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23 Nov 2009 WEEKLY BULLETIN November 23 2009

CPRS DEBATE COMES TO A HEAD
With the CPRS debate and vote coming to a head, Queensland Farmers’ Federation (QFF) has been following with interest the evolution of the debate over the last week as the true meaning of the likely exclusion of agriculture is better understood. The exclusion has sparked some useful discussion around the fact that farmers may be able to be part of the solution and receive recognition, through alternative policy mechanisms, for the valuable work they do sequestering and storing carbon. QFF is aware of the obvious uncertainties in this area of carbon accounting and the difficulties in developing suitable policies given the current wording of Section 3.4 in the Kyoto Protocol, particularly if such measures are to be internationally recognised. QFF agrees that an understanding of what exclusion means is rarely understood. It is apparent that as the discussion does not include the agricultural processing sectors, or input production sectors, the costs incurred as a result of the application of carbon price will still be born by farmers, indeed the likely input cost rises as a result of the CPRS have not changed at all as a result of the proposal to remove farming. For many of the state’s largest food producing industries, these costs will be significant and questions still remain about the choice of the CPRS as a policy instrument in any form.

QFF WATER POLICY MEETING
Water pricing issues were the focus of attention at the meeting of the QFF Water Policy Committee on November 16. The Commonwealth Department of Environment, Water, Heritage and the Arts have released NWI Pricing Principles paper to assist States to achieve consistency in water prices and charges nationally. The meeting was briefed on the content of the paper and particularly principles for recovering capital expenditure in schemes, recovering the costs of water planning and management and pricing for recycled water and storm water use. The Committee will be preparing a submission to the Department due by December 18. The Queensland Competition Authority has also released a review of electricity pricing and tariffs which recommends the removal of 4 of the 5 farm and irrigation tariffs. The Policy Committee were opposed to this proposal on the grounds that the proposal removes the choice that farmers have to select the tariff that best suits their needs and will discourage off peak use of water which could be yielding significant savings in water use. A submission has been lodged with the QCA addressing these and other key issues. The meeting also considered the lack of progress with the Commonwealth buyback and water use efficiency programs in the Queensland Murray Darling Basin and discussed issues arising from the water resource planning review being conducted in the Fitzroy basin and expected in the Burnett Basin. The Committee may meet again in December to review the submission on the NWI pricing principles.

BRISBANE AGRICULTURAL CARBON FORUM
QFF this week attended the Brisbane agricultural carbon forum that was held to discuss the sector’s crucial next step ahead of a vote in the Senate expected next week on the CPRS. Guest speakers included National Farmers’ Federation’s Climate Change Working Group chair Gerald Leach, Meat & Livestock Australia’s Manager Environment, Sustainability and Climate Change Dr Beverley Henry, Queensland Climate Change Centre of Excellence senior scientist Dr Grant Stone, Growcom climate change project officer David Putland and AgForce carbon project officer Graeme Bell. The forum, was delivered by AgForce with support from Growcom through funding from the Australian Government’s Caring for our Country.

RURAL WOMEN’S SYMPOSIUM MT ISA
QFF participated in the November 20 Rural Women’s Symposium at the invitation of Minister Tim Mulherin in his capacity as Minister for Rural and Regional Queensland. The one day workshop was a follow-up to last year’s Roma meeting and focused on livability and economic prosperity issues for community development. The Minister identified the new DEEDI Rural and Regional Queensland Unit as the initial conduit for individuals and communities to engage in government planning processes and suggested the 12 new Regional Development Australia (RDA) Queensland committees is the logical way to influence the 3-year government planning horizon. In an effort to sustain the influence of the Rural Women’s Symposium the group agreed that the Queensland Rural Women’s Network will lead five teams covering Education, Health, Infrastructure & Planning, Sustainability and Economic Development themes as the immediate focus for developing priorities and action.

