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Keynote address to the National Farmers’ Federation 2016 Congress

26 October 2016

Keynote Address to the National Farmer's Federation 2016 Congress by Anthony Pratt, Executive Chairman, Visy

Keynote address to the National Farmers’ Federation 2016 Congress

26 October, 2016 - Canberra

Growing Australia's food industries, expertise and exports

Anthony Pratt, Executive Chairman, Visy


With Deputy Prime Minister Barnaby Joyce and mining magnate Twiggy Forest at National Farmers Federation 2016 Congress

With Deputy Prime Minister Barnaby Joyce and mining magnate Twiggy Forest at National Farmers Federation 2016 Congress

Ladies and gentlemen, it is a pleasure to be here to present this keynote address.

I acknowledge the Deputy Prime Minister, Barnaby Joyce, other members of Parliament, NFF President, Brent Finlay, leaders of State farmer organisations, and other distinguished guests.

The Australian food-agri sector is one of our greatest national assets.

In April I put out a challenge for Australia to more than double our food exports to $100 billion in the next 7 years. With the right focus and passion we can achieve that national goal.

So how can we continue to grow Australia’s food industries, our national food-agri expertise, and our exports?

I’m passionate about Australia’s food industry as my own family has its roots in Shepparton – about food growing, processing, packaging, selling food.  I witnessed first-hand growing a world-class business based on Australian food and fibre.  In the 1950s, my grandfather had an orange orchard and realised that corrugated boxes would have a better future than the wooden crates he was packing his oranges in.

Fifty years later, we were still innovating with things like water efficiency in our paper mills, and we use a fifth of the water of some of the world's best overseas mills.

And it's this type of technology, plus Australia’s remarkable location, that have been the ingredients for this country's revolution in food and beverage packaging.

I am proud to be a part of this industry, as Visy engages directly with Australia’s food and beverage producers.

I’m here today to talk about the next platforms for growth and opportunity for this fantastic industry.

The first plank is the huge appeal of “Brand Australia”.

As a first world country, the only western country in Asia (along with New Zealand), with world’s-best quality credentials, Australia’s food brand is all about safety. In fact, food safety may well be our biggest contribution to global food security.

All parents want safe food for their children. So when a food contamination scandal erupts, like the melamine-in-milk catastrophe, or toxic shellfish poisonings, people crave safety and certainty.

Brand Australia’s reputation today is testament to the hard work of our farmers and our food and beverage companies.

Just think of the many Brand Australia success stories, with companies like Casella Wines and Costas Fruit, Bega Cheese and Blackmores, Bellamy’s, Lion, and Goodman Fielder.

These amazing companies and brands show that Australia already has enviable food production and export credentials and capability.

For example, Norco have totally modernised the dairy value chain into Asia by bringing Chinese Customs clearance right into Australia. This adds days to the shelf-life of our fresh dairy.

Or Teys Meats, who have repositioned Australian premium Angus towards the high-value markets of Asia. Their $50m cold store in Wagga means 60% of that facility will be exported.

In horticulture, Montagues has seen huge export opportunities from development of new, 21st Century apples and Black Diamond plums. By 2020 Montagues will be producing 600,000 cartons of its exclusively-licenced Jazz apples.

Or Yellowtail’s legendary American success, or Treasury Wines’ incredible growth in exporting of luxury wine brands to Asia.  And it’s taking this wine to the world, focussing on the burgeoning, but discerning middle classes of the North.

In just five years, the value of our fruit and vegetable exports has increased by a staggering 250%, and fresh meat by over 150%.

And our value-added exports have more than doubled from $17 billion to $27 billion.

So, “thank God for the food industry!”

You guys are leading this nation – and more people should know about it!

Look at Tassal, the home-grown salmon farmer which has pioneered “Zero environmental harm” fish production. Last year Tassal’s CEO Mark Ryan won the coveted Richard Pratt Banksia Award for Sustainability. And just to prove that “clean Australian food” and great profits go hand in hand, Tassal’s 2016 revenues jumped by almost 40%.

I spend a lot of time in the America. The U.S. has much the same land area as Australia, but 15 times our population. That huge internal market means America doesn’t rely on food exports to keep its industry strong.

Australia’s the opposite. Our farmers are great producers, but our domestic demand is relatively small. So food exports are where we must focus.

The increasingly-wealthy Asian middle class wants more safe, quality protein that our high-value dairy and meat can deliver. And let’s not forget that great latent market of India. There’s another billion people who want their kids to have a share of our safe nutritious food like infant formula.

And we are only just beginning to tap the real potential that a modern, integrated, export-focussed food sector can bring. And doubling our value-added food exports could also double the number of jobs in food growing and manufacturing to half a million people – way more than mining or any other sector can.

So increasing our added-value fresh and processed food exports is the key to our success, because this delivers increased returns to farmers, and plays to our strengths.

But here’s the challenge: The rest of the world won’t stand still while we’re doing it.

Because while we’ve been rightly congratulating ourselves about the Government’s good work with Free Trade Agreements, we need to be continually cross-checking on our relative position in the food-agri development race.  

In fact, while 15 years ago, Australian food exports represented 3 per cent of the global food supply, today we supply only 2 per cent.

