13/10/2014 - 13:29

High-quality focus for agriculture

13/10/2014 - 13:29

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Niche production of quality exports might be the future for high-cost sectors of WA’s agribusiness industry.

High-quality focus for agriculture
RETURNS: David Lock says corporate ownership may be efficient, but often didn’t deliver returns needed by investors. Photo: Attila Csaszar

Selective consumer demand will be the principal factor driving the agriculture sector in the decade ahead, according to industry leader David Lock, who says agribusiness needs to identify a comparative advantage to compete internationally.

Mr Lock is chief executive of private agribusiness Craig Mostyn Group, which exports to 60 countries and has annual revenues of more than $300 million.

Although Western Australian businesses exported a variety of products, they do not all share the same qualities when competing in international markets, Mr Lock said.

“Our northern Western Australia and Northern Territory cattle ranch land produces cheap and effective calves, and that’s why we’re able to have a live export industry into Indonesian feedlots,” he said.

By contrast, WA seafood is very expensive and competes on quality.

“The beach price (of lobsters) in WA is something like $50 a kilogram; by the time it’s landed in China it’s probably an $80 a kilogram product,” Mr Lock told Business News.

“(Yet) we import Cuban lobsters and Florida lobsters landed into Australia at about $20 a kilogram.”

These factors and the sheer volume of consumption driven by population growth and wealth creation in Asia mean that many Australian agricultural products might be more successful as niche offerings.

“Australia’s production of a number of major commodities that China would consume is minor compared to their consumption,” Mr Lock said.

“Australia’s entire pork production would satisfy China for two days, as would our entire rice production.

“We could supply them for 70 days with our entire wheat production.

“What we can do is provide high-quality, expensive niche products.”

Industry structure

In his recent Muresk Lecture, Premier Colin Barnett suggested farms adopting a more corporate structure and opening to private investment could contribute to better performance in the industry.

Mr Lock said corporate ownership was more efficient, but often didn’t deliver returns needed by investors.

“A corporate struggles to get the same return a family can because the family measures the return differently,” he said.

Corporate ownership in WA has been more successful in intensive farming operations, such as those involved in pig and poultry production, than cropping, which required more land.

Mr Lock said foreign and corporate ownership would continue to be a part of Australia’s agricultural industry.

“The Americans owned lots of our agricultural assets, the Japanese owned them, I don’t see the Chinese or Indonesians owning them as any different to that,” he said.

“Ultimately it makes no difference to Australia; the product that is produced probably would’ve been exported to those countries anyway.”

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