Agricultural Competitiveness White Paper Submission - IP529
Regional Development Australia Whyalla and Eyre Peninsula
Submitted 17 April 2014
REGIONAL DEVELOPMENT AUSTRALIA,
WHYALLA AND EYRE PENINSULA
AGRICULTURE WHITE PAPER
SUBMISSION
APRIL 2014
Page
TERMS OF REFERENCE
This paper is a submission to the Federal Government’s Agriculture White Paper Issues Document
prepared by Regional Development Australia – Whyalla and Eyre Peninsula Inc (RDAWEP) on behalf of
the Eyre Peninsula Agriculture Industry in South Australia.
Regional Development Australia - Whyalla and Eyre Peninsula (RDAWEP) Inc. is the region’s leading
economic and regional development agency, servicing eleven Local Government Councils on the
Eyre Peninsula. The Eyre Peninsula Local Government Association (EPLGA) represents its 11 member
councils and has provided input into this submission.
THE REGION
Regional Development Australia - Whyalla and Eyre Peninsula represents the wider region of the Eyre
Peninsula.
This vast and unspoiled region of South Australia occupies the western area of the State. The region is
bound by Spencer Gulf in the east and stretches close to 2,400 kilometres across the Great Australian
Bight to the South Australian - Western Australian border.
With an area of approximately 232,000
square kilometres (23% of the State) it
supports a population of almost 56,400
people or 3.5% of South Australia’s total
population.
Eyre Peninsula is largely a rural community,
triangular in shape and bound at its corners
by the larger cities of Whyalla, Port Lincoln
and Ceduna. In comparison, the Eyre
Peninsula is similar in geographic size to
Tasmania.
Distances are significant, with highways
stretching 300-400km between each of these
main regional centres.
Eleven Local Government authorities cover Eyre Peninsula, with 64% of residents living within the Local
Government areas of Whyalla and Port Lincoln.
Eyre Peninsula is one of South Australia’s most productive regions, producing 42% of the state’s
agriculture product annually. The region is highly export oriented with around $2 billion of its
products being sent to various overseas markets.
The region’s economy relies on its agriculture, aquaculture, fishing, tourism, manufacturing and
mining industries. While the agricultural and fishing sectors are well established, aquaculture and
tourism have developed more recently as major sources of employment and revenue for regional
communities. The city of Whyalla is unique having a substantial industrial base, which is focussed on
its mining, engineering and steel production facilities.
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THE AGRICULTURE INDUSTRY
Agriculture on Eyre Peninsula is the region’s second largest industry in terms of economic value,
producing more than 42% of South Australia’s wheat crop and 20% of the barley crop.
Grain export volumes account for an average of 97% of Eyre Peninsula’s annual wheat, barley, and
legume production. The region is renowned for its high quality premium grains, particularly high
protein wheat, malting barley varieties, oil seed/canola and milling oats.
Agriculture, forestry and fishing is the largest sector in terms of employment on Eyre Peninsula,
accounting for 20.6% of regional employment. The industry employs around 5,070 people in
businesses throughout the region.
THE AGRICULTURE TARGET TEAM
The Agriculture Target Team serves as a link through Regional Development Australia [RDAWEP] to
major regional groups including Eyre Peninsula Natural Resource Management [EPNRM] and Eyre
Peninsula Local Government Association [EPLGA]. The target team serves as a sounding board for the
industry and through collaboration provides proactive constant improvement to a more sustainable
industry in the region.
Members of the Agriculture Target Team provide high level strategic advice to the Regional
Development Australia Board members and staff and have provided input into this paper.
Target Team members assist the Board in developing a high level regional plan for the agriculture
sector. The key priorities from this Plan are then linked directly to the Board’s strategic planning
document.
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RESPONSE TO THE ISSUES PAPER
1.
Ensuring food security in Australia and globally
The issue of food security is a global condition relating to the ongoing availability of food. Many
factors affect food security including:
•
•
•
•
Availability: production, land use, natural resource management, crop selection,
and management, and harvesting.
Distribution: storage, processing, transport, packaging, and marketing.
Access: affordability and allocation
Utilisation: food safety, nutritional value
breeding,
The Agriculture White Paper Issues Document seeks input on how to increase production.
Locally on Eyre Peninsula the possible benefits from Genetically Modified (GM) crops may increase
production. Ongoing research, development and extension in to drought tolerant varieties, better
Water Use Efficiency properties, and higher temperature tolerances and examples of traits that will
support food producers in growing varieties capable of producing under severe climatic stresses.
Access to GM crops with these traits would be very valuable. This requires further investigation.
In established crop production areas, farmers are demonstrating the ability to increase production
yields through improved efficiency particularly water use efficiency due to dramatically changed
cultivation practices.
To further drive production gains more investment in individual farms and the farm value chain is
required. The industry could farm more intensively, but it requires greater integration through the
value chain, an injection of capital, access to labour and access to markets.
There is need to reduce risk from weather driven variation by obtaining more reliable weather
forecasting information. On the Lower Eyre Peninsula the Bureau of Meteorology has identified
benefits in providing this information from installing a radar system but is yet to fund it.
Increasing responsiveness to food demand and integration in supply chains.
In order for farmers to be responsive to global food demand, they need access to timely, relevant and
accurate information to drive production decisions.
The complexity of farming businesses today demands good time management. The availability of
information has reached ‘overload’ levels and it is a time consuming task to sort through the raft of
available information to find the relevant details to assist in driving production decisions.
Production decisions are typically a result of what grows well in the local environment, is good for crop
rotation and will return the most economic benefit to the farming enterprise (yield and price) rather
than responding to global food demand trends.
Australian farmers could benefit from training on how to extract the relevant information and
understand / interpret this information to shape production decisions. To maximise the impact of this
training farmers need to free up time. Farm businesses like all businesses in the SME sector could gain
great benefit from a reduction in compliance red tape.
Greater integration through the supply chain has its challenges. The greater portion of Australian
agriculture product is exported with a consequence of competing against subsidised produce.
Australian food manufacturers inevitably utilise imported produce to compete and meet market
expectations.
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Australian famers have demonstrated the ability to meet demand however the variable climate dictates
the need for safe storage to smooth out the production highs and lows and ensure continuity of
supply at the required specification. It is cost prohibitive for farmers to invest in on farm storage to
cater for this market particularly when the majority of grain produced on the Eyre Peninsula is
exported and little benefit is realised in growing a certain specification for the farmer. In many cases
quality grain is blended down to suit the grain marketer who also controls logistics on Eyre Peninsula.
Until Eyre Peninsula has infrastructure in the way of access to alternative multi commodity ports,
container loading facilities and links to the nation’s rail network, there is little opportunity for Eyre
Peninsula farmers to realise the benefits of value adding and responding to both domestic and
international demand through the supply chain.
Opportunities to export Australian Agricultural technology and skills to build global food
security.
Eyre Peninsula farmers are leaders in dry land farming. This technology could certainly be
implemented in many parts of the world to enhance food security. This could potentially form part of
Free Trade Agreement negotiations.
Other issues affecting Food Security: Land Use and Workforce
Eyre Peninsula has an exciting future with the emergence of the mining industry. The Gawler Craton
and the Eucla Basin provide one of the most exciting new mineral provinces in the world. Exploration
interest and investment in the search for iron ore, coal, gold, lead, zinc, uranium, mineral sands and
kaolin provide the basis of developing a sustainable new mining industry within the region.
These opportunities have the potential to impact on the region’s agriculture industry in terms of land
use. Whilst multiple land use is the goal, this cannot be achieved in all instances and the risk to the
agriculture industry is a reduction in land available for broad acre cropping and livestock farming in
lieu of mining enterprises. This has obvious impacts on food security.
