ELDERS managing director and CEO Mark Allison has laid down a challenge to agtech innovators and marketers to focus on “what really matters”, and ensure their products address the key issues of productivity, profitability and sustainability.
In an opening address to 1400 audience members at the second annual evokeAg conference in Melbourne yesterday morning, Mr Allison noted that Elders has recently marked 180 years of history.
In that time, the company had witnessed many game-changing technological leaps including the grain stripper, the stump jump plough, mechanical wool shearing machines, the Hendra Virus vaccine and no-till cropping. Now agtech is driving further advances that have the potential to make farmers’ lives easier, better and more profitable. The changes it is bringing are causing challenges for some industries and opportunities for others.
“Five years ago it would have been difficult to imagine we would be listening to a burger giant talk about beef-free burgers, or the reality of a virtual agronomist from NZ,” Mr Allison said.
But he also warned what agribusiness needed right now were tangible, on the ground initiatives that will benefit farmers and optimise overall supply chain productivity and sustainability.
As the chief executive officer of one Australia’s oldest and largest agribusiness companies, Mr Allison said he attends many conferences and sees “thousands of great agtech innovations and propositions spruiking astonishing capabilities”.
“Of course, anyone can put together a slick PowerPoint presentation and extol the virtues of their latest discovery, the blockchain transformation, a robotic breakthrough, artificial intelligence from the latest cohort of an accelerator program,” he said.
Any innovation or idea had to be accountable and had to deliver against a few key criteria:
Anyone running a start-up had to be talking about at least one of the following areas, he said:
Nutrition – focusing on how any farmer can boost productivity, whether it’s through soil and crop nutrition, or in livestock with a delicate mix of protein, energy, roughage and minerals;
Soil moisture conservation – improving the water use efficiency on farms whether it’s in cropping, horticulture, irrigation, or producing feed for livestock or feeding livestock;
Pest management – how can a farmer optimise chemical use to combat weeds and pests for maximum impact on productivity with minimal impact on the environment;
Genetics – This included genetic gains across all breeds in livestock production, as well as in cropping, where new varieties provide greater drought resistance, pest resistance, salt resistance or defence against weeds and other pest.
The barrier in farming’s road to riches
Mr Allison cited recent data showing farm income and costs in the Mallee from 1994 to 2017.
A line plotting income started at $300,000 in 1994, gradually rising over the decades, with peaks every five or so years, then dropping, only to rise again, finishing the chart at $1.5 million in 2017 .
Farming may look like the road to riches, he said, but the true story was revealed when the detail of farm costs was overlapped.
“It will be no surprise to any of you that those costs have been rising at a rate equal to or greater rate than income.
“As a result, farm profit has flatlined for the last 20 years.”
To account for the challenges of drier seasons and fluctuating markets farmers were increasing production, and in doing so were employing more staff, adopting the latest technology, innovating in pasture and sheep genetics, and adopting best practices to improve the health, and moisture content of their soils.
Yet the reality was their profit wasn’t increasing.
The cost to maintain sustainable production simply outweighed any profit.
“Most of the extra costs are labour and capital items such as machinery and farm improvements, but without significant improved efficiency in operation, the farm is simply becoming an expensive lifestyle.
“This nut must be cracked, with the combination of productivity and profitability increases being coupled with sustainability from an environmental, social and economic viewpoint.”
Learn to manage variability
Mr Allison said Elders’ longevity had proven that in agriculture you can be profitable and sustainable through good seasons and bad seasons, strong commodity prices and poor commodity prices.
“Our business models and agtech innovations must be aimed at not relying on a consistent climate, predictable weather patterns, abundance of rain and stable political environment in order to be profitable and sustainable.
“How we manage variability and unpredictability must be in our own hands”
The question and debate for the audience at evokeAg audience should not be on what causes this variability and unpredictability, he said, but rather “how can we modify our business models and farming systems to create a profitable and sustainable system”.
“At Elders we always plan for an average season and, like all good agribusinesses, we have structured our cost and capital base to allow us to make okay money in bad seasons, and great money in good seasons.”
Mr Allison said it will take work for Australian agriculture to grow productivity by $40 billion to meet a target of $100 billion by 2030.
Opportunities will come through value-adding and improving infrastructure, in particular transport capabilities nationwide and the ability to get produce out of the paddock and into markets around the globe faster and cheaper than today.
Improvement in telecommunications were also critical. Australia needed to raise connectivity levels across rural and regional Australia to comparable standards as those enjoyed by major agriculture competitors the US and Canada to ensure it remained competitive on a global scale.
Gains would also be made in breeding and genetics, as well as processing and labour efficiencies.
He said Elders is investing in projects including one with the South Australian Research and Development Institute and the SA Government which is implementing world’s best practice on medium scale livestock in Struan in the state’s south west, and putting the latest animal genetics and pasture varieties, innovative water utilisation processes, disease management and grazing strategies to the commercial test.
He stressed the commercial focus of the projects, saying each must deliver a return.
Elders has also started a similar partnership with Meat and Livestock Australia – the MLA Smart Farm Project – which is evaluating the best of agtech, trialling Internet of Things services and other agriculture “wish list” devices and services as a farmer would.
Mr Allison said collaboration was critical to achieving advances in future.
He suggested some of the $430 million in funding that is split between 15 research and development corporations be combined to solve one or two of the most pressing problems facing all farmers – soil problems, water issues, or climate adaptability.
Capital in the form of foreign investment was also vital to the industry’s future.
Last year foreign investment in Australian agricultural land hit $7.9 billion, led by Canadians, followed closely by China and the US .
“We absolutely need the capital if we are to deliver the necessary infrastructure and technology gains.”
Mr Allison said it was important that farmers are supported, to ensure the digital advancements discussed from events like evokeAg match the needs of those on the frontline to achieve a productive, profitable and sustainable future of the industry.