Reorienting animal agriculture in Australia

Andrew Spencer

Chair of the Australian Farm Institute  and outgoing CEO of Australian Pork Limited



Australia is great at animal agriculture. Between our past history of ‘riding on the sheep’s back’ and being amongst the greatest beef exporters in the world, we know how to do it well.

It’s noteworthy that we know how to do it well despite our challenging circumstances; particularly our relatively poor soils, tyrannical distances and difficult climate. However, tomorrow is going to be different and our successful history won’t ensure a successful future.

The global population continues to rise and continues to generate greater demand for animal agriculture through a rapidly expanding middle class in many parts of the world. The climate seems inevitably to be shifting as well, making our agricultural lives more difficult.

So how does Australian livestock farming look in the future and how is it different to what we have done in the past? What are the forces that we need to take into consideration in preparing ourselves for a sustainable, ethical and successful Australian livestock industry? How is our role seen in the eyes of the community and what is the impact we are having on the environment? How will the directions of global supply and demand dynamics and trade influence the future? What role does technology play in making our future livestock industries different to what we’re used to today? And importantly, how are the attitudes of our consumers changing and how does our product need to change with them?

There are too many questions to answer for one man in one article, so I will focus on one aspect of positive change in Australia’s livestock industries that we must more fully embrace: the shift from production to consumption orientation.

A changing landscape

By some measures, different industries evolve in similar ways. They emerge on the back of significant discoveries, refine their core competencies, and ultimately are exposed to greater levels of competition which results in challenges to the default business model. Those who continue to innovate ahead of the pack succeed.

Agriculture generally (and livestock agriculture specifically) is no different. Whether it’s beef, lamb, pork, chicken, dairy or wool, we’ve discovered how to produce it under the challenging Australian conditions. Through ongoing research and development (R&D) at many levels we’ve refined the model to improve productivity at an impressive rate over recent decades. However, due to the law of diminishing returns it is getting harder to sustain the rate of productivity improvement through our R&D investments. At the same time, other countries are refining their own livestock industries and improving productivity. In some cases these competitors have clear advantages over our own situation in the form of their natural environment, lighter regulatory burden or lower labour costs.

The 21st century will surely be remembered as the era of the consumer. With an increasingly interconnected world and millions being dragged out of poverty and into the middle classes in Asia and the Indian subcontinent, consumers have never had so much power.

It’s relatively recently that purchasing food for sustenance took up a significant portion of the weekly income for most people. In the developed world today, basic food needs now average well below 10% of income for many people. Our success has made food cheap and – along with the superior spending power of today’s consumers – it has also made the price of buying premium food much more affordable.

This of course hasn’t happened overnight. In my experience working with the rural R&D corporations, those investing in R&D on behalf of Australia’s agricultural industries wrestle daily with the question of how to find the best return for Australia’s farmers. In black and white terms, sometimes the question is as simple as: “will I create more value for my farmers by investing in on-farm productivity or an enhanced consumer experience?”

Clearly there are farmgate returns in both investment options, but the pressures on the mix are growing. As a rich country, the regulations we impose on ourselves and the cost of our labour means that the days of being one of the world’s lowest cost producers for most agricultural commodities are well behind us. In this environment, locking in a premium attribute to our produce can look a lot more attractive than locking in a 1% yield improvement, for example.

Innovation generation

Farmers on average are a very resilient bunch, but one man’s resilience is another man’s stubbornness. Farmers are great at what they do, but what they do has traditionally been all about production and not much about consumption. This challenges our ability to objectively look at the value mix of different investment options for the future of our industries.

The new generation of farmers seem to better understand the power of the consumer than the ‘old guard’ and are prepared to shift production models to generate greater value in the eyes of their target market. This shift might take the form of working to imposed standards around animal welfare, environmental impact or eating quality that can support brands with premium claims for the ultimate consumer products.

To accomplish this shift from a production to consumption focus, investment, innovation and (most of all) a willingness to change are required. Some farmers see the shifting consumer preferences as a threat to their past identity: “this is the way we’ve always done it and it’s stood the test of time”. Maybe so, but if giving consumers what they want makes for a better future business, why not do it? Changing the way we produce our food and fibre to be more aligned with consumer preferences is not appeasement; it’s good business.

Australian-made

This systemic shift, however, is not just a choice for individual farmers. When our products travel overseas, the core attribute they take on is ‘Australianness’. Most of our exports have international competition and Australian provenance is a key market differentiator. For example, while Australian beef competes in the domestic market with pork, chicken, lamb and seafood, once exported it competes with Brazilian beef, European beef and US beef.

What Australianness means in the market is therefore critical. What it doesn’t typically mean is ‘cheap’. It can mean high standards of food safety, animal care, environmental stewardship and consumer experience – but this positioning is up to us and not without competition. Our historical attempts at building a stronger Brand Australia have usually been met with generic positivity at the start, before being compromised by our inability to work together, keep our eyes up and on the big picture.

For the beef industry, Australianness means aiming to be carbon neutral by 2030. For the pork industry, Australianness means not using sow stalls after an industry-wide voluntary phase-out. Collective leadership at an industry level can create its own value, and this is our future opportunity. We need leaders who have a clear vision of what our food and fibre industries (including those which are animal-based) are good at. Agriculture needs leaders who can help leverage these strengths – and in turn the industry must build and maintain Australia’s reputation by working with communities (domestic and international) to understand their food values, ensuring those values are built into our products every day.

Australian animal agriculture is on a journey from a production orientation to a consumption orientation. This is the right journey to be on, but it is a slow journey as we should never sacrifice one at the expense of the other. Many of the initiatives that we undertake to enhance consumer experience and attractiveness also have strong links to productivity enhancement; the difference lies in the reasons for which we pursue them.

Changing expectations

A discussion on the future challenges of Australian animal agriculture would be incomplete without recognising a phenomenon that has increasingly emerged in recent months. Animal rights activists (often vegan-driven) will continue to try to make the lives of those involved in animal industries difficult. Ironically, their extreme philosophy would – if realised – result in the extermination of the farm animals, pets and zoos they purport to protect. None of our arguments will change their minds, but we must note that the origin of their outrage is embedded in a perceived misalignment of how the community believes animals should be farmed and the reality of livestock husbandry. This is the point that we can’t afford to miss, and it challenges us to engage better with the community, not to attempt to ‘educate’.

The fake meat industry has similar roots of community perception. It is a rude awakening for us to realise that some consumers would prefer to eat meat grown in a bucket of hormones and chemicals than our wholesome, natural products. Yet this young industry has attracted multi-millions of dollars from investors trying to get on the next big thing. They’re arguing that their product is not the consequence of death; our response should be that it is not the consequence of life either.

Conclusion

The journey from a productivist approach to animal agriculture (where more from less is the single-minded aim) to a consumer-driven quality approach (in which value is added through building a relationship around how the product was produced) is a bumpy road. But it is one worth treading if we believe our future lies more in the realm of value than that of cost.

Image:  Australian Pork Limited

John Ralph Essay Competition 2019: What is the future for animal agriculture?