Agriculture sector could lose its competitive edge as productivity slows

Australia's farming productivity rate is falling, despite the nation's farmers efficiency

Transcript

00:00Music

00:06I think optimism is what you need, for sure.

00:10There are few times in a year as hopeful as sowing.

00:13And if you are ready, then there's plenty of reason to be optimistic.

00:18It's exciting, there's opportunity to say that the year could be great.

00:23At Lilliput, near Rutherglen in Victoria's northeast,

00:28James Russell is planting wheat and canola.

00:31Australia wide, farming is on track for one of its highest value years.

00:35But this fifth generation farmer says the spoils won't come without risk.

00:41Where my grandfather was farming, sort of where I got a lot of my knowledge from,

00:46he often spoke about the costings of things way back then.

00:51Sort of that dollar to make two dollars.

00:54That was the margin, you know, you put a dollar in to make two.

00:58Whereas now, what we're seeing on a net profit scale,

01:02we're sort of seeing ten dollars to make eleven.

01:05The cost of inputs, such as seed, fertiliser, fuel, land and labour,

01:11mean farmers like James rely on being paid well for their outputs.

01:15In this case, crops.

01:17We are looking at around fourteen hundred dollars a hectare gross margin

01:24to actually produce a crop nowadays.

01:26If we don't receive those higher outputs,

01:28we've got a big bill to fit at the end of the year.

01:31It's the difference between what's going in and what's coming out of the farm business

01:35that shows why farm productivity really matters.

01:38So we look at productivity in two ways.

01:41We kind of look at it in the sense of, well, how much more output are you getting

01:44from a given set of inputs?

01:46Or are you getting more output from your already existing use?

01:50But in a sign that the National Farmers Federation says should be ringing alarm bells,

01:55Australia's farm productivity rate is barely growing at all.

01:59The annual rate in the 80s and 90s was 2.2%.

02:03Today, it's closer to half a percent.

02:06And that's kind of put us back in terms of our relative to international competitors,

02:12where they're getting stronger productivity growth.

02:14Now, the thing with that is that despite them getting stronger productivity growth,

02:18they're starting from a lower base than we are.

02:20Now, this is the simplest of my life,

02:24well, I'm looking for Ali Keefe and I will see the next minute,

02:26clicking a road in the스가st.