Workforce will be another key issue and has the potential to impact on the region’s agriculture
industry. As mining activity increases so too will the need for skilled workers to carry out the projects.
The agriculture industry is at risk due to the financial discrepancies between mining wages and
agriculture wages, and the transferrable nature of agriculture skills to the mining industry such as
heavy vehicle operation, diesel mechanic and welding skills. Without a sustainable skilled workforce
the ability for the region to maintain food production at current levels is questionable. Service
industries supporting agriculture including machinery dealerships will also be impacted by the
migration of skilled workers to the mining industry.
2.
Farmer decision for improving farm gate returns
Farmers can pursue an improvement of farm gate returns through adopting alternative business
structures, innovations or practices.
A Farmer’s ability to undertake these initiatives is often constricted by the experience or preference of
their trusted advisors such as accountants, bankers, farm consultants, agronomists, marketers,
agents.
The lack of technical knowhow, the difficulty in finding likeminded business partners and often access
to capital are also factors inhibiting many farm businesses in realising improved returns. The driving
force behind farmers seeking improved returns will always be financial and efficiency returns.
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Risk Management
In terms of the tools, skills and advice farmers need to effectively adapt and respond to risk much has
been achieved over time and larger farm businesses are able to share the load across personnel and
specialise in specific areas of responsibility, for example grain marketing, agronomy, management of
plant and equipment etc. This is a challenge for smaller businesses (single family operators) as the
human resource element is limited to be able to manage the various risk areas of the business
effectively. Small farming businesses have little choice other than to outsource elements of the
business to commercial consultants that obviously adds cost to the business and risk with the
potential for lack of knowledge transfer, and limited understanding of the business from a third party
when making recommendations.
The specific tools of Farm Management Deposits, improved long range weather forecasting and
improved farm business management skills including risk management are all important tools in
managing risk.
Government can play a role in improving farm gate returns in a variety of ways. The achievable returns
for Australian farm bulk product are largely set by international competition but many of the costs are
determined by providers own assessment of the customers ability to pay. The nature of dry land
farming and its reliance on the ‘roll of the dice’ in regard to nature’s inputs requires farmers to have
the capacity to even out income variations. Tax averaging and Farm Management Deposits are
designed to do this but there is a need to recognise that returns have largely stayed in a fixed range
for decades while costs, particularly machinery, fuel and fertilizer have spiralled upwards, unimpeded.
Government can also assist with structural changes to the way industry farms. In many cases the
capital cost of machinery is a farmer’s greatest cost. With a structure that separated land ownership
from operational farming, and then increasing efficiencies through size of operation, farmers could
improve their financial performance.
Biosecurity
Biosecurity is a shared responsibility and has a huge impact on farm viability. This includes threats
from within Australia and also those arriving with imports. Australian Agriculture has a significant
competitive advantage with the present low level of disease and invasive pests. Apart from the
management costs and production losses that exotic pests and diseases would impose, there would
be significant loss of markets and of product value as a result of additional management practices to
address these threats.
The impact and control of weeds costs Australian agriculture more than $4 billion per year. Farmers
consider weed control as one of their highest priorities in preventing long-term land degradation.
The cost to agriculture from wild dogs, rabbits, foxes, pigs,
approximately $745 million in 2009.
pest birds and mice is estimated at
Changing climatic conditions pose another biosecurity concern as pests and diseases move into new
areas.
Improving Drought Preparedness
Government can play a role in improving drought preparedness through ensuring there is consistency
across all levels of government at legislation, administration and regulation, and government
programs /incentives that encourage self-sufficiency.
Farm Management Deposits and taxation
averaging provisions are an essential element of preparedness that recognise the naturally occurring
production and market price fluctuations that are a feature of the industry, regardless of drought.
FMD’s provide an extremely useful drought proofing measure and there needs to be greater
encouragement of their use rather than farmers rely on governments for support once the drought is
established. Of course in many farming enterprises the current maximum levels can be devoured by
farm input costs very rapidly and long before the drought is over.
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An increase in this would support larger businesses (with higher costs – not necessarily the more
profitable businesses as any with very large turnovers are in our marginal areas where drought
preparedness is absolutely essential).
The limits places on farm family trusts with FMDs could be considered so as to make FMDs available
for more food producers. FMDs could also be considered for those businesses directly affected by
downturns in agriculture – eg machinery dealers in small country towns which rely entirely on local
custom to retain their business and staff.
There also could be a need to give consideration for a self managed ‘insurance’ scheme, perhaps as a
mandated contribution based on a percentage of gross income separate but in conjunction with
FMD’s, covering the areas where drought is more prevalent.
Professional development programs for farmers specifically dealing with risk management will
continue to build resilience against drought.
Providing household support at the same levels and support as temporally unemployed workers would
also be a useful initiative in times of drought. It is also important to make available service providers
to keep vital community structures in place. Retirement funds, set aside and to be used exclusively
for that purpose need to be insulated from any eligibility means test to enable intergenerational
transfers to continue and this would encourage the experienced next generation to continue in the
industry.
Subsidised interest rates can also be offered - BUT they need to be available to all affected by drought;
not those just struggling. Previous programs have caused divisions in the community and distort the
value of land and businesses, for example good operators are unable to access market signals and
grow their holdings.
Clearly stating the limits on any future government drought support during better times will give the
message to farmers that they must be self reliant.
One method of self reliance is seeking income diversification through generating off farm income for
example fencing contracting, developing farm stay tourism attractions or outsourcing plant and
equipment for use in other industries for example mining.
Attraction of new farmers
Good Succession Planning is essential in attracting new farmers to the industry. There are many
examples of businesses losing keen farmers due to poor succession planning within family farms.
Further promotion and access to information on effective succession planning would be valuable. Also
promotion of schemes where farmers wishing to retire without family members keen to continue the
business might explore ways to support a non family member entering the business.
Better access to information about agriculture and associated careers within the education system
would also assist in promoting agriculture as viable and attractive career. We have some great schools
in South Australia such as Urbrae Agricultural College, Cleve Area School and Cummins Area School
and ongoing support for them is valuable.
Sadly in South Australia due to cost limitations we lost our Bachelor of Agriculture degree and
Agriculture diploma a few years ago and now only have bachelor of Agricultural Science available. This
has eliminated many students who were very interested in becoming agronomists or farmers who
didn’t have the desire or ability to undertake a science degree.
In order to attract new farmers to the industry we also need to ensure that retiring farmers are leaving
the industry with similar or comparable conditions (eg superannuation) to workers in secondary
industries.
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A major deterrent in attracting new farmers to the industry is the high barriers to entry. Capital
requirements and structures are the main issues particularly for young people who cannot access the
capital to buy farming land and operations. Current structure expectations are that farmers own land
and farm it. If the structures changed and young farmers could farm for perhaps non-farm land
owners then it would be possible to attract new farmers to the industry.
Government can assist this process by providing educational opportunities for young people to
understand farming business and various structures.
3.
Enhancing Access to Finance
Attraction of Private capital
Private capital investors seek to invest large sums of money of $500 million plus. Farming enterprises
seeking private investment need to package up to that size. Educational programs dealing with cluster
development and becoming investment ready including having demonstrated management expertise
would be good initiatives in working towards attracting private capital.
Alternative Financing Models / Business Structures
As banks become more risk adverse and their appetite for lending to marginal farming enterprises
diminishes the need to explore alternative financing models will increase. One option that could be
explored is developing a structured pathway / process to link providers and recipients with identified
project specific options with tradable shares or identified end dates that allow for the variable investor
needs.
