Farmers are awesome, but does it matter?

Mick Keogh, Australian Farm Institute

The ‘Australian Year of the Farmer’ (AYOF) was a campaign conducted during 2012 which aimed to celebrate and promote the work of Australian farmers, and to showcase the critical role that agriculture plays in the Australian economy. It was initiated by a small group of individuals concerned about the apparent lack of awareness and appreciation of agriculture by urban residents. AYOF was able to attract high profile ambassadors (including the Governor General), and through fundraising, which included securing significant government and corporate support, was able to mount a roadshow that travelled to nearly 300 different events held across the entire continent. Most of these events were reported to be Royal Agricultural Society Shows in regional centres of Australia, as well as the major shows in the capital cities. There were also a large number of other events held by organisations as part of the ‘Year of the Farmer’ celebrations.

The specific objectives of the AYOF were as follows:

  • Establish closer ties between Australia’s rural and urban communities.
  • Celebrate the broad range and fine quality of the produce our farmers grow and harvest.
  • Share how Australia is leading the world in farming techniques and innovation.
  • Highlight the essential role of Australian agriculture to the maintenance of national and global food security.
  • Promote the role our farmers play as environmental managers, creating and delivering sustainability through best practice management.
  • Recognise farmers for feeding the nation and sustaining our vital agribusinesses.
  • Communicate to all Australians the importance of farming and rural communities to our national economy and social fabric.
  • Encourage Australians to reflect on the origins of the food they consume every day and perpetuate the call to buy Australian produce.
  • Focus on – and prepare for – the future of farming in Australia by creating awareness of career opportunities in agriculture and related areas.
In assessing the year, the AYOF website stated:

The Australian Year of the Farmer has… enabled a wider proliferation of discussion about, and media attention on, the exciting future of agriculture in Australia. The Year has successfully highlighted the abundant opportunities available in the sector for education and careers as well as encouraging a better understanding within metropolitan audiences of the origins of their food and fibre.

The AYOF’s assessment of what the year achieved also included an analysis of media coverage. The AYOF website stated:

Media coverage reaching an estimated total readership in excess of 81.5 million people (in other words many Australians would have seen or heard media about the Year on several occasions) through over 5500 pieces of media positioning across print and broadcast mediums.

 Television stations from commercial, online and public broadcasters have supported the Year through the airing of stories on the ABC’s Landline and 7.30 programs, Foxtel’s Sky Business News, a feature on the Australian Year of the Farmer Roadshow on Channel 7’s Great Outdoors segments on Gardening Australia and Better Homes and Gardens, and an educational series based on the objectives of the Year aired on Skills One Digital TV to school students.

To develop, fund and implement such a comprehensive program over an entire year, and to engage the highest levels of both state and Australian governments in the events was a major achievement, and those involved need to be congratulated for their dedication and effort.

In the sober early morning light of 2013, however; when the AYOF has joined the Sydney Olympics, the Australia bicentenary celebrations, various royal and US Presidential visits, and events such as major natural disasters, as a gradually fading memory linked to a specific year; there is merit in considering what the lasting legacy of the AYOF will be, and whether, in cold hard commercial terms, it has delivered the Australian farming sector value for money.

There are a number of different ways of assessing the lasting benefits arising from a promotion such as the AYOF. An economist would develop a model of potential economic benefits (both tangible and intangible) flowing from it and calculate the longer-term value of these, net of the cost of the campaign. A government might analyse the campaign from the perspective of the measured reduction in negative consequences (for example a specific disease), and use that, in combination with known information about the costs of the disease to society, to calculate the net benefits. A large corporation, such as a mining company, might assess the value of the campaign from the perspective of the added ‘social licence’ or political influence the company is able to gain from the promotion, with this being measured in terms of increased political access, or a reduction in negative mentions in the media, or other similar metrics. A commercial organisation undertaking a promotion associated with a branded product would analyse sales of the product compared to past sales to determine the value of campaign.

