What does 2017 hold for Australian agriculture?

Mick Keogh, Australian Farm Institute executive director , January 23, 2017

ATTEMPTING to forecast how Australian agriculture will fare in 2017 is an exercise fraught with risk, but it’s probably fair to assume that for most involved in the sector, 2017 will not be as good as 2016. Very favourable seasonal conditions combined with high livestock prices meant that the gross value of agricultural production will exceed $60 billion in 2016, about 16 per cent higher than the average figure for the preceding five years, according to ABARES.

Mick Keogh

Mick Keogh

The last time such a big jump in the annual value of agricultural output occurred was in 2001-02, a period that also involved that rare combination of good seasonal conditions and high commodity prices. However, the onset of the millennium drought in 2003 meant that it was a further seven years before the gross value of agricultural output exceeded the level achieved in 2001-02.

Hopefully the coming seasons will not be a repeat of the mid-2000s, and the current state of both public and private water storages in the eastern states provide some reassurance that the sector is well positioned if a dry season is forthcoming. The $4.3 billion held in Farm Management Deposits in December 2016 which is an all-time high for the December quarter also provides some reassurance that the sector is well prepared with cash reserves if coming seasons are not as kind as 2016 was.

Likely developments in Australian agricultural policy in 2017 are perhaps marginally easier to forecast that economic prospects, due to the long lead-time associated with many policy matters. At the national level, the current Horticulture Code of Practice is due to be replaced with a new code by the end of April, and the Government has already engaged in extended consultation on this issue.

The implementation of Unfair Contracts law in late 2016 is also likely to mean that some current agricultural commodity marketing arrangements will require changes. The proposed implementation of the “Effects Test” in Australian competition legislation will also have some longer-term implications for some farmers involved in direct supply arrangements with processors or retailers.

Water recovery

Water policy is again at the forefront, with the Murray Darling Basin Authority currently seeking comments on proposed amendments that will impact water recovery in the Northern Basin and groundwater extraction limits. Despite all the emphasis on science-based future decision-making that is the basis of the Basin Plan, it seems many of those involved in these debates are still resorting to subjective and emotion-based arguments in favour of increased environmental flows. Maintaining an objective approach to decision-making will be a real challenge for the Australian Government on this issue.

At the State level, the NSW Government has promised to implement revised native vegetation laws in the coming year, and these laws are also likely to be again under review in Queensland following the defeat of proposed legislative amendments in 2016. It would also be surprising if there were not further developments in Queensland in relation to sugar marketing and the Great Barrier Reef.

Virtually all state governments have also promised action on ‘right-to-farm’ laws, as attempts to restrict normal farming practices become more common in regions with growing lifestyle populations. This is somewhat of a sleeper issue for agriculture, but as local government amalgamations reduce the influence of the farm sector in planning decisions and rural lifestyle resident numbers increase, it will become and increasing challenge to carry out ‘normal’ farming operations.

Digital agriculture

Away from the legislatures, it is a fairy safe bet that the most topical issue debated in 2017 will be the implications of digital agriculture. Digitisation of the sector is occurring at a very rapid rate as the cost of technology plummets, computing power grows exponentially, and the cost of agricultural data storage, analysis and transmission shrinks.

The potential to capture objective data at multiple points along supply chains that extend from ‘paddock to plate’ is creating multiple new opportunities to boost productivity and competitiveness by all participants. However, the lessons emerging from the US are that attempts by post-farm supply chain participants to capture this data and limit farmers access to it will severely constrain innovation, to the detriment of the entire sector.

Open-access data

The recent emergence of open-access data platforms in the USA has created a competitive and innovative agricultural software sector that has developed decision-support tools that enable farmers to increase productivity. The cropping, horticulture, intensive livestock and dairy sectors have all achieved very impressive productivity gains through insights available from linking genetic, production and processing data. This same opportunity is now emerging for Australia’s broadacre livestock sectors, but will not arise if post-farm participants restrict access to data, or attempt to develop proprietary systems with the aim of limiting farmers marketing options.

Ultimately, it is in the processors interests as much as it is in farmers interests to improve productivity in the broadacre livestock sectors, because higher livestock productivity will mean more and better product for processors to transform and market. Creating open-access data systems whereby farmers can obtain objective data on livestock processing performance – irrespective of the processor involved – will be critical in providing livestock farmers with the critical information needed to lift productivity.


A related issue also likely to generate increasing debate in the agriculture sector in 2017 is telecommunications access. Many of the potential gains from digital agriculture are not available without good internet connectivity, something which is sadly lacking for many agricultural businesses, even those located close to major regional centres. Contrary to all the glossy advertising claims by telecommunications providers, much of rural Australia has poorer telecommunications access than is the case in developing nations in Asia and Africa, as returning Australian travellers readily attest. The much-vaunted National Broadband Network is also proving to be a major disappointment, with severe data restrictions and poor reliability.

Getting data availability and telecommunications access right will be a major challenge if the benefits of digital agriculture are to be realised in Australia, and 2017 is shaping up as a critical year for both these issues.

Source: Australian Farm Institute


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