In terms of alternate business structures that retain ownership with farm families, options such as
farm business and machinery syndicates and other cooperative structures should be explored. Other
options include families aggregating land parcels and developing a “family oriented” company or
structure that farm the land. Benefits include efficiency, scale, and available labour.
Foreign Investment
Foreign investment evokes mixed attitudes within the farming community. As individual farming
enterprises struggle to remain sustainable, the agricultural industry is likely to see an increase in
corporate ownership of farms whereby economies of scale will be achieved through much larger
parcels of land and the use of larger machinery that can operate at higher capacities.
Corporate ownership also brings with it the likelihood of foreign investment funding these enterprises.
Whilst this may be a way of continuing food production in the region, it is not conducive to sustainable
farming enterprises as we know them today. The social and cultural impacts that this will have on Eyre
Peninsula communities must not be taken lightly.
Foreign investment can best contribute to productivity growth of the agricultural industry by:
•
paying reasonable prices for Australian farm produce.
•
Providing an exit strategy / succession plan to retiring farmers where their land can be sold
to a foreign investor; farm it for them for a period; train up a manager for succession; then
retire.
•
Providing investment in infrastructure including rail, roads, grain handling facilities, and
ports. This investment should provide a “reasonable” return but enhance our operating
environment.
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4.
Increasing Competitiveness of the Agriculture Sector and its value chains
The Eyre Peninsula agriculture industry faces two key challenges in increasing competitiveness. The
first challenge is dealing with legacy infrastructure in dire need of an upgrade that industry cannot
afford to finance. The second challenge is having to operate within a monopolistic environment in
regards to port access. Following is a discussion on these two issues.
Current Port Infrastructure
The region’s Agriculture industry is currently serviced by two ports – Port Lincoln and the Port of
Thevenard.
Port Lincoln
Port Lincoln is one of the best natural deep water ports in the southern hemisphere. The port is the
main export terminal for the region’s grain industry, with Panamax vessel capacity and is the region’s
major deep water port. Its limited land size, multiple land ownership and conflicting user requirements
already make for a congested facility; its future transport task however is forecast to be far greater and
even more diverse than current demands.
With no investment in Port Lincoln’s port and related infrastructure, grain exports would continue, but
current congestion issues between grain and other product handling activities will continue through
the city centre and at the port. Rail unloading operations will become increasingly insufficient as larger
vessel sizes demand greater loading rates. With the fishing and aquaculture industries continuing to
grow across the Eyre Peninsula, limited wharf space will become an even greater issue. Operational
inefficiencies and OH&S issues will be adversely impacted, and some fishing operations may choose to
relocate elsewhere as opportunities arise for improved wharf-related operations.
In addition to this, there is currently restricted space for access, storage and the delivery of iron ore
and/or mineral concentrates at the port. There are a number of factors contributing to this issue, with
the most significant being the train corridor leading into the port and the residential and commercial
build up in the immediate port and central business district areas which has in effect hemmed in the
port facility. This is a disadvantage to the port and in the future it may be a deterrent in attracting new
industries to use the facility in Port Lincoln.
Port of Thevenard
The Port of Thevenard is the major port on the west coast of Eyre Peninsula, South Australia. Major
cargoes handled through the port include gypsum, grain, mineral sands and salt exports. In 2011 the
facility handled 3.0 million tonnes of cargo, an increase of 900,000 tonnes of output in 5 years.
The Thevenard jetty has two berths each capable of handling ships of 198m length overall (LOA) and
28m beam with a berthing pocket 30 metres wide and 9.8 metres deep. A gantry supports a load out
conveyor and a discharge boom with a travel length of 160.5m, capable of bulk loading grain at 750
tonnes per hour and gypsum at 950 tonnes per hour, into ships holds with a maximum outreach of 18
meters.
RDAWEP has identified the re-development of the Port of Thevenard as a major project that will ensure
the long term sustainability of an integrated export Port facility and supply chain logistics system on
western Eyre Peninsula that maximises, over the long term, the efficiency of grain and minerals
exports, storage & handling while minimising the community impacts of changes to the current
logistics system.
The project includes a number of key components which include:
•
The deepening of the Yalata Channel from the existing 8.2 metres to 10.7 metres and
widening of the corners to 150m
•
Increasing the shipping export capability of the Port from 25,000 tonne to 45,000 tonne
capability
•
The upgrade/ replacement of the ship loader with a system capable of operating at 15002000tph
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The main benefits that accrue from the re-development of the Port of Thevenard including the
deepening of the Yalata Channel and associated supply chain infrastructure ensures the long term
viability of Thevenard as a future export facility for grain, gypsum, and salt. At the same time it will
secure the Port as the preferred export facility for all new mineral export products in the region. The
additional services provided by this infrastructure will provide essential inputs to regional
competitiveness, production and sustained economic growth on western Eyre Peninsula.
As in Port Lincoln, the fishing industry utilises the Port of Thevenard and experiences limited wharf
space. Operational inefficiencies and OH&S issues associated with congestion are a major issue and
the District Council of Ceduna has been seeking support to develop the Thevenard Marine Off Loading
Facility to relocate the fishing industry and relieve this congestion at the main wharf.
The great positive for Thevenard is that it services the needs of a remote area and it embraces
multipurpose use which is a highly desirable feature. It is unlikely that any of the individual
commodities being exported through Thevenard could justify a port in their own right.
This project is now reliant on the owner of the grain handling infrastructure (Viterra / Glencore)
investing in the upgrade of the belt loader. To date, Viterra has initiated engineering investigations
into the existing loader capabilities to be upgraded.
2003
2004
2005
2006
2007
2008
2009
2010
2011
Thevenard
1,778,421
1,680,385
1,814,575
1,955,008
1,888,207
2,071,234
1,959,234
2,704,559
3,000,528
Port
Lincoln
1,534,472
1,877,392
1,204,644
1,711,542
765,575
945,934
1,225,940
2,257,835
2,578,253
Port Giles
436,498
699,152
399,845
542,081
154,102
362,472
305,949
520,987
1,043,882
Wallaroo
219,474
706,939
340,704
425,330
165,391
424,866
505,530
702,524
908,937
Port Pirie
588,207
403,837
407,121
313,467
272,397
298,232
669,958
519,336
203,101
Flinders Port Shipping Statistics
Current Rail Infrastructure
The Eyre Peninsula’s railway network is an isolated and aged narrow gauge railway system that is not
connected to the national standard gauge network. This prevents agricultural commodities from being
transported to national markets by rail.
The railway lines link the Port of Thevenard at Ceduna to Port Lincoln via a route passing through
Wudinna, Lock and Cummins. A branch line extends eastwards from Cummins through Ungarra,
Rudall and Kimba terminating at Buckleboo in the north of the region. These railway lines were
previously used exclusively to transport grain to Port Lincoln for export.
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North of Cummins, a small spur line extends approximately 50kms from Yeelanna to Kapinnie.
Another line stretches from Thevenard to Kevin (near Penong) approximately 70kms west of Ceduna,
and is used for hauling gypsum for export from Thevenard Port. The Trans Australian Railway Line
passes through the northwest of the region through Cook, south of the Maralinga Tjarutja Lands, but
this standard gauge interstate line comes from Port Augusta and is not connected to the Eyre
Peninsula rail network. This line is owned and operated by the Australian Rail Track Corporation
(ARTC).
A standard gauge railway line running north from Whyalla to Port Augusta is the only line connecting
the region to the national standard gauge network. This line services and terminates at the Arrium
steelworks factory in Whyalla.
Figure : Eyre Peninsula Rail Network.
