Farming productivity is declining despite boosts to efficiency

ABC NEWS (Australia)

Australia's farming productivity rate is on the decline. While the nation's farmers may be working efficiently, the gains they're making are barely notable.

Transcript

00:00Music

00:06I think optimism is what you need, for sure.

00:10There are few times in a year as hopeful as sowing.

00:13And if you are ready, then there's plenty of reason to be optimistic.

00:18It's exciting, there's opportunity to say that the year could be great.

00:23At Lilliput, near Rutherglen in Victoria's northeast,

00:28James Russell is planting wheat and canola.

00:31Australia-wide, farming is on track for one of its highest value years.

00:36But this fifth-generation farmer says the spoils won't come without risk.

00:41Where my grandfather was farming, sort of where I got a lot of my knowledge from,

00:47he often spoke about the costings of things way back then.

00:51Sort of that dollar to make $2.

00:54That was the margin, you know, you put a dollar in to make $2.

00:58Whereas now, what we're seeing on a net profit scale,

01:03we're sort of seeing $10 to make $11.

01:05The cost of inputs, such as seed, fertiliser, fuel, land and labour,

01:11mean farmers like James rely on being paid well for their outputs.

01:15In this case, crops.

01:17We are looking at around $1,400 a hectare gross margin to actually produce a crop nowadays.

01:26If we don't receive those higher outputs, we've got a big bill to fit at the end of the year.

01:31It's the difference between what's going in and what's coming out of the farm business

01:35that shows why farm productivity really matters.

01:38So we look at productivity in two ways.

01:41We kind of look at it in the sense of, well, how much more output are you getting from a given set of inputs?

01:46Or are you getting more output from your already existing use?

01:50But in a sign that the National Farmers Federation says should be ringing alarm bells,

01:55Australia's farm productivity rate is barely growing at all.

01:59The annual rate in the 80s and 90s was 2.2%.

02:04Today, it's closer to half a percent.

02:07And that's kind of put us back in terms of our relative to international competitors,

02:13where they're getting stronger productivity growth.

02:15Now, the thing with that is that despite them getting stronger productivity growth,

02:19they're starting from a lower base than we are.

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