Australian Government Response to the inquiry into Food production in Australia

Select Committee on Agricultural and Related Industries Report

On 25 June 2008 the Senate referred the following matter to the Senate Select Committee on Agricultural and Related Industries for report by 27 November 2009:

Food production in Australia and the question of how to produce food that is:

1. affordable to consumers
2. viable for production by farmers and
3. of sustainable impact on the environment.

The Select Committee subsequently sought and received extensions to the reporting date. The report, which included a dissenting report, was tabled in the Senate on 23 August 2010.

The Select Committee report made four recommendations:

1. The committee recommends an audit be undertaken to establish the extent of foreign ownership of commercial agricultural and pastoral land, and ownership of water, in Australia, with particular emphasis on ownership by sovereign and part sovereign-owned companies.
2. The committee recommends that the Rural Industries Research and Development Corporation (RIRDC) report to the Senate on the current level of agricultural research in OECD countries as a percentage of GDP and the trend for investment over the last ten years.
3. The committee recommends that IP Australia advise the Senate what patents, if any, have been granted over biological discoveries as opposed to inventions, with reasons for them being granted.
4. The committee recommends that the senate re-establish the Select Committee on Agricultural and Related Industries in the new parliament to further examine issues relating to food production, including the implications of any proposed emissions trading scheme for affordable, sustainable food production and viable farmers.

A dissenting report was prepared by Senators Sterle and O’Brien. The dissenting report raised issues that they believe the Select Committee should have pursued but made no recommendations.

Australian Government Response

The Australian Government has considered the recommendations of the Senate Select Committee report. The government’s response to the recommendations is as follows.

Senate Select Committee report Recommendation 1

The committee recommends an audit be undertaken to establish the extent of foreign ownership of commercial agricultural and pastoral land, and ownership of water, in Australia, with particular emphasis on ownership by sovereign and part sovereign-owned companies.

The Australian Government agrees to this recommendation.

Foreign investment is important to the Australian economy and to support economic growth and creation of jobs for Australians. Investment in agriculture, whether from foreign or domestic investors, helps to stimulate jobs on farms, and supports services such as harvesting, transport, and processing. These jobs have flow on effects for regional towns and communities through local purchases of inputs, machinery, and the general necessities of life. Moreover, new investment can help Australian agriculture to be more efficient, competitive and profitable in world markets, providing increased opportunities in global markets and access to new technologies and practices.

The available evidence is limited but suggests the current level of foreign ownership of Australian agricultural land and water resources is very low. For example, a survey of commercial broadacre and dairy farms, conducted by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) in 2007-08, indicates that an overwhelming majority (99 per cent) of these farms are family operated. Of the remaining 1 per cent, it is estimated that only around 0.1 per cent are foreign owned. Broadacre and dairy farms account for around 70 per cent of Australian farm businesses. Further, investment in the agriculture, fisheries and forestry sector is a small part of overall foreign investment in Australia, ranging between 0.06 per cent and 1.53 per cent of approved proposals, by value, made through the Foreign Investment Review Board in the last ten years.

However, the Australian Government recognises there are concerns about the sale of rural land and agricultural businesses to foreign investors. These concerns are compounded by the limited data available on foreign ownership. The government is addressing these concerns by taking action to strengthen the transparency of foreign ownership of rural land and agricultural food production. The Assistant Treasurer, the Hon. Bill Shorten MP, has asked the Australian Bureau of Statistics (ABS) to collect more information about rural land and water ownership in order to provide a better statistical picture of the foreign investment landscape.

In addition Senator the Hon. Joe Ludwig, the Minister for Agriculture, Fisheries and Forestry, has asked the Rural Industries Research and Development Corporation (RIRDC), in collaboration with ABARES, to report on the role and history of foreign ownership in the development of Australian agricultural land and the factors driving foreign investment in Australia.

The RIRDC and the ABS are working to have this information available later in 2011.

Senate Select Committee report Recommendation 2

The committee recommends that the Rural Industries Research and Development Corporation (RIRDC) report to the Senate on the current level of agricultural research in OECD countries as a percentage of GDP and the trend for investment over the last ten years.

The Australian Government does not agree to this recommendation.