Arrium is the owner of a rail line system between the Whyalla steelworks and iron ore mining
operations at Iron Knob, Iron Baron, and Iron Duke. This is a separate isolated narrow gauge system
that is not connection to the Eyre Peninsula rail network.
The Arrium railway line is operated by Genessee and Wyoming Australia (GWA). In August 2013 GWA
invested $50 million to purchase a new locomotive for this line network to support Arrium’s mining
operations and port expansion.
The Eyre Peninsula rail network is generally in poor condition. The Wudinna to Port Lincoln line and
parts of the Kimba to Cummins line have been refurbished. This upgrade increased line capacity to
handle a maximum average axle load of between 14 and 15 tonnes. Grain train operations have been
curtailed between Buckleboo and Kimba on the eastern line and Wudinna to Thevenard on the western
line. The line north of Ungarra is generally in very poor condition and the Yeelanna to Kapinnie line
has been closed. The poor state of the rail network has resulted in grain being hauled from rail depots
to ports by road, which is escalating road train use and exacerbating pressure on the road network.
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During 2013, Viterra changed grain delivery arrangements across the Eyre Peninsula with grain
deliveries to Port Lincoln restricted to farmers within a local delivery zone. These arrangements have
forced farmers outside the local delivery area to transport grain to different up country silo sites. This
has further diminished the use of rail for grain transport and led to a marked increase in road trains
across the region.
Although some rail lines are now dormant the rail owner, GWA, is required under the lease agreement
with the State Government to keep the lines maintained in a ‘fit for purpose’ condition to enable rail
vehicle use of the line. GWA owns the rolling stock and operates all rail services on the Eyre Peninsula.
Current Road Infrastructure
The Agricultural industry are heavy users of local roads on Eyre Peninsula and this usage is on the rise
as discussed previously in the Rail Infrastructure section.
The region’s eleven local Councils collaborate through the Eyre Peninsula Local Government
Association (EPLGA) to develop a strategic regional roads plan which is supported by funding from the
Special Local Roads Program.
Road maintenance and development is a major financial burden for the Councils due to the size of the
road network and limited ability to raise capital from the ratepayer base. The extent to which the
Local Government road priorities are implemented remains subject to the funding provision from the
Special Local Roads Program.
Local Governments are under constant pressure to provide roads suitable for local farmers whom
make up the majority of their rate payer base. Firstly roads must be assessed to ensure they are fit for
purpose and this comes at a cost. Once assessed, upgrades are likely to be required to meet
specifications for intended use. In many cases this requires widening roads which in turn requires
removal of native vegetation. Under the Native Vegetation Act councils are required to purchase
offsets to compensate for the loss in native vegetation providing another financial burden. Lastly the
cost of the physical upgrade is also incurred to meet specification. These costs are often not able to be
shouldered by small district councils, which leads to an inefficient road network and the inability for
farmers to upgrade grain handling plant to streamline their business operations.
In addition to this, the size of the farm machinery once folded up for transport interferes with the
canopies of road side trees requiring trimming and maintenance by local councils – again with Native
Veg cost implications.
Road Developments to Improve Safety – Highway Passing Lanes
The region’s highway network only has two passing lanes located on the Flinders Highway at the
western outskirts of Port Lincoln. Increasing use of the highways by grain road trains and a growing
self-drive tourism sector – notably grey nomads towing caravans or driving large mobile homes and
fifth wheelers - has led to local demand for the strategic installation of passing lanes to improve road
safety.
This need is recognised by the RDAWEP Board, the EPLGA and the City of Whyalla.
If mining operations and industrial developments are established in the region at the rate anticipated
and grain cartage by road trains continues to increase, then significant road upgrade works and
improved road maintenance programs will be necessary to provide appropriate road infrastructure and
enhance road safety.
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Port Lincoln Heavy Vehicle By-pass
The need for a heavy vehicle by-pass at Port Lincoln for vehicles entering the city from the north along
Lincoln Highway has long been recognised. At present, heavy vehicles including double road trains
travel to the port and silo area through the heart of the Port Lincoln CBD and retail sector. The
vehicles need to negotiate four roundabouts and one set of pedestrian lights in this process.
This route is particularly problematic during the 6-8 week grain harvest season which brings a larger
number of road trains into the CBD. There is traffic conflict between heavy vehicles and parental
transport at four schools along the route and many people regard this situation as having considerable
potential for accident.
Increasing use of road trains for grain transport is placing considerable pressure on the CBD road
network, which was not designed for such use.
Tod Highway
The Tod Highway is a key north-south link between Kyancutta and Port Lincoln and a key route for
grain road trains. Approximately 100kms of the highway between Kyancutta and Karkoo has yet to be
widened. This has become problematic as trucks and road trains have become larger and wider. This
section of the highway is so narrow that several incidents have been reported of truck side mirrors
clipping each other because the drivers are reluctant to steer off the bitumen onto the dirt road
verges. The EPLGA has written to DPTI about this matter in the past.
The need for improvements to the Tod Highway is identified in the draft SA Government Integrated
Transport and Land Use Plan. The proposed upgrade works include road widening, shoulder sealing
and the provision of rest areas.
New Port Development Projects to benefit Agriculture
Since the privatisation and monopolisation of the state’s grain storage, handling and export
infrastructure, Eyre Peninsula farmers and the wider rural community in general, have been highly
focused on the development of a new, competitive grain export terminal on the Eyre Peninsula. It is
widely held that an open access, competitively managed grain terminal on the Eyre Peninsula with the
opportunity for grower equity involvement will bring about substantial long term competition and
reduced grain export costs for all industry participants.
Growers are currently faced with significant charges to get their grain on to export ships. Receival and
export handling costs are a significant portion of each individual farming enterprise and given the
current monopolistic situation on Eyre Peninsula there is little farmers can do to manage this risk.
Eyre Peninsula growers face significant charges in getting grain from their local receival site on to the
ship. Prices per tonne range from $41.39 to $57.39 which is a significant proportion of input costs for
growers and can severely impact profitability and therefore long term sustainability of farming
enterprises across the region.
The vessel booking fee of $5 per tonne Viterra charges other grain marketing companies which in turn
is passed on to growers makes it restrictive for those marketing companies to participate in this
market. This cost is considered by grain growers to be a cash cow for Viterra, provides no benefit to
the industry and is anticompetitive from a grain marketing company view point.
With the transition from a grower owned co-op to corporate ownership of infrastructure there is a lack
of investment into key supply chain infrastructure such as the rail network which encourages
inefficiencies. Farmers have also lost transparency of costs through the supply chain.
Page 12
The financial benefit to having an alternative export port to Viterra’s operation on the Eyre Peninsula is
forecasted to reduce FOB’ing costs by approximately $5 per tonne and in addition provide a direct
freight saving of $5 per tonne to up to 50% of the region’s grain growers. These figures translate to
the following economic benefits to the industry as a whole:
Description
Anticipated Saving
(per tonne)
$5
$5
FOB’ing
Direct Freight
Total
Volume
(tonne)
1,500,000
750,000
Total Saving
(per annum)
$7,500,000
$3,750,000
$11,250,000
Impact of Supply Chain Costs on a farming enterprise at $220 per tonne (Wheat)
250
220
220
220
200
150
100
57.39
48.42
41.39
50
0
Wudinna
Rudall
Storage & Handling
Edillilie
Wheat Price
Following is a summary of the alternative export port facilities being investigated on the Eyre
Peninsula.
Cape Hardy
Iron Road Limited’s Central Eyre Iron Project at Warramboo, near Wudinna, is the biggest magnetite
resource project in Australia and one of the top 20 projects in the world. The mine has an estimated
magnetite reserve of 3.7 billion tonnes, and a 30+ year life based on exporting an average of 20
million tonnes per annum.
