1. Copyright John Hine and Associates Pty Ltd, www.developqld.net.au. Page 1
JOHN HINE AND ASSOCIATES PTY LTD
www.developqld.net.au
KEY ISSUES FOR REGIONAL AUSTRALIA
13 September 2015
Summary
Changes in agriculture and tourism markets are changing rapidly. New opportunities are growing but
traditional industry structures may find it difficult to cope in this new environment.
Attempts to preserve existing industry structures are only likely to cause existing farmers and tourism operators
even more stress. Assisting these people and companies to change and adapt is likely to be the best way to
reduce personal and business stress, allow new or changed businesses to establish, save regional jobs and
maintain or improve regional prosperity.
Background
There are many stories about economic and social stress in regional Australia. These include reference to:
 A tragic level of suicides.
 On-goingstoriesof paralysingdebtlevels, while atthe same time there are storiesfromthe bankssayingthat
debtlevelsare nothigh.
 Regional towns are losingpopulationandwithagrowing percentage of olderpeople. These towns tendtobe
those furtherwestof the DividingRange egLongreach.
 The average age of our farmersisrising.
 It isclaimedthatmany farmershave a probleminthattheyhave no successionplans. A US teacher’s
superannuationfund,TIAA-CREF,hasopenedanoffice inSydneytotake advantage of Australianfarm
propertiescomingonthe marketasolderfarmershave no successionplan.
 Many regional manufacturershave closedoverrecenttimes,includingabattoirs.
 On-goingproblemswithdrought.
 Miningopenednewopportunitiesforsome areabutthe slow-downinthe miningindustryseemstobe having
majorimpactson such townsegChinchilla.
Other regional issues include;
 Some regional townsclosertocapital citiesare doingwell,egOrange. These regionsoftenhave afocuson
value addedfoodproducts aimedatcitycustomers ratherthan commodities.
 Foodexportsare fallingwhilefoodimportsare rising.
 All the indicationsare thatopportunitiesforfood exportstoAsiaare growing.
 The level of skillsinregional Australiaisoftenlowerthanforthe restof Australia.
 Many touristsare seekingnew experiences,openingopportunitiesforexperience tourismrelatedto ourflora
and fauna,indigenousculture andAustralianbushculture.
 Australiansuperannuationfundsseemtobe lessinterestedininvestinginagriculture whileinternational
superannuationfundsandinstitutionalinvestorsseemtobe investingreadilyinAustralianagriculture.
Tel: 07 3264 4568
Mob: 0432 027 744
Email: john@developqld.net.au
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2. Copyright John Hine and Associates Pty Ltd, www.developqld.net.au. Page 2
 Many casual labourersinregional townsare backpackers. Inparticular,thisincludesfruitpickers.
 It isclaimedthatthere isa gap inworkersneededtofill keyskilledpositions,includingagricultural scientists.
 Many farm organisationsclaimmajorgapsin infrastructure.
Key historical issues affecting agriculture include;
 Statutorymarketingauthoritiesledtoafocus oncommodities,ratherthanproducts, andlow businessskillsin
our farmers. Examplesof thisinclude hamburgerbeefratherthanspecificcutsof beef aimedatspecificsocio-
economicgroupsandbulkwheatratherthan specificwheatvarietiesforindividualprocessors.
 Too manyfarmersdidnot developalternative marketing structuresonce marketingboardswere phasedout.
 Our highnumberof smallerfarmsmeansthatthese farmershave trouble beingprofitable,accessingcapital,
usingmoderntechnologies andacquiringthe skillsrequiredtocope.
 Importquotas,tariffsandbiosecuritybarriersgave alevel of importprotectionthat limitedinnovation.
 Thislack of businessskillsinourfarmingcommunitycontributedtothe steadylossof ourvalue adding
operations,egabattoirsanddairyprocessing,tointernational companies.
Issues impacting on agriculture include:
 Ethical agriculture isof risingimportance. Thisincludesenvironmentalissues,animal welfare,GMOsetc.
 A whole range of newtechnologiesare comingonstreamforagriculture,includingprecisionagriculture,
controlledtrafficfarming,remote sensing,robotics,dronesand electronicsensing. Thismeansthatfarmingis
an increasinglyahighlyskilled,complexindustry.
 Increasingly,farmproductsare beingboughtbylarge supermarketchainsandlarge manufacturers. These need
large volumesof specificquality productsyearround. Increasingly,these are beingsuppliedbylargerfarmers
and bywholesalers. Wholesale fruitandvegetable marketsare now of much reducedimportance asthese are
generallyby-passedbythese largerfarmersandwholesalers. Cattle andsheepare oftenboughtdirectfrom
farmersratherthan at saleyards.