Taking the economists approach first, the analysis would initially involve adding all the direct expenditure associated with the AYOF promotion. There would then need to be some consideration of the counterfactual case – what would have happened if the AYOF did not occur. This would require a degree of judgement – for example would those sponsors of the campaign (including the governments) have spent their funds anyway, and would the presence of the AYOF roadshow at regional agricultural shows have resulted in expenditure that would not otherwise have occurred? The conclusion would probably be that much of the expenditure associated with AYOF may have occurred anyway, meaning that the total expenditure associated with the campaign would need to be discounted substantially, before any consideration was given to possible multipliers associated with the expenditure. The conclusion of this analysis would likely be that the AYOF campaign probably only generated minimal direct economic benefits. Turning to the intangible benefits – rural people feeling more confident and reassured about the worth of their industry, school students more likely to choose agriculture as a career, urban people having a raised awareness of the role of farmers and agriculture in the economy – there is obviously some economic value in these, although it would be very difficult to estimate, and unlikely to persist into the future. Again, the analysis would probably conclude that the intangible benefits were of only limited net economic gain.

From a government perspective (and assuming for a moment that the total AYOF expenditure was by government), an analysis of the benefits might include consideration of some broader community benefits associated with more positive perceptions of the agriculture sector. This might include increased farmer confidence resulting in stronger investment that could lift farm productivity, profitability, and ultimately regional economic growth. Increased community awareness of agriculture could also result in school leavers being more interested in an agricultural career, boosting the agricultural workforce and reducing added costs associated with labour shortages in the sector.

There is no doubt that some of these benefits were generated by the AYOF, but it is likely that the total value of such benefits was not substantial, relative to the expenditure. It would also be extremely difficult to allocate the value of these changes to the AYOF, with any certainty. For example, initial reports about enrolment levels in university agricultural courses in 2013 are positive, and it may be that the AYOF campaign was a contributing factor. There are also a multitude of other factors that may have contributed to this change, including the slow-down being experienced by the mining sector (and therefore the reduced attractiveness of a career in that industry), a lowering of the entrance mark required for agriculture-related courses due to an increase in funding for university places, and the return to more normal seasons following the 2002–09 drought. It would be extremely difficult to isolate the impact of the AYOF on this, and the effect is at best likely to be a one-off change, that may not persist in the future.

In analysing expenditure decisions, governments also face the need to consider what else the scarce resources (taxpayers’ dollars) available could be used for, and whether or not a better return might be available to the community from those alternative uses. There are many groups in the community – for example lawyers, doctors or automobile industry workers – who could just as easily claim that their industry or sector is undervalued by the wider community, and governments should assist in promoting their sector. There is also the issue of whether there might be a higher return for the community in spending these funds to build better roads to regional centres, or to provide more doctors to regional communities.

Taking all these questions into consideration, it is likely a government analysis of the AYOF promotion would conclude that the benefits to the wider community were at best marginal and short-lived, and that there are other ways in which funds could be spent to generate greater net community benefits.

In considering the AYOF promotion from the perspective of a large corporation or a company marketing products and services, a Board of Directors would demand either that management identified and reported on a specific metric to justify the promotion (in the case where the corporation was seeking to influence community or political attitudes), or that the merits of the promotion be justified on the basis of increased sales of the company’s products.

While some of the specific objectives of the AYOF promotion listed above can be measured, many cannot. In addition, many of the metrics that would be useful are relative measures, requiring a ‘before and after’ comparison to gauge the extent of the change that has occurred.

For example, the objective of promoting the role farmers play as environmental managers deals with the perception of the wider community about whether farmers are essentially self-interested, or are prepared to do things (such as environmental management) that are in the wider public interest. A related issue was the subject of a recent Essential Media Communications poll, which asked respondents to indicate which sectors of the economy they most trusted to act in the public interest. The responses are displayed in the table below.

 

The survey respondents rated the agriculture sector the highest of any sector of the economy in response to this question. As this survey was conducted in January 2013, after the AYOF, it could be argued that this response was at least in part a consequence of the AYOF promotion.