To get the resource to export Iron Road is pursuing the development of a new port at Cape Hardy,
7km south of Port Neill and approximately 15kms north of Port Spencer. Both port sites are within the
District Council of Tumby Bay. The estimated capital development cost for the port is US$0.49 billion.
The Cape Hardy port will have the capacity to load Cape sized vessels for the export of minerals and
other products through the provision of a 1.4km long jetty. The port proposal includes the provision
of a new 150km infrastructure corridor from the mine to the port, which will include the construction
of a new standard gauge railway line, a power transmission line and a pipeline to supply saline ground
water 60km to the mine site.
Page 13
The port will be sited on 1,100 hectares of land and will have export capacity of 30 million tonnes per
annum (mtpa) initially, which allows 10 mtpa for third parties. The port is being designed as multimulti
commodity facility enabling the export of grain
grain. However, third party users and grain exporters will
need to provide their own storage facilities and handling conveyors and seek their own development
approvals.
Port Spencer
Centrex Metals mining venture at Wilgerup originally intended to export the iron ore from Port Lincoln.
The proposal was opposed by the Port Lincoln community and alternative
ternative port options were
investigated.. A site at Lipson Cove
Cove, north of Tumby Bay, was identified
dentified as an ideal port location
because the site:
•
•
•
•
•
Is central to several iron ore deposits on the Lower Eyre Peninsula,
Is only 5kms from the Lincoln Highway and 27kms from rail infrastructure at Ungarra,
Has access to 20+ metre deep water within 5
515 metres of the shoreline (thereby
(
accommodating Cape class vessels without the need for dredging, and minimising the cost of
jetty infrastructure),
Did not have any native vegetation issues (because the adjacent land had been denuded of
vegetation through broad acre farming practices), and
Had no Native Title issues.
Port Spencer is being developed primarily for the iron ore mining operation at Wilgerup and the Fusion
JV with Eyre Iron Pty Ltd at Koppio. However grain will also be exported from the facility and Free Eyre,
an Eyre Peninsula based farmer owned agricultur
agricultural
al company, is part of the design team investigating
the viability of grain export (using
using smaller Panamax sized vessels).
Centrex planned to develop the port in stages. Stage One will establish the base infrastructure and
accommodate the delivery of grain and haematite (from Wilgerup) by road trains. Stage Two will
enable magnetite to be delivered from the Koppio mine via a 40km underground slurry pipeline, with
the water provided from a 5GL desalination plant. The desalination plant will be of modular
construction
struction enabling upgrade to about 20GL capacity if needed. Future stages would
w
enable the
delivery off haematite and grain by rail via a proposed narrow gauge spur line from Ungarra.
Figure 3D Image Model of Port Spencer Development.
Page 14
In September 2013, Centrex made a decision to reschedule its mining projects in line with changing
market conditions. Centrex signed an MOU with WISCO to re-scope the project and reassess the
resource base. In short, the various mining projects moved back to the prefeasibility stage which will
take approximately 1-2 years to complete.
Centrex also reassessed the Port Spencer development and, in November 2013, released an ASX
announcement regarding the adoption of transhipment technology to reduce the establishment capital
developments costs of Port Spencer. The transhipment process is proven technology that has been by
Arrium at Whyalla for many years. The technology comprises a self-powered docking vessel which is
loaded with ore, which is then transferred to a Cape class vessel moored in Spencer Gulf. The use of
this technology will bring many costs and other benefits to the Port Spencer development, including:
•
•
•
Reduction of the jetty length from 515 to 200 metres,
Reduction of the capital development cost to $142 million,
Overcoming the need for tug boats and tug berthing facilities – thereby reducing operational
costs compared to traditional transhipment processes.
The use of larger and multiple transhippers retain the ability to export larger commodity volumes in
accordance with market demand. The export of grain is also retained, and the onshore port
infrastructure design enables future expansion to accommodate third party users
Port Bonython
A new multi user port facility suitable for export of bulk minerals via Cape Size bulk iron ore carriers
(180,000 Tonne) has been proposed at Port Bonython by the Spencer Gulf Port Link Consortium who
would construct and operate the facility. The consortium is comprised of Flinders Port Holdings,
Leighton Contractors, Macquarie Capital, BIS Industrial Logistics and ARTC. The project is relatively
advanced with State and federal approvals well underway.
The facility would be scalable and able to export more than 50 million of tonnes of bulk cargo each
year when fully developed. This port project is not broadly popular for the Agriculture industry due to
location and shipping accessibility.
Lucky Bay
An alternative port solution, a Common User Export Facility (CUEF), is currently being developed at
Lucky Bay, north of Cowell, using a transhipment system to get the iron ore to market. The facility is
being developed to support IronClad Mining Limited’s mine operation at Wilcherry Hill, north of Kimba.
In addition to the operational cost savings, transhipment technology has several other advantages
compared with a typical deep water bulk commodities port. The system overcomes the need to
construct expensive jetty infrastructure to access deep water and can be established at a fraction of
the cost.
The CUEF infrastructure provision also has the advantage of a much shorter construction timeframe
(i.e. about 5-6 months) and less environmental impact than a traditional deep water bulk commodities
port. The combination of less capital investment and a smaller development period means that
transhipment technology is better suited to the needs of smaller or junior mining companies, many of
which are pursuing operations on the Eyre Peninsula.
Grain will also be exported from the facility which makes the Lucky Bay CUEF critical infrastructure for
the Eyre Peninsula’s Agriculture industry and fast developing mining operations that are close to being
production ready because there is presently no other realistic option for the provision of a bulk
commodity minerals export facility or alternate grain export facility within the next few years.
Page 15
The Lucky Bay CUEF will be able to service the agricultural industry and mining companies well into the
future because the facility has the capacity to grow as export tonnages increase. When fully developed
with a permanent floating harbour moored in Spencer Gulf, the CUEF will be much more efficient and
cost effective and will be able to export the product of other users.
Development approval was given in December 2013 and the project aims to be operational in late
2014.
Port Lincoln Fishing Industry Facility – Lukin Quays Development
A Port Lincoln Wharf Relocation Committee was formed in 2012 to pursue the development of a
purpose built offloading facility for the fishing industry. The committee, comprising representatives of
the fishing industry and RDAWEP, supported the Ports Master Plan proposal to develop a facility at the
former BHP wharf in Proper Bay and undertook preliminary consultation about the site potential.
The key stakeholders included the tuna, sardine, prawn, rock lobster, mussel, abalone and kingfish
industry sectors and the consultation was being undertaken to ensure that the wharf upgrade and
design would meet the needs and expectations of the different seafood sectors.
The wharf proposal is part of a larger project to develop adjacent land inclusive of an industrial
precinct, a residential development and a golf course, to provide the capital to enable the development
to proceed.
Figure : Lukin Quays Development Proposal.
The plan also includes a new western link road that will help address traffic problems in the Port
Lincoln CBD, particularly existing fishing industry truck and heavy vehicle movement between the Port
Lincoln wharf and the Port Lincoln Marina where most of the fishing industry vessels are presently
based.
If successful this project will reduce congestion issues at the Port Lincoln wharf and reduce pressure
on the Port Lincoln CBD road network therefore benefitting the agriculture industry.
Page 16
Thevenard Marine Offloading Facility
Similar to the Lukin Quays development, the Thevenard Marine Offloading Facility aims to relocate the
fishing industry from the Port of Thevenard.
Much of the wild catch seafood is caught in the southern waters of Eyre Peninsula. However, the Great
Australian Bight (GAB) fishery is one of the richest and largest untapped resources in Australia. In
recent years industry interest in fishing the far west coastal waters has increased significantly. Growth
opportunities exist for most fish species, but the best commercial options are for sardines, skipjack
tuna, blue mackerel and rock lobster.