 The AgriFoodSkillsCouncil2015 environmentscanshowedthat;
o Small niche farmers supply 5%of output
o Small to mediumcommodityfarmerssupply 15% of output
o Large familyorcorporate farmerssupply 80% of output
 AlanMitchell, inthe Australian Financial Reviewof 7 July 2015 said that;
o 70% of farmersproduce 20% of output.
o He wasstronglyagainstdroughtrelief,delaysmarketadjustment
o Most current agriculture policy isfocussedonthe 70%!
 Some agricultural cooperativeshave developedintothrivinginternational businessesengaginginvalue adding.
Many have closed. CooperativessuchasSunrice,Murray Goulburn,Norco,CBH seemtobe doingwell. Others
such as Mackay Sugar survive butstill have basicallyacommoditybasis.
 Extensionservicestofarmersare increasinglybeingsuppliedbythe private sectorratherthanbygovernment.
Publicservants as extensionofficers will struggle tohave the commercial skillsneeded byfarmers andpeople
withsuchskillswill oftennotstayingovernmentassalariesare toolow.
 Qualityandsafetyare of increasingimportance.
 Trace back systemstoprove provenance are increasinglybeenrequiredbylarge customers. These systemsare
alsorelevantre biosecurity,disease control andfoodsafetyinvestigations.
 The systemdeveloped byLaborGovernments inthe 1990s to fosteragricultural R&D,the Rural R&D
Corporations, isbasedonindustriesandcommodities,andnotcompaniesandproducts. Modernagriculture is
increasinglyaboutcompaniesandproducts. Australianeedsawayto allow largerfarmsandcooperativesto
do the proprietaryR&Dtheyneed. AllowingfarmersaccesstoR&D tax incentivesneedstobe investigated.
 There isincreasingcompetitionincommoditymarketsfromarange of nationsegSouthAmerica, the ‘BlackSea
Nations’(Russia,Ukraine andKazakhstan).

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International agricultural issues include:
 Australiahaslittle overseasinvestmentinagriculture.
 Australiahasfew large agribusinesscompaniesworkinginternationally.
 Australiahaslittle exportinagriculturalservices.
 Singapore isa far biggerplayerininternational agribusinessthanAustralia,byvirtue of itsinternational
agribusinesscompaniessuchasWilmarandOlam.
International tourism issues include that Australia has little overseas investment in tourism and few large
tourism companies operating internationally.
Key issues regarding tourism include;
 Australiaisincreasinglybecominguncompetitiveregardingvolumeorcommoditytourism. Many developing
nationsare movingintotourismandofferingcheaperbeachdestinationsclosertokeymarketsinEurope,North
AmericaandJapan. For example,Australiahaslostmuchof itsJapanese golf holidaybusinesstoThailand.
 The issuesof small businessesinagricultureare similarre tourism. Thislinksto;
o Lowerbusinessskills
o Fewlarge internationaltourismbusinesses,suchasthe FrenchownedAccor hotel chain.
 Too manyregionssee neighbouringregionsascompetitorsratherthatalliesindevelopinglinkedchainsof
attractionsand eventssoas to presenta‘package’todrive tourists.
 Eventshave become significantopportunitiesformanysmallertowns,egthe ElvisPresleyfestival inParkesand
the melonfestival inChinchilla. These eventsare currently mainlyopportunitiesfortownswithinreasonable
drivingdistance of acapital city.
 It seems tobe that marketinghasa greaterfocus thanproduct development. We alsoneedtohave niche
attractionsfor those withspecificinterests,forexample,
o Birdwatchingand otherattractionsbasedon ourfloraand flora,includingmakingbetteruse of our
national parksand otherwaysto show people ourfloraandfauna.
o Indigenousculture
o Bushculture
Actions for the Future for Regional Australia
In general, as with the rest of Australia:
 Improvingbusinessskillsshouldbe akeypriority. Businessskillsprogramsneedtobe viaa range of delivery
mechanismsandnotjustbasedon currentqualificationsegcertificates, diplomas, degrees,MBAsetc.
 Businessesworkingtogetherincooperativesornetworkshave real potential. Many farm and non-farm
cooperativesare large internationalbusinesses. Some 250 million people internationallyworkforcooperatives.