Two problems arise from this conclusion. The first is that, in the absence of a similar poll before the AYOF commenced, it is not possible to identify the extent to which the AYOF influenced this response. The second is that experience with community attitudinal surveys is that the results are extremely difficult to change over a relatively short period of time, so it is likely the agriculture sector was already highly trusted to act in the public interest before the AYOF commenced.

The critical question from the perspective of the agriculture sector is not so much whether the sector is generally trusted to act in the national interest, but whether this high level of trust translates into advantages for the sector when it comes to government policy measures or consumer behaviour. The progress of debate and government decisions on livestock exports and the Murray-Darling Basin Plan does not provide any strong evidence that the high level of regard in which the agriculture sector is held translates into more favourable decisions.

Interestingly, it is apparent from the advertising campaigns of Australia’s major supermarket chains that they are well aware of the high regard in which Australian farmers are held by consumers. Both major retailers feature images of farms and farmers heavily in their advertising campaigns, in effect hijacking the reputation of farmers to promote their own supermarket brand, while they simultaneously engage in commercial practices that some farmers claim have a severe negative impact on them.

The other way in which a large corporation might assess the value of expenditure on a promotion such as the AYOF is via changes in the sales of a branded product associated with the promotion.

Unfortunately, it is not possible to use this metric in assessing the value of the AYOF, for two reasons. The first is that the AYOF focused on the farmer, rather than the food and fibre produced by farmers. The promotion was not about a specific ‘product’ that consumers could pick up from a retail shelf and pay for at the cash register.

A second and related reason this metric cannot be used is that even if, in response to the AYOF promotion, consumers decided to preferentially seek out products grown by Australian farmers and buy them, they cannot easily do this and they have not been given a reason to do so.

Consumers cannot easily select Australian grown produce because of Australia’s labelling laws, which do not require packaging to provide clear information about where the product was grown. Australian supermarket aisles are stacked full of products labelled ‘Made in Australia from imported and local ingredients’, which surveys reveal lead consumers to believe they are purchasing Australian grown products. This is not the case, as it is often only the packaging and some minor processing steps that are carried out in Australia, with the main ingredients being imported.

Curiously, the Australian Competition and Consumer Commission (ACCC) does not seem to believe such labels are misleading, yet has recently heavily criticised proposed poultry industry labelling standards for free-range eggs because they ‘may mislead consumers’!

Leaving aside the fact that consumers cannot easily identify imported products, the critical issue is whether consumers have been provided with reasons they should seek out and potentially pay more for Australian grown products. Unfortunately, this is generally not the case, meaning that there is an implicit assumption that some sort of nationalistic loyalty will come to the fore in the case of Australian consumers, and the Australian label (where it is present) will be sufficient to attract consumers overseas. This is equivalent to Australian car manufacturers relying on Australian consumers to buy Australian-made cars simply because they are made here, irrespective of their value, performance or appearance.

There are many reasons Australian and overseas consumers should actively seek out and purchase Australian grown products, as listed below. Unfortunately, these are not promoted to consumers in any meaningful way, which means consumers are not given reasons they should select ‘Brand Australia’.

This is a major deficiency for Australian agriculture in both domestic and international markets, and especially if the sector is serious about capturing the new middle-class consumer markets that are rapidly emerging in Asia. These consumers need to be given reasons to seek out Australian products. Safety and quality are obviously paramount, as the response to recent milk substitution issues in China has highlighted, and Australian produce has a very good track record in this regard. Unfortunately, few consumers are aware of this because there is no concerted effort to explain and promote it.

Promoting Australian farmers and the farming lifestyle to Australian consumers has undoubtedly resulted in some benefits for the industry, but unfortunately these are likely to be limited, and short lived. Promoting Australian farm produce to Australian and international consumers, and giving them sound reasons to seek out and buy those products, has the potential to result in long-term benefits. In domestic markets, it has the potential to create a price premium and also to pressure major retailers to preference Australian produce. In international markets, it has the potential to ensure Australia secures a strategically important foothold in the quality end of booming Asian consumer markets.

Neither of these will occur unless the Australian agriculture sector focuses on promoting the benefits of its produce, rather than merits of its farmers.