Ceduna is the closest regional centre to the GAB fish resources and Thevenard is the only port facility
on the far west coast with the capability to handle commercial fishing vessels. Subject to the actual
location of fishing resources, the GAB fishing grounds are approximately 300-400 kilometres south
west of Ceduna, 600-700 kilometres west, south or north west of Port Lincoln, and 700-900 kilometres
from Port Adelaide.
For operational, economic and product quality reasons, GAB fishing companies have preference to
unload their catch at Thevenard and transport the product to buyers by road transport, rather than
steam their vessels to other ports.
The viability of fishing operations from Thevenard Port is at risk due to wharf access restrictions which
are constraining fishing operations and profitability. Bulk export vessels presently have priority use of
Thevenard wharf. When export vessels are being loaded, fishing vessels need to either wait for wharf
access or steam to Port Lincoln or Port Adelaide to unload their perishable catch. The wharf access
constraints also prevent fishing operators from servicing and maintaining their vessels at Thevenard,
resulting in substantial costs to undertake this work at other ports.
If successful this project will reduce congestion issues at the Thevenard wharf therefore benefitting
the agriculture industry.
5.
Enhancing contribution to regional communities
Communications
The provision of reliable and fast communications infrastructure is critical to contributing to regional
communities. In 2011, Internet broadband connection in private dwellings in the region, Whyalla, Port
Lincoln and Ceduna were below the rates for South Australia and Australia but, with the exception of
Whyalla, dial-up and other connection systems exceeded the State and Australian rates.
Access
Home
to
Internet
at
Whyalla
Port
Lincoln
%
(Proportion of Occupied
Private Dwellings)
Ceduna
Region
Australia
%
South
Australia
%
%
%
%
55.6
57.5
53.3
56.3
63.5
67.1
With dial-up connection
2.5
3.0
2.7
3.2
3.5
2.9
Other connection
3.5
4.7
4.3
4.4
4.1
3.9
With
connection
Broadband
Table : Access to Internet at Home in the Region, South Australia and Australia. (ABS, 2011).
Page 17
National Broadband Network
Telecommunications in the region will be substantially improved with the roll out of National
Broadband Network (NBN) infrastructure. The NBN will deliver fibre-to-the-premises in Whyalla, Port
Lincoln, Kimba, Cleve, Cowell, Tumby Bay and Ceduna. Other towns will receive wireless or next
generation satellite services.
The roll-out program for the region (at June 2013) was:
•
•
•
•
•
•
Whyalla – construction has commenced at the new Jenkins housing estate, but connection for
the rest of the city will occur January 2014 to June 2015.
Port Lincoln – construction has commenced at the New West Road housing estate, but
connection for the rest of the city will occur from March 2016.
Cowell and Kimba – construction from September 2014.
Cleve – from December 2014.
Tumby Bay - from September 2015.
Ceduna – from June 2016. (www.nbnco.com.au/roll-out map).
The delay in the roll-out is disappointing for the region but the process is being driven by cost
efficiencies, project logistics and the principle of providing priority connection to people who presently
have limited or no access to broadband services. When completed, 93% of premises across Australia
will receive broadband via fibre optic cable, but the remainder – which includes the bulk of remote
communities – will be served by a combination of next-generation fixed wireless and satellite
technologies, 4% via fixed wireless and 3% via satellite. Cummins will be among the 4% of towns to get
the fixed-wireless alternative and the rest of the Eyre Peninsula, including Elliston and Streaky Bay, will
have satellite.
Concern has been expressed that the inferior wireless and satellite services may disadvantage some
farming businesses and households. Whereas fibre to the premises technology will provide broadband
speeds of up to 100 megabits per second, the wireless and satellite services will provide download
speeds of 12 megabits per second.
Some of the smaller towns in the region with satellite services might be disadvantaged in comparison
with larger regional centres. However, NBN Co has confirmed that smaller towns that only receive a
satellite connection will be able to use services such as E-health (on-line electronic health support)
because the new satellite services will be superior and have the speed capability to send and receive
large files.
One issue is that NBN Co has a town size threshold which means that some smaller towns (including
those with hospitals, such as Wudinna) might not be connected to fibre even if the infrastructure runs
past the town. NBN Co is reviewing its Extension Policy so there is a chance that the fibre connection
of some towns might be reconsidered. RDAWEP will argue for fibre connection wherever possible. The
NBN rollout will provide opportunities for on-line business growth. RDAWEP will foster business use of
the Internet through forums and workshops to encourage development of the region’s digital
economy.
Mobile Communication Coverage
Mobile communication coverage presently extends across the region via Telstra Next G and 4G
networks, giving a level of broadband and mobile phone service to most rural townships and
communities. Other network providers (Optus and Vodafone) have expanded their coverage in recent
years and offer service alternatives, mainly in or near the cities of Port Lincoln and Whyalla.
But many areas near these cities suffer from communication black spots with fluctuating and nonexistent mobile phone and wireless broadband reception. The black spots are largely caused by local
topography and signal impact from the ocean at coastal locations.
Page 18
Mobile Coverage Program
The Australian Government announcement of a $100 million program to improve mobile coverage and
competition across regional Australia is welcomed by the region’s farming community.
This Program includes two complementary components:
•
$80 million Mobile Network Expansion Project – to improve mobile coverage along major
transport routes, in small communities and in areas prone to experiencing natural disasters.
•
$20 million Mobile Black Spots Project – to improve mobile coverage in locations with unique
coverage problems, such as areas with a high demand for services during seasonal holiday
periods. Under this program component, the Government was seeking to establish a list of
locations that receive no or poor mobile coverage.
This listing would assist to determine the optimum location of new base stations proposed in the
previous component, but the base station selection is linked to a community stakeholder expression
of interest process involving co-contributions (either in cash or in-kind).
In order to prepare for the latter, RDAWEP and the EPLGA jointly initiated a black spot survey with the
11 member Councils of the EPLGA in February 2014. The survey is continuing to ensure that a
comprehensive black spot listing is compiled for the region.
The lack of signal is severely impacting the ability of agricultural businesses to operate efficiently and
effectively in today’s digital world.
Mobile Coverage and the NBN Program
The NBN will not improve mobile telephone services because they use different communication
systems. But, if the RDAWEP region is to be economically competitive and be marketed as a quality
place in which to live and work, it is reasonable to expect that mobile signal will not drop out during
phone calls, especially when the caller is in direct line of sight to major regional centres.
Impact of growing regional centres and diminishing remote centres
Growing regional centres improves social infrastructure including schools, hospitals, medical facilities
and sporting facilities. It also underpins a vibrant small business sector. Strong regional centres
improve workforce attraction.
Diminishing remote centres isolate families and reduces the opportunity for social interaction. Folding
of sporting teams, reduced services and access to day labour are all inevitable outcomes of
diminishing remote centres. This subsequently adds costs for farm businesses e.g. travel and time,
and the impact on mental health with limited outlets from the stress of business.
Attracting the next generation
In order to attract the next generation of farmers the structure of farming will need to change because
the capital requirements are great. Older farmers need to let go and let younger and new participants
in. For this to occur there needs to be a way to free up capital for retirement / superannuation without
selling the farm.
Farming as a career needs to be marketed more effective to improve public perception. There are
many young people particularly in regional areas that would just love to go farming. To help these
people realise this dream they need a good understanding of farming and farm management, they
need a positive and realistic attitude, and a good work ethic. They must have a vision for the long
haul. Most of this can come from education.
Page 19
6.