As there is an existing body of work in this area, the Australian Government does not consider it necessary for RIRDC to commission a specific study on this.

Over recent years there have been many studies by ABARES and other researchers that have assessed expenditure on agricultural research and development over the long term. These studies have analysed the relationship between productivity growth in the agriculture sector and the drivers of that growth, including levels of investment in research and development. Agricultural research and development investment is an ongoing area of interest to the Australian Government and ABARES will continue to examine the relationship between productivity growth and research and development investment in Australian and other developed countries and disseminate results as appropriate.

Much of the literature agrees that there are significant lags between research and development investments and the realisation of productivity benefits, often occurring over decades, highlighting the importance of taking a long term perspective to research and development funding. Analyses of investment in research and development are generally undertaken over multi-decadal time frames in order to identify investment trends and their impact on productivity growth.

A number of international studies cite reduced investment in agricultural research and development as an important element contributing to the slow-down in agricultural productivity growth in recent years. Public sector investment in agricultural research and development in developed countries grew by an average of 1.89 per cent per year during the 1980s. However, this growth slowed to 0.38 per cent per year through the 1990’s and has continued at around the same rate through the last decade (Pardey, 2009).

These studies also use research intensity to compare the levels of agricultural research and development in different countries. Research intensity measures investment in agricultural research and development as a percentage of agricultural Gross Domestic Product (GDP), or the economic size of the agricultural sector, and provides a better basis for comparing relative levels of investment in agricultural research and development than when compared to national GDP.

Pardey (2009) estimates that although public research intensity grew during the 1980’s from 1.62 per cent to 2.33 per cent in 1991, it has remained static since (2.36 per cent in 2000). Public research intensity in developing countries has also remained relatively constant over the past 30 years, albeit at a much lower percentage than developed countries—around 0.5 per cent in 2000.

In regard to Australia, studies (e.g. Mullen 2010 and Sheng et al 2010) indicate that public research intensity grew strongly from the early 1950s through to the late 1970s, peaking at between 4 and 5 per cent of agricultural GDP between 1978 and 1986. More recently, public research intensity in Australia has declined to around 3 per cent of agricultural GDP.

Senate Select Committee report Recommendation 3

The committee recommends that IP Australia advise the Senate what patents, if any, have been granted over biological discoveries as opposed to inventions, with reasons for them being granted.

The Australian Government notes this recommendation.

Under Australian law, as prescribed by the Commonwealth Patents Act 1990, patents can only be granted for inventions. Discoveries are not inventions, and thus are not patentable, irrespective of whether they are biological or not. IP Australia, the government agency that administers Australia's intellectual property rights system, specifically patents, trade marks, designs and plant breeder’s rights, applies Australian law in its assessment and decisions to grant IP rights.

Senate Select Committee report Recommendation 4

The committee recommends that the senate re-establish the Select Committee on Agricultural and Related Industries in the new parliament to further examine issues relating to food production, including the implications of any proposed emissions trading scheme for affordable, sustainable food production and viable farmers.

The Australian Government notes this recommendation.

The decision to re-establish the Senate Select Committee on Agricultural and Related Industries is a matter for the Senate to consider.

The Australian Government notes that the Senate Procedure Committee considers that there should be no more than three select committees at any one time. There are currently two select committees and one joint select committee; with two more joint select committees foreshadowed.

References

Mullen, J.D., 2010, “Agricultural Productivity Growth in Australia and New Zealand.” Chapter 5 of J.M. Alston, B.A. Babcock, and P.G. Pardy (eds.) Shifting Patterns of Agricultural Production and Productivity Worldwide, Iowa, April 2010.

Pardy, P.G., 2009, “Reassessing Public-Private Roles in Agricultural R&D for Economic Development” in World Food Security- Can private Sector R&D Feed the Poor,? proceedings of The Crawford Fund annual conference, Canberra, 27‑28 October 2009.

Sheng, Y., Gray, E. and Mullen, J. 2010, “Public investment in R&D and extension and productivity in Australian broadacre agriculture”, Conference paper prepared for the 16th World Productivity Congress and 2010 European Productivity Conference at Antalya, Turkey, November 2010.