COASTAL ZONES AT RISK FROM CLIMATE CHANGE
Penny Wong, Climate Change and Water Minister last week released the Climate Change Risks to Australia's Coast report. It is a “first pass” assessment of sea-level rise impacts for Australia based on updated research developed for the March 2009 Copenhagen climate congress. While acknowledging the limitations of the data and research used for this report it suggests on balance that the 1.1 metre rise by 2100 relative to 1990 was “plausible” (previous mid-range IPCC scenarios were for an average 0.79 metre rise). The full report can be accessed here and includes state by state assessments of the most “at risk” coastal regions. This report uses only a “calm surface rise” assessment and modeling for storm surges, king tides, floods and local hydrological conditions will need to be conducted before more useful detail of these cumulative risks are understood. The Australian Government will hold a national forum in early 2010 to begin developing a blueprint for coastal cities and towns to meet the current and future climate challenges.

NAMS DECOMMISSIONED
QFF has just been advised that the National Agricultural Monitoring System (NAMS) has been decommissioned due to a lack of agreement by the Primary Industries Ministerial Council (PIMC) to continue funding. QFF is surprised and disappointed by this unexpected development because NAMS came into being in 2005 as a means for providing more comprehensive and standardised information about drought and other climatic conditions impacting agriculture. It was seen by QFF and the Productivity Commission as a progressive tool and transparent information source that would help the national drought policy reform processes. Its closure without warning signals that there is neither bureaucratic nor political will to move forward with the comprehensive climate preparedness programs needed to replace the inequitable Exceptional Circumstances programs. Recent progress to better monitor irrigation water supplies and seasonal projections are unfortunately now lost. QFF will seek to have this important work undertaken elsewhere.

MAKING REGIONS ATTRACTIVE
Recent interest in regional development issues, especially those associated with the attraction and retention of skilled workers into agriculture and mining regions of Queensland gained new focus this week with Premier Bligh suggesting an added $3,000 first home owner grant for non-South East Queensland regions might help. Not surprisingly leading experts in the field of planning and regional development have noted the failure of such “decentralisation incentives” in the past. University of Queensland Professor Bob Stimson noted that people will move to regional towns for “lifestyle reasons or for reasons related to the employment market and job opportunities”. This is same theme and direction that Agrifood Skills Australia is promoting where regional alliances are forged so that shared challenges are addressed and collaborative actions put in place to secure sustainable living solutions for families and workers. This approach seems to offer lasting solutions to the ongoing challenges of regional planning and development. The Central Highlands may soon become a “model” from which we can all learn that livability, affordability and sustainability come from within the community.

WORLD FOOD SUMMIT HIGHLIGHT A PRECARIOUS SITUATION
The recent global food insecurity situation has worsened and continues to represent a serious threat for humanity. With food prices remaining stubbornly high in developing countries, the number of people suffering from hunger has been growing relentlessly in recent years. The global economic crisis is aggravating the situation by affecting jobs and deepening poverty. The Food and Agriculture Organisation (FAO) estimates that the number of hungry people could increase by a further 100 million in 2009 and pass the one billion mark. FAO Director-General Jacques Diouf has proposed a World Summit on Food Security to agree key actions to tackle this crisis. He comments: “The silent hunger crisis — affecting one sixth of all of humanity — poses a serious risk for world peace and security. We urgently need to forge a broad consensus on the total and rapid eradication of hunger in the world.” An agenda for action. Poor countries need the development, economic and policy tools required to boost their agricultural production and productivity. Investment in agriculture must be increased because for the majority of poor countries a healthy agricultural sector is essential to overcome hunger and poverty and is a pre-requisite for overall economic growth. The gravity of the current food crisis is the result of 20 years of under-investment in agriculture and neglect of the sector. Directly or indirectly, agriculture provides the livelihood for 70 percent of the world's poor.