Improving Competitiveness of inputs to the supply chain
Protection of our Natural Resource
The industry has demonstrated its commitment to natural resource management and taken giant steps
in this regard in the last decade using its own resources and setting its own goals. Examples of this
include R&D investment and extension of research results, and GM crops.
Extension – taking knowledge to farmers from research and extension is very valuable. Local Natural
Resource Management boards are increasingly filling this area where State Government t has reduced
its services over the last 20 years.
Regional and local grower groups are also playing a significant role in extension and support of
adoption. These mainly volunteer community based groups allow growers to learn from each other,
receive contributions from specialist experts, and through taking part in and observing regional and
local trials and demonstrations.
Dissemination of research is fundamental to adoption of new practices and technology and is accepted
and implemented more readily by the farming community when driven and delivered by local
expertise.
This is highlighted by the agricultural industry improvements generated through the SARDI Research
Centre at Minnipa, the leading research and development agency into dry land farming systems in the
low to medium rainfall zones of Southern Australia and SARDI in Port Lincoln with its leading research
into canola, legume and cereal production and diseases and the two main farming systems groups;
Eyre Peninsula Agricultural Research Foundation (EPARF) and the Lower Eyre Agricultural Development
Association (LEADA) who through their networks, disseminate the outcomes of better sustainable
framing practices.
Provision of Skills and Training
Technical skills can be delivered through on farm training and agricultural schools education. The
State Government’s price banding has made this very difficult for the agriculture industry. Courses
have increased in cost by three fold in some instances due to a change in the price banding for
agriculture. This removes any incentive for our young people to consider agriculture as a career.
Management skills can be delivered to the agricultural workforce through workshop professional
development and the Agricultural colleges. Eyre Peninsula has excellent operators who have been
influenced by both of these streams.
Farming is now a very complex occupation and individual farm members are required to specialise in
specific facets of the business. In addition there is significant growth in the range and number of
commercial providers that has opened up new employment opportunities. Single entity operations
are particularly disadvantaged.
Workforce Attraction
Age Profile of the Regional Workforce
Population ageing is clearly reflected in the regional workforce, which has an older profile for most
industry sectors than South Australia and Australia. 43.8% of the region’s workforce is aged 45 years
or older, compared with 42.2% for South Australia and 39.9% for Australia.
Page 20
Workforce – Industry by Number
Aged 45 Years or Older
Region
South Australia
Australia
No
aged
45 or older
%
No
aged
45 or older
%
No
aged
45 or older
%
Agriculture, Fishing and Forestry
1,781
52.7
16,585
57.6
149,007
59.6
Mining
306
31.1
3,563
36.9
62,136
35.2
Manufacturing
1,120
39.6
33,041
42.4
385,840
42.7
Electricity, Gas, Water and Waste Services
103
42.6
4,259
42.9
50,347
43.5
Construction
694
39.8
20,804
37.4
29,969
35.3
Wholesale Trade
319
42.3
11,351
43.9
167,763
41.5
Retail Trade
924
34.1
25,399
30.6
327,942
31.0
Accommodation and Food Services
536
33.8
10,779
23.3
158,357
24.3
Transport, Postal and Warehousing
710
57.6
16,108
52.5
239,977
50.1
Information Media & Telecommunications
62
41.0
3,671
34.7
57,055
32.0
Financial and Insurance Services
161
42.3
8,811
40.0
119,814
31.8
Rental, Hiring and Real Estate Services
113
47.3
4,477
47.4
66,732
42.0
Professional Scientific & Technical Services
253
39.7
16,249
40.1
266,332
36.5
Administrative and Support Services
359
47.5
11,592
45.6
130,813
40.4
Public Administration and Safety
553
47.8
24,023
46.0
298,791
43.3
Education and Training
915
46.7
30,551
52.1
398,119
49.5
Health Care and Social Assistance
1,520
50.9
50,511
50.2
561,468
48.0
Arts and Recreation Services
61
44.2
3,158
33.9
48,610
32.0
Other Services
347
37.4
11,704
40.6
142,531
37.7
Inadequately described/not stated
242
46.6
5,823
41.9
92,581
39.6
TOTAL
11,079
43.8
312,028
42.2
4,017,184
39.9
Table : Industry by Number Aged 45 Years or Older. (ABS, Census 2011).
By industry the region’s transport, postal and warehousing sector has the oldest profile with 57.6%
aged 45 years or older, followed by primary production (agriculture, fishing and forestry) at 52.7%, and
health care and social assistance at 50.9%.
Across Australia, the primary production industry has the oldest workforce profile with 59.6% aged 45
years and older. The region’s primary production profile is marginally younger by comparison, and
younger than the South Australian profile of 57.6%.
Page 21
Regional Workforce 65 years and over
According to the ABS, people aged 65 years and over constitute the fastest growing age group in
Australia. The growth rate for the over 65 sector was 3.7% in 2013 compared with 1.4% for the
working age population and 1.7% for children. The number of people in Australia aged 65 and over
increased from 11.6% of the population (2.1 million people) in 1993 to 14.4% (or 3.3 million people) in
2013. The ABS also predicts that the number of people aged over 65 will double to 6.8 million people
by 2040.
The ageing of the Australian population has serious implications for workforce development because a
surge in retirements will shrink the pool of skilled and experienced workers in forthcoming years.
Workforce ageing is a becoming major issue in South Australia because population projections indicate
that the proportion of South Australians aged 65 and over will increase to 22.6% in 2020 and 25.7% by
2030.
A more detailed age breakdown of the regional workforce indicates that in 2011, 949 people or 8.6%
of the workforce had already reached the retirement age of 65 years and over. Most of this sector (845
people) was aged 65-74 years. The majority were employees in the primary production (agriculture and
fishing) industry – 301 people or 35.6% - followed by employees in health care and social assistance
(69 or 8.2%) and the retail sector (60 people or 7.1%).
The primary production industry also had the largest representation of employees aged 75 years and
over, comprising 48 people or 46.2% of this age sector.
Regional Workforce – Industry by Number
Aged 45 Years and Older
45-54
Years
55-64
Years
65-74
Years
75-84
Years
85 and
over
Total
% Workforce
Agriculture, Fishing and Forestry
803
629
301
45
3
1,781
52.7
Mining
213
83
10
0
0
306
31.1
Manufacturing
733
346
38
3
0
1,120
39.6
Electricity, Gas, Water and Waste Services
50
50
3
0
0
103
42.6
Construction
365
291
38
0
0
694
39.8
Wholesale Trade
177
112
25
5
0
319
42.3
Retail Trade
533
325
60
3
3
924
34.1
Accommodation and Food Services
325
185
26
0
0
536
33.8
Transport, Postal and Warehousing
384
270
56
0
0
710
57.6
Information Media & Telecommunications
37
19
3
3
0
62
41.0
Financial and Insurance Services
97
57
7
0
0
161
42.3
Rental, Hiring and Real Estate Services
70
37
6
0
0
113
47.3
Professional Scientific & Technical Services
129
89
32
3
0
253
39.7
Administrative and Support Services
196
141
22
0
0
359
47.5
Public Administration and Safety
308
212
33
0
0
553
47.8
Education and Training
497
363
50
5
0
915
46.7
Health Care and Social Assistance
913
532
69
6
0
1,520
50.9
Arts and Recreation Services
26
29
6
0
0
61
44.2
Other Services
178
140
26
3
0
347
37.4
Page 22
Inadequately described/not stated
92
94
34
19
3
242
46.6
REGIONAL TOTAL
6,126
4,004
845
95
9
11,079
43.8
Table : Regional Workforce by Industry Aged 45 Years and Older. (ABS, Census 2011).
