CAPITAL of all sorts – human and foreign predominantly – is the currency needed to give Australia’s troubled northern beef industry a chance at getting back up off its knees, according to speakers at the CEO outback business summit held in Longreach recently.
Organised by Longreach grazier James Walker to focus on the double-pronged necessities of keeping businesses going in the short term to the next rain event and identifying solutions to flaws in current operating conditions, the event drew on the combined brain power of Australian business leaders, primary producers, accountants, university professors and taxation lawyers.
They were asked to exchange ideas and create opportunities for those affected by drought and those wanting better terms of trade, and brainstorm they did.
The executive director of the Institute for Resilient Regions, John Cole, based at the University of Southern Queensland, urged north Australia’s movers and shakers to have open minds and be able to “put things on the table that don’t seem acceptable”.
“For example, the mantra is that you’ve got to get bigger to succeed, but is that always right,” he asked.
“And if you do buy more country, buying your neighbour can compound your risk by exposing you to the same dose of bad weather.”
Foreign capital has a troubled image in some circles in Australia, viewed with suspicion by those who see it as a backdoor takeover of our assets, but Mr Cole and most other speakers at the summit advocated it as a necessary ingredient to a rural revival.
“One of the cultural inhibitions we have to get over is foreign investment,” he said. “China is very important to us.”
It was a message pushed by Laguna Bay rural land fund managing director Tim McGavin in his address, saying “a wall of money was coming to agriculture”.
“I urge people to hang in there – we’re heading towards an incredibly inflationary environment and owning land is the best investment against inflation,” he said.
The summit was introduced by a recorded message from federal MP Bruce Scott who made the point that it was foreign money that financed European settlement in Australia.
“Opening the door to foreign investment is essential to healthy agriculture,” he said. “We need to engage in opportunities in the burgeoning Indonesia-Asia region.”
Rob Atkinson chairs NorthBEEF, the group pushing for a beef processing facility for northern Queensland and he also endorsed the need for foreign investment.
“An abattoir can only get up with overseas investment,” he told the summit. “So much can happen – the only thing holding us back is finance.”
In another one of the “open your mind” moments, a number of the business participants asked if it was necessary to own land.
Nuffield Australia CEO Jim Geltch has travelled the world examining different farming systems and said one of his key lessons was that it wasn’t necessary to own land to farm it.
“A strategy like this allows you to invest capital in things that can generate cash,” he said.
It was an approach advocated by Tim McGavin too.
“People can sell 70 per cent of their assets and lease some of it back – there’s lots of options,” he said.
At the first agricultural business summit in regional Australia to be live-streamed to the nation, speakers also paid tribute to the people behind the figures that are being analysed.
John Cole was one of the first to acknowledge that the family farm has an emotional context.
The summit began analysing a fictitious beef enterprise, the Kidworth case study, which forms the basis of a competition devised by Mr Walker as a way of putting the spotlight on financial decision-making and ways for rural operations to become more resilient.
Mr Cole said solutions would not come from without but from within the affected area.
“The solutions can’t be political – the numbers aren’t there.
“And saying ‘all we need is rain, or government help, we know how to do the rest’ – that’s the point at which a system is most vulnerable to disruptive change.
“You have to always be questioning and thinking, but you need to start with knowing that no-one is going to replace you.
“You know best how to run beef here, you have a body of knowledge no-one else has.”
On a practical level, speakers pointed the finger at a less than desirable level of financial literacy for some of the decisions made in recent years, especially those of borrowing to get into more property.
Nuffield’s Jim Geltch said financial literacy was the greatest constraint on Australian agriculture.
According to MLA’s managing director for research and development, Wayne Hall, while survey had identified that not enough farmers and graziers had business management skills, it was a challenge to get people to see value in training courses MLA had developed.
“Our challenge is that small business says it’s too busy to come.
“It’s a limited view of the future and you ignore training at your peril,” he said.