14 December 2022
Furthermore, the sector continues to reap the reward of investment in infrastructure, research and development and the adoption of innovative framing practices.
This month, the Australian Bureau of Agricultural and Resources Economics and Sciences (ABARES) released data highlighting Tasmania's successful winter crop production, led by wheat, barley and canola, which has gone from 100,000 tonnes in only a few short years to forecast production of over 160,000 tonnes.
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The success of the agriculture sector, including agriculture, forestry and fishing, contributes $2.75 billion to the Tasmanian economy annually and is the second largest contributor to the state's economy.
So imagine if we could resolve some of the challenges facing the sector that prevent it from achieving further success.
Like any other business, farmers need to make a profit to continue operating. When input costs rise, it eats into their earnings and makes it more difficult for them to make ends meet.
To understand how these inputs contribute to the cost of farming, let's use the metaphor of bread making. Like a farmer, a baker needs various ingredients to make bread.
These ingredients include flour, yeast, salt, and water (all of which require energy to process for the baker to use). The baker needs to use energy to power the oven and labour to mix the dough. In the same way, a farmer needs seeds, water, electricity and fertiliser to grow crops. These inputs are essential for the success of the crop.
Farmers continue to innovate in the energy space, with many irrigators using "smart" technology to automate irrigation. This technology gives Irrigators flexible tariff options, but we still need fair electricity rates reflective of our state's natural competitive advantage in Hyrdo energy to keep input costs down.
The farmer must also use labour and equipment to plant and harvest the crops. The cost of these inputs can vary depending on several factors. The price of seeds and fertiliser may fluctuate due to market conditions, while the labour and equipment costs can be affected by local wages, workforce participation and supply chains.
Labour availability in agriculture has long been a challenge for agribusinesses in Australia.
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The horticulture sector has been hit hardest by labour shortages. In 2019, 63,000 casual and contract labourers were granted visas to work on horticultural farms, but in 2020 the supply of overseas labour declined significantly.
If we return to the cost of a loaf of bread, all of these supply chain and production costs, as well as the impact of extreme weather events we have recently experienced, impact the price the consumer pays for the loaf of bread. However, the ability to pass all of these costs on to the consumer is limited due to competition between retailers and the rising cost of living pressures.
So, who absorbs the majority of these costs?
As John F. Kennedy once said, “The farmer is the only one in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.”
By understanding the relationship between inputs and cost, we can better appreciate the effort and expense of producing the food we rely on daily and hopefully ensure our farmers get a fair return for their efforts.
As the largest advocacy group in Tasmania and the only one that focuses exclusively on farming and the rural sector, the future of Tasmanian agriculture is our focus.
Join the TFGA today for a greater future.
Contact our Membership Manager, Kellie Morris