial lending was for the establishment of a national farm debt meditation scheme that would see the speedy resolution of farm finance issues. There has also been some discussion in the Commission of the need to implement a nationwide approach to farmers in distress.

Such a scheme would make it compulsory for banks and other creditors to offer mediation to farmers before commencing debt recovery proceedings on farm mortgages.

The Royal Commission has brought into the open what many of us in the industry have long known. The pressure of not performing is high, and there is clear evidence that mental health issues are a big issue for farmers who are trying to desperately hang on in difficult circumstances.

There’s a saying that sunlight is the best disinfectant – and exposure of the unethical behaviour of some financial institutions will no doubt lead to more transparency. Implementation of this recommendation would go a long way to ensure that there is no repeat of the unfortunate behaviours that have now come to light.