 Focussingonproductsfor specificmarketnichesratherthanaimingatcommoditiesforvolume markets.
 Environmental managementisincreasinglyacritical issue. Thisisa mix of cost reductionandpreservingthe
natural assetson whichthe businessisbased.
 Highqualitybroadbandinas muchof regional Australiaaspossible,for education,health, agriculture, tourism,
miningandall otherbusinesses.
 Encourage the use of renewable energythroughoutregionalAustralia,oneconomicgroundsasmuchas for
climate change reasons.
 Increase the superannuationguarantee,toraise the level of fundsforinvestmentaswell asof course improving
retirementoptionsforpeople.
 We needtax reformsothat;
o We nolongerprovide governmentincentivestoinvestinhousing.
o Australiansuperannuationfundsinvestmore inagriculture. Itseemsthatour superannuationfunds
investfarlessinour agriculture thandooverseassuperfunds.

4. Copyright John Hine and Associates Pty Ltd, www.developqld.net.au. Page 4
Re agriculture:
 Small farmsworkingtogetherincooperativesormergingtoforma largercompany,has real potential for;
o identifyingnicheproducts.
o supplyingthe volumeneeded.
o employingthe highlevelskilledpeople,formarketing,farmtechnologyetc.
o attractingthe capital needed. Businessmodelsthatare large enoughandstructuredto allowequity
investmentratherthandebtthroughborrowingneedtobe developed. Also,equityinvestmentoften
happensonlyinlargeramountseg$25M.
 We needtorecognise thatwe will increasinglystruggle tocompete incommoditymarketswithlowercost
developingnations. We thus needtofocuson productsfor niche markets. These can be quite large
opportunities.
 We neednewwaysof supportingR&Dthat allow the largercooperativesormergedfarmcompaniestodo
proprietaryR&Dwhentheyneeditwithoutgoingthroughacommittee thathas six monthlyorannual rounds
and mayinclude itscompetitors. It maybe feasibletocutR&D leviesinsayhalf andallow farmsaccessto R&D
tax incentives.
 Encourage regionstoform farmerowned,incorporatedR,Dand E companiessuchas with the BirchipCropping
Group inNW Victoria. Thishas some 20 employeesandfocussesonappliedresearchandextension forthat
region.
 Newprogramsare neededtoassistfarmerswiththe growingrange of new technologiesbeingdevelopedfor
agriculture. These shouldbe basedmore onworkshopstoraise awarenessandtrainingprogramsratherthan
governmentextensionofficers.
 Encourage our farm cooperativesandmergedfarmcompaniestoexplore overseasinvestmentinagricultural
productionandvalue adding.
 We needtoexplore more waystoexportourhighlevel skillsinagriculture. Thiscouldmeanbuildingnetworks
or cooperativesamongagricultural consultantsandbuildingonthe trainingprogramsouruniversitiesetc
operate.
 Explore optionsforthe use of biomanufacturinginAustralia,basedontechnologiesforextractingthe sugars
tiedupin woodywaste egbagasse andstraw. This wouldallow the production byfermentation of almostany
chemical nowmade fromoil andgas.
 Make determinedeffortstodevelopopportunitiesfrom ourfree trade agreementsandotherinternational
agreements.
Re tourism
 Continue andextendthe current national qualityassurance scheme intourism. We needto ensure that,as far
as possible,internationaltouristshave qualityexperiences.
 Assistandencourage the developmentof new niche touristexperiencesthatincludethose basedonourunique
assets,including;
o our floraand fauna
o indigenousculture
o bushculture.
 Thisproduct developmentshouldincludemore small scale environmentallysensitiveusesof ourNational Parks.
 Explore newopportunitiesinfarmtourism, includingfloraandfaunaopportunities,andevenhunting,asa way
to control feral animalssuchas pigs,foxes,dogsandcats.
 We needtomake more use of the highlevelsof expertise inthe publicsectorinourfloraandfauna and in
indigenousculture. Thiswouldinclude agriculture departments,CRCs,National ParksDepartmentsetc.
 We needtolookat howthe R&D tax incentivecanbe modifiedforproductdevelopmentfortourismbusinesses.
 Networksof tourismbusinessesshouldbe encouragedtopresentawiderrange of experiencesforinternational
touristsandcreate themeddrive tourismopportunitiesforinternational andAustraliantourists.
 These networkscouldbe formal businessnetworksorevencooperatives.
 Farm leasesshouldnotdiscourage farmtourism.
 We needtoencourage more off-shore investmentintourism.