18/05/2016 - 11:08

Labour costs a risk to exports: Galati

18/05/2016 - 11:08

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The state’s high labour costs and lack of available farmworkers will make it difficult to compete globally in agribusiness, potato grower Tony Galati told today’s Business News Success & Leadership breakfast.

Labour costs a risk to exports: Galati
Mr Galati spoke at this morning's Business News Success & Leadership breakfast. Photo: Attila Csaszar

The state’s high labour costs and lack of available farmworkers will make it difficult to compete globally in agribusiness, potato grower Tony Galati told today’s Business News Success & Leadership breakfast.

Mr Galati, who made headlines last year during his battle with the Potato Marketing Corporation, owns the Spudshed chain of retail stores, and also operates farms across the state, including in the Ord River area.

He said labour costs and availability were a problem across the agriculture industry generally, yet particularly bad up north.

Speaking about the potential for Kununurra and the Ord River area to become the food bowl of Australia and a big export region, Mr Galati said there were opportunities and challenges.

“As a business proposition for the future, it’s a harsh country,’’ he said.

“I can tell you one thing; it's really hot up there.

“You work flat out especially in the mango season … you’d just stand still and you sweat

“(When) you take workers up there the production you would get would be 50 per cent, 40 per cent less because of the weather conditions.

“Unless they let overseas workers come in and get cheaper labour, we’ll never be competitive.”

Mr Galati gave an example from a couple of years ago, when the mango picking operation was short of people and the company was forced to fly people up from Perth to pick mangoes.

“Whatever you do up there is hard,” he said.

“They (the government) need to do something with our labour, especially in horticulture, because (people) keep on saying they're taking jobs from the Australians … we go on the farms, no Australians want to work on the farms.

“The government should encourage more backpackers to come to Australia.

“If you want to expand our export operations, where there is potential, we need more of these people who are willing to work.”

Responding to an audience question about robotic pickers, Mr Galati said he’d thought about picking broccoli with a robot but it would probably some years into the future.

“Definitely our cost of production in Australia is way too high, our labour cost is too high, we can’t compete globally,” he said.

Value add

Mr Galati said there was a possibility he could move down the value chain into processing of potatoes, such as for crisps.

Labour costs were still a problem for this sort of endeavour, however, as workers in competing countries are often paid substantially less.

“You can get all the sophisticated machines but you still need a percentage of people,” he said.

“We’ve got our eyes on it, (although) you need volume growers to grow the chips.

“It’s a shame that they're closing the chip factory over in Canning Vale.

“The reason why they were closing it is because of the cost of production.

“We haven't got enough water here, not enough water resource or good land to grow the spuds.

“We can grow the quality over here but we can't grow the volume.’’

Western Australian growers might need $480 per tonne to cover costs while those on the eastern seaboard only need $300, he said. 

He said there was huge export market potential that could be developed in the coming five years, something which his sons would focus on as they took over the business.

Growing up

Being the son of immigrants, he found his Italian parents had not mixed much with the local population, which caused a culture shock.

“I’ll never forget my first day at school,” Mr Galati said

“From when I was born until the day I went to school I didn't know there was an English language.

“So i get to school and they're all talking and I didn't understand a word.

“My mum dropped me off and I was so disturbed.

“Six months later I learned how to speak the english language and I became their translator.

“That's how my journey started… when I was about 9 or 10 I used to do their bank statements.”

He used to find himself translating for his parents in meetings with bank managers, and leaving classes to call wholesalers to check bean prices to determine if they were worth harvesting.

Planting seeds

The family’s battle with the potato regulator goes back to the 1970s, when his dad was growing less than 100 tonnes a year on a small license.

But his dad’s license was revoked because he had a second job, as a painter, which was not allowed under the system.

Many farmers had second jobs yet had their licenses under the names of their spouses, so his dad took action by growing out of license.

They’d sell six bags of potatoes a night down the road at fish and chip shops, and after being caught, had to work for nearly a year to pay off the fine.

As years passed, the family acquired more licenses and as production expanded they came under more pressure from the regulator, which Mr Galati said was because competitors had picked the family business as a threat.

The next step Mr Galati took was to move down the supply chain and become a washer and packer.

One company was under pressure at the time and Mr Galati negotiated a deal within 24 hours to buy the license.

But the potato board did not approve.

“They tried everything to stop us,” he said, although after involvement from a lawyer he obtained the license.

It didn’t stop there, however.

“They had about four inspectors watching all the local growers,” he said.

“They put three on us and the other inspector used to look after all the other growers.”

Another battle occurred when he grew a new variety which took an extra month to grow.

That meant they would need to be sold in a different pool, which the regulator overruled.

“I thought they were joking,” Mr Galati said, of the events that took place 18 years ago.

“It was so unfair because the people sitting on the board were direct competitors of mine, telling inspectors what to do and how to try and stop us.

“They threatened us, they were going to take the license away.

“We were progressing and they didn't want us to progress…. we paid a lot of money for the licenses, we bought all this equipment.

“They told us we had to dump them.

“We still had to dig the spuds.

“By that time there it was just a joke, they had private eyes watching us 24 hours a day.

“It was so wrong, even my kids were saying - “dad, who are they?”.

"They were watching our harvesters to make sure we weren’t harvesting spuds.

“I said stuff it, they’re not going to beat us… if we can’t sell them we’ll give them away.”

It went so far that the investigators attempted to block them driving the truck of free potatoes out of their driveways.

He gave away 1200 tonnes of spuds that year, he said.

“I just could not believe the power they had, they just used to hide behind this act."

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