Resources, Water and Agrifood Opportunities Year of the Farmer, Wangaratta David Sackett

Resources, Water and Agrifood Opportunities

Year of the Farmer, Wangaratta

David Sackett

An easy future?

“Invest in ag and go to the beach for

the next five years” (Blackrock)

The big picture issues we need to focus on

• Fewer farmers (1200 -1500 p.a.)

• Increase demand for food (70% increase by 2050)

• Increase demand on farmers

– Social, environmental, welfare

– More complex

• Farming still a good low risk business

• Rain-fed farming systems• Low labour requirement (replace with capital)• Low cost producer• Technology• Commodity v Niche?

– Out of season– Quality (safe, organic)– Location

– Cereals, oilseeds, sheep, beef (?), cotton– Low labour requirements (capital replaces labour)

Where is our competitive advantage?

Where is our competitive advantage?

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• Cereal and oilseeds• Southern beef• Sheep meat• Wool• Dairy• Cotton?• Sugar?

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• Horticulture• Northern beef

• Commodity v Niche

• Location

• Natural resources

• Human resources– Expertise– Interest and passion

YOUR competitive advantage?

Lamb Production

Average cost/kg DWt

Lamb Production

Average cost/kg DWt

The best wheat producers

Average Cost/tonne

The best wheat producers

Average Cost/tonne

Three things• Productivity

• Productivity

• Productivity

Note: Production and Productivity are very different

What really does matter?

• Sheep 0.3%

• Beef 1.5%

• Cropping 2.1%

Productivity gain by sector1978-2007

Some key questions

• “Low input” or “high input”?

• Specialised or diversified?

• Variation (risk?)– resilient– responsive

• Chasing price premiums (organic, out of season)

• Price risk management (forward selling etc)

• Grazing systems

• “Farming” carbon (<$200/tonne)

• Most new technology

The Things that do not Matter

• Labour (machines)

• Livestock

• Land

Where will the gains come from?

A food crisis or a water crisis?

70% of the worlds water is used to grow 40% of the worlds food

Water use– Human use (golf courses)– Manufacturing/Mining– Agriculture

» Horticulture» Seed crops» Summer crops eg cotton, rice, corn» Dairy» Winter crops eg wheat, canola» Beef and lamb» Wool

Decreasing

returns

The opportunities

• Slow change in farm structures

– Fewer larger farms v lifestyle

– Separating ownership and management

– Separating land and enterprise ownership

• Intellectual property

• Identify your competitive advantages– Look at a range of models

• Productivity gains remain critical for long term viability in commodities

• Plenty of scope• Human capital• Fewer farms• New technology

Summary