TONY BURKE TO VISIT ROME FOR UN WORLD FOOD SECURITY SUMMIT
Minister for Agriculture, Fisheries and Forestry Tony Burke will visit Rome this week to participate in discussions on the key global challenge of food security. Mr Burke will attend the Food and Agriculture Organisation (FAO) of the United Nations’ World Food Summit on Food Security. The summit was called by FAO Director-General Jacques Diouf to agree on key actions to tackle the food security crisis. Mr Burke will represent Prime Minister Kevin Rudd at the summit, and co-chair a roundtable on climate change adaptation and mitigation and the challenges for agriculture and food security, with the Prime Minister of Bangladesh, the Honourable Sheikh Hasina. Mr Burke will then attend the 36th session of the United Nations Food and Agriculture Organisation’s (FAO) World Food Security Ministerial Conference. He will meet with the European Commission’s Commissioner for Agriculture and Rural Development Mariann Fischer Boel. He also expects to hold bilateral meetings with ministers representing other important trading partners, including New Zealand, the Philippines, Korea, Italy, Egypt, Saudi Arabia and Indonesia. The summit and the conference will provide important opportunities to discuss the challenges of achieving world food security, with predictions the world’s population will reach 9.1 billion by 2050. Mr Burke will emphasise the need for free trade, an end to protectionist subsidies and more support for agriculture in developing countries, to help meet the challenges of the global food shortage.

NATURAL RESOURCES AWARENESS GRANTS
Grants of up to $5000 (excluding GST) are available to community natural resources management groups for the development of small projects that promote the importance of natural resources. Grants of up to $10,000 will be considered where projects are a genuine collaboration between two or more organisations. Grants are for one year only and this year’s theme is ‘Reducing our carbon footprint’. They are not intended to fund core, on-ground natural resource management activities. Projects should be educational and of general interest, and should encourage people to become involved in natural resource management activities during World Environment Day on June 5 2010. The department will support Natural Resources Awareness Grants by promoting projects to the media before and during World Environment Day. For more information go to www.derm.qld.gov.au/funding/nr_awareness_grants/index.html

MEMBER NEWS

PROGRESS ON THE ACCC REVIEW OF THE MANDATORY HORTICULTURE CODE OF CONDUCT
Growcom has welcomed progress on the ACCC review of the mandatory Horticulture Code of Conduct. The federal government has released a report prepared by the Horticulture Code Committee which is assisting in responding to ACCC’s recommendations. Growcom is pleased the committee has considered growers’ concerns. Growcom has worked with other horticulture bodies including Horticulture Australia Council (HAC) in developing an industry position. Overall the organisation supports the committee’s findings. In a media statement released last week, Growcom said it strongly supports the recommendation that agreements entered into before December 15 2006 should not be exempt. However, as recommended by the committee, a transition period should be put in place for those operating under pre-code agreements.
A key recommendation relates to increasing Code coverage to all first point of sale transactions. The committee has recommended that small scale farm gate, “grower sheds” and farmers’ market type transactions under $1000 are not captured. Industry considers there is no need to stipulate a transaction limit provided the grower is selling their own product, the transaction is face to face and payment is immediate.
A significant ACCC recommendation would allow pooling and price averaging for agents and growers. The Committee has supported this recommendation provided safeguards protecting the grower are put in place, such as ensuring the produce is of the same quality specifications, both parties agree to pooling and price averaging and a detailed sales report is provided to the grower. The horticulture industry supports this approach.
The main area of contention relates to the ACCC recommendation that a merchant does not have to provide growers with an agreed price but can instead provide a price formula. The committee has supported this recommendation provided a number of safeguards are put in place. The horticulture industry cannot support this recommendation. Growcom supports the recommendation of an Ombudsman to oversee implementation of the Code and the need for more education for all parties. Growcom, through HAC, is seeking a meeting with Agriculture Minister Tony Burke to discuss industry’s position on the committee’s recommendations. For more information contact Policy and Research Officer Troy Reeves on 07 3620 3844 or industryaction@growcom.com.au

