Monday, March 22, 2010

Cool heads needed for tough times

The past year has been extremely tough for Australia’s agricultural industries. High input prices, a collapse in commodity prices and harsh seasonal conditions have put many farm businesses in a precarious position. Some farm consultants I have spoken to reckon it is the toughest budget season they have ever been through.

It is no coincidence that many of our farming representative bodies are under pressure. In the past few weeks we have seen a beef industry crisis meeting that put Meat and Livestock Australia (MLA) to the sword; the resignation of the CEO of Australian Wool Innovation (AWI); and a grains industry crisis meeting in WA calling for industry assistance.

This would come as no surprise to those that have had a long-term involvement in Australian agriculture. By its nature, agriculture is cyclical and is characterised by sharp swings in prices, conditions and sentiment. At the bottom of these cycles it can appear that agricultural production has no future, while at the top it appears opportunities are limitless. The reality is somewhere in between.

Human nature dictates that we must find someone to blame for the predicament. While sometimes this can be the catalyst for some blood-letting and good change – the reforms of livestock industry structures in the late 1990’s that led to the formation of MLA - have been very successful in my view. Often this can result in futile and harmful instability. The wool industry for example seems to have been plagued by constant instability over the past couple of decades which has distracted participants from the job of rebuilding demand for Australian wool (in its 9yrs, AWI has had 21 Directors, 4 Chairman and 4 CEO’s).

Next we will see sectors of the industry - both fighting the cyclical downturn - start to turn on each other. Already farmer representatives are trotting out some of the age old bones of contention ‘T-bone steak has skyrocketed to $20.87/kg – all while I was battling to get $1.70/kg liveweight for cattle’. Such statements involve such a cursory analysis that they serve little purpose, other than to inflame an already volatile situation.

Now is the time for cool heads and for the real industry leaders to stand up and take charge. Tough times can provide a mandate for change, but if any change is to be ultimately successful, it needs to be focussed on achieving the best long-term outcomes for the industry, not change for change’s sake.

1 comment:

Jenny said...

That's right. Keep the cool but be tough enough to be able to come up with the best business solutions when time calls for it. Thanks for the facts. More power!