Ten reasons consumers should actively choose Australian grown food and fibre products

1.    High quality
Australian agricultural products are regarded as being of the highest quality by fussy consumers in places like Japan, Korea, Singapore, the US and the EU. Australia is one of the few nations that has consistently exported agricultural products to all these nations for many years, and the high quality of Australian produce has helped to retain access to these markets.

2.    Safety
Australian agricultural products have a very high level of safety for consumers, being free of disease and chemical and biological contaminants. This is regularly highlighted by the results of the National Agricultural Residue Survey and the National Antibiotic Monitoring Program. The fact that only Australia maintained access to both the Japanese and Korean beef markets during the entire period of the Mad Cow Disease incident is just one example of the high levels of biosecurity associated with Australian agricultural products.

3.    Traceability
Australia has the most advanced national livestock identification system (NLIS) of any nation on earth – a fact that is readily acknowledged by competitor nations such as the US and Brazil. This provides Australia with an unmatched ability to ensure the integrity and safety of meat and other products. Similarly, advanced logistics and supply chains used in the grains, horticulture, sugar and wine industries ensure the integrity of Australian products.

4.    Cost to consumers
Australian agriculture operates with the lowest levels of taxpayer support of any agriculture sector in the world, according to annual surveys carried out by the OECD. This means Australian taxpayers do not pay any hidden or extra costs for Australian agricultural products, unlike consumers in most developed nations whose taxes subsidise farmer incomes.

5.    Low and declining greenhouse emissions
According to the Australian Government Department of Climate Change and Energy Efficiency, Australian agriculture is the only sector of the economy to have reduced greenhouse emissions over the last two decades. Were it not for the 30% reduction in emissions from the agriculture sector over this period, Australia would have exceeded its Kyoto Protocol national emission target by a considerable margin, and taxpayers could have experienced a considerable cost if Australia decided to purchase international carbon credits to offset the additional emissions.

6.    Fair treatment of workers
Australia has the fourth highest wages in the world, and some of the highest standards of workplace health and safety enforced by regulation. Even in cases where overseas labour is used, these workers enjoy the same award rates, and health and welfare benefits of Australians. This is in stark contrast to the agriculture sectors of many overseas nations, which rely on low-paid immigrant labour, or have much lower wage and safety standards than Australia.

7.    Environmentally-friendly
Australian agricultural businesses operate under some of the strictest environmental controls in the world. Australia’s most recent ‘State of the Environment’ report noted the substantial improvements that have been made to land management in Australia, with the adoption of conservation tillage practices higher in Australia that in any other nation. A recent ABARES report has detailed the very high level of engagement of Australian farmers in biodiversity conservation, and Australian water management policies are acknowledged as world leading by international agencies such as the United Nations and the World Bank. Australian farmers utilise much lower rates of chemical and fertiliser use than farmers in virtually any developed or developing nation, and are rapidly adopting precision agriculture technologies to make artificial input use even more efficient.

8.    Supporting Australia’s regions
According to the Australian Bureau of Statistics, the Australian agriculture sector is a much bigger direct employer of people than the mining sector, and has been and remains the main source of employment in many Australian regions, bringing important income and helping to maintain services and infrastructure in these regions. Purchasing Australian agricultural products directly results in the creation of Australian jobs.

9.    High animal welfare standards
Australian farm animal welfare standards are some of the highest in the world, with many practices and production systems banned in Australia that are still utilised in overseas locations that export products (such as pigmeats) to Australia. Australia is also the only nation in the world that has major programs aimed at improving animal welfare standards in markets that are destinations for Australian livestock exports. Purchasing Australian livestock products is the best way to ensure high standards of animal welfare.

10.    Supporting family farming
Australian agriculture overwhelmingly consists of family farming businesses, a contrast to many overseas locations where large-scale factory farming is carried out in intensive production systems that use very high levels of inputs and create significant waste and pollution problems. Purchasing Australian farm products directly supports Australian farming families.

 

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Images:  Deniliquin Newspapers, GrainCorp Limited