LOWER FRUIT AND VEGETABLE PRICES ARE GOOD NEWS FOR CONSUMERS BUT DISTURBING FOR INDUSTRY
Australian Bureau of Statistics’ Cost Price Index figures show that for the September quarter 2009 prices fell by 5.6 per cent for vegetables and 5.4 per cent for fruit, due to peak growing seasons and favourable weather. For the 12 months to the September quarter 2009, a 2.5 per cent rise in food prices were mainly driven by price rises in take away and fast foods (up 5.1 per cent), restaurant meals (up 3.2 per cent), snacks and confectionery (up 4.2 per cent) and soft drinks, waters and juices (up 3.9 per cent). Vegetables and fruit recorded the most significant drop in prices dropping 3.8 per cent and 2.6 per cent respectively for the year. Growcom’s Chief Advocate Rachel Mackenzie said that from a producer’s perspective these figures were disturbing since they did nothing to illuminate the gap between what the consumer paid and the producer’s returns.
“Recent reports have showed that returns to growers have been declining. Australian Bureau of Agricultural and Resource Economics’ figures showed that adverse seasonal conditions in many vegetable growing regions in 2007-08 had led to a decline of farm cash incomes to vegetable farms by 3 per cent,” Ms Mackenzie said.
“At the same time Food and Grocery Council figures show that Australia’s largest food imports by value are processed fruit and vegetables which have been increasing steadily in the past five years and were valued at $1.7 billion in 2008/2009,” she said.
“The Australian Competition and Consumer Commission’s grocery inquiry last year failed to investigate the supply chain as far as the farmgate and was unable to shed light on the pricing mechanisms used by retailers to set food prices. Clearly, farmers in recent years have not only had to bear the costs of drought but also increasing cost of inputs such as fertiliser, fuel, labour and freight in their own production systems.
“But to what extent they are also contributing to the maintenance of the profits of Coles and Woolworths through a continual downward price pressure at the detriment of the sustainability of a local industry long term is unknown and the investigative might of the ACCC was unable to bring it to the light of day.”
Ms Mackenzie said despite the failure of the federal government’s Grocery Choice web site, the degree of choice consumers would have in future about where they buy their groceries would be greater following an agreement between the ACCC and Coles and Woolworths announced in September which will phase out restrictive provisions in supermarket leases currently in existence and which will not include restrictive provisions in any new supermarket leases. For more information, go to www.growcom.com.au.

OTHER NEWS

BRIGHTENING PROSPECTS FOR WOOL AND COTTON
While much of the focus in recent years has centred on strengthening demand for food commodities, much less has been said about the fibres that have an equally positive story to tell. According to the Westpac-NFF Commodity Index global prices for cotton during the last six months have escalated by 4.9 per cent and 18 per cent respectively, despite the significant appreciation of the Australian dollar. Central Queensland cotton producer, Hamish Millar, is positive about the fact that fibre prices have managed to buck the recent downward trend being seen in global grain markets. “There is no doubt that cotton supplies, particularly in the United States, eased during the soft commodity boom of 2007-08 as producers substituted cotton crops with grain and corn,” Mr Millar said. “Although we have seen a shift back to cotton production in recent times, world prices have held up pretty well. Natural, cool and renewable fibres such as cotton are clearly still offering a good value proposition to the global consumer.”

According to Westpac Senior Agribusiness Economist Andrew Hanlan, few Australian industries can claim to be as highly dependent on the global marketplace as the cotton (and wool) sectors - both exporting well in excess of 90 per cent of their production,” said. “Both sectors have seen prices increase, even at a time when the Aussie has jumped 26 per cent against the Greenback in the last six months, suggesting market fundamentals are strong for Australian fibre.” During October 2009, the Westpac-NFF Commodity Index increased by 2.5 per cent. The Index is now 16.2 per cent lower than a year ago. Commodity prices that lifted during October included wool (4.6%), cotton (3.0%), wheat (3.3%), barley (12.5%), dairy (7.6%), and beef (0.3%). International commodity prices easing during the month were canola (-4.6%) and sugar (-6.5%).

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