Based on ABS 2011 Census data for the regional industries, over 11,000 workers (approximately 40%
of the regional workforce) will leave their jobs within 20 years if they all retire at 65 years of age. Over
4,500 positions will become vacant by 2020 if workers aged 55 years and over retire within 6 years.
The biggest impact will be in the transport, postal and warehousing industry, the primary production
industry and health care and social assistance where 57.6%, 52.7% and 50.9% respectively of the
industry workforces are over 45 years of age.
The challenges of an ageing population and workforce, a small replacement work pool, and
educational qualifications are significant. Recruitment difficulties and competition for labour are
compounded in the agricultural sector. Impediments to the development of a skilled agricultural
workforce include:
•
•
•
•
•
The competitive labour market is making it difficult to attract and retain workers.
The poor image of the agricultural industry makes labour attraction difficult – i.e. seasonal
employment and negative messages about agricultural working conditions.
The ageing agricultural workforce is posing a substantial challenge to maintaining the
industry’s workforce capabilities.
Rural locations deter people from relocating to and staying in regional areas.
The number of employees in the agricultural industry with formal qualifications is
comparatively lower than in other industries, and many agricultural workers have skills which
have not been formally recognised.
Even though employment in the region’s agricultural sector has declined by 16.8% since 2011, there is
a need to provide more accessible training programs to improve workforce capability and provide
formal qualifications. Work also needs to be done by farmers employing staff. It is important for farm
managers to have sound human resource management skills and to understand the benefit of
providing career pathways for employees.
Regional educational facilities are critical for promoting career pathways in agriculture and should be
supported by government. Eyre Peninsula has a number of fine examples of educational facilities to
deliver skills training in the region including the Cleve Area School Sims Farm project, Minnipa
Agriculture Centre, and Cummins Area School. Removing price banding on Agriculture study is
essential to ensure sustained demand for training in agriculture.
Improvements in the Research, Development and Extension
Government should recognise and support the numerous hands on groups working in the
development and extension field in agriculture and seek their input into the process.
Increasing productivity is the key to economic growth in the agricultural sector. There is a need to
increase government inputs into Research, Development and Extension (RD&E) as these are the key
drivers to increasing productivity in the sector. Governments have a role to play in facilitating RD&E as
they are impartial and have no commercial interest. Often there is a market failure and all but the few
leading businesses can afford to invest in their own R&D.
In the last 20-30 years, there have only been small incremental gains in research. As research inputs
have been falling away, looking to the future there will be nothing to build on. This could result in a
flattening out of productivity gains and the sector losing its competitive advantage. By becoming less
profitable, farming may not be able to keep up with the cost-price squeeze it has been subject to for
the last 50 years. Even today, when inputs are cut to maintain profitability this often results in a loss of
peak of gross production and therefore a net loss for the state’s GDP.
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Governments also need to recognise that the policy direction they set has a marked effect on the
direction research activities take for example the GM free SA or the carbon tax. We need to find the
next large “step change” in agriculture such as the green revolution of the 70’s and dwarf plant
varieties to keep ahead of the food security needs heading into the future.
Research into innovation in Agriculture should also be encouraged. An example of this is trailing the
growing of Guar in Australia to meet the demand from the emerging oil and gas industry. Guar is
predominantly grown for its Endosperm, which is powdered and is known generally as Guar Powder or
Guar Gum. Once milled, the basic use of Guar gum is to add viscosity to a liquid, such as ice cream,
cream cheese, BBQ sauce, Orange Juice, or cat and dog food. Guar has applications in paper,
explosives and most recently in oil and gas well drilling for “fracing”.
Transport, Storage and Infrastructure Requirements
The state of Eyre Peninsula’s legacy infrastructure and the need for investment in ports, rail and road
has already been highlighted in this paper.
This region needs a fully integrated and unrestricted self funded competitive rail/road freight
movement system.
The long-haul freight movement should surely be rail for example Canada’s
system.
Existing Port and grain handling infrastructure needs improvement. Roads badly need investment and
this should not be the sole responsibility of local government.
New transport infrastructure requirements to support the mining industry development on Eyre
Peninsula could be the enabler for the upgrades the region requires. Government investment or
underwriting as a minimum is essential to enable these nation building projects.
Other Input Costs
Input costs have an obvious risk factor in the percentage ratio, cost versus ultimate returns, driven
directly by the natural experiences and vagaries of weather, insufficient or untimely rain, frost or early
onset of hot temperatures
Cost of Transport
The disproportional increase in registration fees from singles to road trains and B trains makes it cost
prohibitive for farmers to select the most efficient transport mode for carting grain. These fees have
doubled recently and this does not encourage investment in the most efficient farming systems.
In addition to addressing registration fee increases, there is also a need to encourage advancement in
road transport capacity through introducing larger payloads. Western Australia demonstrates a system
of efficient combinations and South Australia should follow suit through a change in legislation
allowing these vehicle combinations.
The proposed permit system for farm machinery in South Australia is also of great concern to the
Agriculture industry. The proposed system seeks to introduce permits and registration not only for
road trains but also for tractors and farm machinery. This is yet another impost to farm business.
Chemical & Fertilser
In addition to the grain handling costs discussed in the previous sections, fertiliser and chemical input
costs are also a significant component to farming costs of production.
Supplier pricing of fertiliser and chemical has historically been reflective of grain prices which causes
volatility in pricing. Volatility in turn elevates the risk farming enterprises must carry in preparing
forward budgets and setting grain marketing strategies to achieve profit targets and remain
sustainable.
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Mice Baiting
The impact of mice plagues has been a significant issue for Eyre Peninsula Farmers in recent years.
This is exacerbated with changing farming techniques such as retention of stubble and intensive crop
rotation. The frequency of mice numbers reaching plague proportions has elevated to 1 in 5 years vs
historical figures of 1 in 15 years.
Mice baiting is very expensive and regulations are restrictive leaving farmers with little choice in
managing this risk. Farmers are already required to have Chem Cert qualifications to handle chemicals
on farm and should be allowed to mix mice bait chemical on farm provided they meet certain
protocols. This would provide cost competitive alternatives improving profitability and sustainability.
7.
Incentives for investment and job creation
How well is the current set of government programmes and incentives directed at the agriculture
sector meeting their objectives, in terms of both effectiveness and efficiency?
The current set of programs and incentives reflects the diminished level of importance that
Government holds for the industry and has indirectly contributed to the generally uninformed public
perception. The pull back from government R & D and particularly extension services has removed the
opportunity for non-biased advice. The commercially provided advice that has largely replaced those
services doesn’t align with the commitment to resource management and sustainability that farmers
aspire to.
Are government visa arrangements and programmes like relocation assistance, the Seasonal
Worker Programme and Harvest Labour Services effective at channelling workers into the
agriculture sector and what other approaches should be considered?
A problem with regard to farm labour is that the skill levels required are increasing as technology
advances.
What have other countries done to inspire agricultural investment?
Other countries have applied subsidies to inspire agricultural investment. That is not to suggest that
subsidies are sought in Australia but the need to reflect the level of importance that other countries
place on food and fibre production is required. The importance of agriculture in Australia (certainly
South Australia) has certainly suffered as a consequence of successive government’s concentration on
the mining industry.
What has Australia done in the past that has had best effect?
The Australian Agriculture industry has operated quite successfully in the past in a much less
regulatory environment. As previously mentioned, the extension services provided to industry were
invaluable but really there is little about the present and nothing about the past that is relevant to the
industry’s future.
For further information regarding this submission please contact:
Dion Dorward
CEO
RDA Whyalla and Eyre Peninsula
Amanda Bridge
Economic Development Manager
RDA Whyalla and Eyre Peninsula
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