Although Australia has an absolute freight-cost advantage with Asia, more distant exporters like Argentina are having more success at capturing these emerging markets.

Brazil’s beef export growth has outpaced Australia’s by more than 300%.

How then can we improve our performance as we head toward that $100 billion goal?

Two important levers come immediately to mind …

Productivity and expertise.

During the 1990s, our productivity was world-class.

But today it is 20% behind others.

We need to invest more heavily in productivity, which has two obvious components.

The first is to really tackle food loss inside the farm gate, and food waste beyond it.

50% of our food value chain will be either lost or wasted and food waste is the number one threat to global food security.

So it’s simply got to be part of our national farming and food strategy. 

So why not work to double the effective nutrition delivery on the current level of agricultural production?

I am committed to working with the Government, and with civil society and business in America, Australia and New Zealand, to make this a winnable national goal.

Visy is also committed to collaborating with our thousands of food and beverage customers to bring technology to this challenge.

Which would effectively double our product sales to end-customers from the same farm footprint.

Another productivity investment is in robotics, a part of our goal of being the clever country.

While robotics have been used for a long while in high tech industries like making cars, it’s only recent in farming and food manufacturing.

US companies like Blue River have smart sensing devices to apply just enough fertiliser to fully optimise growth.

And Google has bought nine robotics companies in the past year or so and has committed $1 billion to supporting the agricultural industry.

In Japan a company called “Spread” is investing in robots to produce lettuce.

If sustainable intensification is the new goal of Australia’s food production, robotics is going to have to play a central role.

Some of this new food technology is being developed in Australia.

For example, at GP Graders cameras grade cherries on size and colour and reduce human sorting in half and doubles accuracy.

Another example is Costas, who have teamed with Driscoll’s I’m told to develop taller plants that means the person picking the fruit doesn't need to bend down. They’ve also got 16-arm robotic harvesters.

And Costas have also led the way with their ultra large-area glasshouses. I call them “Harry’s glasshouses”, because Harry Debney used to run Visy. They also use just 12 litres of irrigation water per kilogram of tomatoes, compared with up to 200 litres for field tomatoes.

JBS has built intelligent automation into its beef and lamb processing.

Fonterra is investing $31 million at its automated milk factory in Victoria to produce 100,000 bottles of fresh milk for Woolworths a day with robots packing pallets of milk and driving forklifts.

Nestlé eliminated 5 million manual handling steps a year with robotics.

And PepsiCo installed artificial intelligence in its South Australian DC, for automatic palletising, labelling, and shipping.

With on-farm technology, with soil, water and other enviro-sensing and real-time market intelligence, we will deliver even greater productivity dividends. 

Our own company is investing heavily in technology. At Tumut, we operate Australia’s most advanced export-packing warehouse, packing 700,000 tonnes a year with a fleet of fully-automated self-drive forklifts.

And we're always trying to use technology for our customers like temperature controlled packaging for produce and dairy, in-mould label barrier systems and ultra-light weight beverage containers.

And we can always do better.

Water security is a big issue. More than 60% of our nation’s water supply is needed for food and fibre growing. The huge national rewards from a bold food export strategy demands we find a better way to provide cost-effective water to our farmers.

We can learn a lot from Israel’s smart ways with water. They made the desert bloom.

Visy is looking at Israel innovations like time-temperature integrated food package labels to replace conventional “use by date” labelling, and packaging films that prevent mould-formation.

All of these innovations can help our Australian farmers and our many excellent food and beverage producers, extend shelf life and dramatically cut food waste.

Robotic supply chain technology is one thing.

But an even more important one is people skills.

There will be an even greater need for a highly skilled, digitally-aware workforce.

It’s no coincidence that over 30% of Germany’s graduates are engineers and Germany is the world’s greatest engineering nation, exporting its high-value goods and services everywhere. But in Australia agricultural science has less than 2% of graduates. So how can we expect to be growing our food-agri expertise fast enough to make us as good at food as Germany is at engineering?

Actually, until recently the student intakes for food-agri courses decreased to a low of 900 places in 2012.

I’m relieved to see that university data show this year’s aggregate intake at 1,500.

But, while this turnaround is encouraging, we’re going to need it to more than double each year for our food-agri workforce to have the capacity to support a major expansion of agriculture into the future.

We need to make more places available in universities for agricultural science and food production courses.

If we are to grow our food-agri sector to a globally-significant scale, we need a seismic shift in the nation’s people skills along with it.

***

As I close, I want to ask what a truly national food export growth strategy might look like.

Here are three goals that we can all embrace as we work to more than double our food-agri export value, with more onshore food processing, skilled jobs and new technology:

1.    We must eliminate food loss and waste, because doing just that will supply twice the markets from the same farm footprint

2.    We should reinvest more of our national income in applied R&D for water efficiency, robotics and other productivity tools to bring more competitive food solutions to a hungry world, and

3.    We must double our student intakes in ag science and related disciplines, and then deploy them into highly-skilled, well-paid jobs within Australia

I am totally convinced that if we all strive together to grow Australia's food industries, channel our technology and expertise, and really drive our export performance, we can truly transform our nation to become the world's leading high-value food producer and we’ll not only help “feed the world” but make money and create Aussie jobs doing it.

 


 

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