Submission to the

Green Paper on Developing Northern Australia

Growcom68 Anderson Street Fortitude ValleyPO Box 202 Fortitude Valley QLD 4006Tel: 07 3620 3844 | Fax: 07 3620 3880 www.growcom.com.au

August 2014

August 2014

About Growcom

Growcom is the peak representative body for the fruit and vegetable growing industry in Queensland, providing a range of advocacy, research and industry development services. We are the only organisation in Australia to deliver services across the entire horticulture industry to businesses and organisations of all commodities, sizes and regions, as well as to associated industries in the supply chain. We are constantly in contact with growers and other horticultural business operators. As a result, we are well aware of the outlook, expectations and practical needs of our industry.

The organisation was established in 1923 as a statutory body to represent and provide services to the fruit and vegetable growing industry. As a voluntary organisation since 2003, Growcom now has grower members throughout the state and works alongside other industry organisations, local producer associations and corporate members. To provide services and networks to growers, Growcom has about 30 staff located in Brisbane, Bundaberg, Townsville, Toowoomba and Tully. We are a member of a number of state and national industry organisations and use these networks to promote our members’ interests and to work on issues of common interest.

Growcom - submission on Joint Select Committee on Northern Australia Enquiry 2

August 2014

Key issues

Growcom welcomes the opportunity to provide input into the Green Paper on Northern Australia. In Queensland, the area extends from Rockhampton north, which represents a huge component of the horticultural production areas in Queensland and is one of the most significant growing regions in Australia.

Key growing areas include:

Table 1: Horticultural production in northern Queensland1.

RegionEstimated

Value ($million)

CurrentHectares of production

Principle crops grown

Far North Queensland1 >$348.5* 27,317 (perennial)

1302 (annual)

bananas, watermelons, pineapples, papaya, other tropical fruit, potatoes, onions, citrus, avocadoes, cashews, macadamias, sweet potatoes

Cape York Region >$1.3 53ha (combined)**

Bananas, small scale vegetable production for local consumption.

Gulf Region minimal 23ha (combined)

mangoes

Bowen/Gumlu/Whitsundays $232 8580 (annual)

1534 (perennial)

tomatoes, capsicums, chillies, french and runner beans, sweet corn, mangoes, lychees, pineapples, macadamias, rockmelons, cucumbers, zucchini, pumpkin, bananas

Burdekin/Charters Towers $88.1 1232 (annual)

4167 (perennial)

mangoes, pumpkins, pineapples, rockmelons, sweet corn, beans, capsicum, watermelons, zucchini, cucumbers, marrows, squashes, potatoes, tropical fruit, bananas

Central Queensland $54 300 ha (annual

Sweet potatoes, zucchini,

1 Information in this table was largely derived from data from the Queensland Agricultural Land Audit. http://www.daff.qld.gov.au/environment/ag-land-auditGrowcom - submission on Joint Select Committee on Northern Australia Enquiry 3

August 2014

horticulture)6000 ha (perennial)

pineapples, pumpkins, papaya, mangoes, lychees, macadamias, grapes, citrus and watermelons

* The land audit did not provide value of production figures for this region** doesn’t include the new 70ha indigenous banana farm at Hope Vale

Many of the commodities grown in North Queensland operate in counter-seasonal windows with the intention to supply Southern markets for a reasonable rate of return. Additionally, many growers spread risk by owning enterprises in both northern and southern growing areas. There are some commodities such as bananas and mangoes which are predominantly grown in north Queensland due to their suitability for tropical climates.

Growcom, after consultation with members and local growers associations, strongly supports the concept of maximising the potential of Northern Australia. However, we contend that the focus should be on removing barriers and constraints to existing enterprises and growing new markets, rather than opening up green-field areas for horticulture production. The domestic market is often oversupplied resulting in low prices and poor profitability. Drastically increasing production with no regard to market development will simply exacerbate existing problems with farm profitability. There must be a clear primary focus on growing demand for Australian fruit and vegetables, both here and overseas.

As described in the Queensland Government’s agricultural land audit2, based on biophysical characteristics there are significant opportunities for development of the horticulture industry in every major region in North Queensland. We urge the Commissioners to refer to this document in their deliberations. We see that developing these existing growing areas further as an important action for the longer term.

In the short term, the most important actions are removing barriers and impediments to existing enterprises and building demand by developing export markets before any new areas are opened up for horticulture.

As can be seen in table 1, horticulture in Northern Queensland is not homogenous with a variety of crops grown in different regions. However, the issues facing horticulturalists are reasonably consistent across regions with different levels of priority. The case study outlined below provides a snapshot of the key challenges and opportunities for the horticulture sector in Northern Queensland which Growcom hopes will address the issues raised in the Green Paper.

Case Study – Mackay-Whitsunday region

Within this region, horticulture is predominantly grown in the Bowen Gumlu area. It is a well established horticulture area producing 58% of Queensland’s capsicum crop, 38% of the State’s field grown tomatoes and 14% of the State’s beans. According the land audit, annual horticulture production currently occurs on 8580 hectares of land representing 0.1% of the region. Perennial horticulture occurs on 1535 hectares (0.02 % of the region). According to the Queensland land audit, from

2 http://www.daff.qld.gov.au/environment/ag-land-auditGrowcom - submission on Joint Select Committee on Northern Australia Enquiry 4

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a bio-physical perspective 746 113 hectares of land are suitable for perennial horticulture and 1 582 905 hectares of land is suitable for annual horticulture. This represents something like 185 times the current land use under horticulture. Most of the potential area is currently used for grazing (75%) and sugarcane (21%). It should be noted that the land audit information is based on ABS figures which are notoriously unreliable for horticulture. Local data from the Queensland Department of Agriculture puts value of production for the Bowen Gumlu area alone, at $400 million which is double the amount calculated from the ABS figures for the whole region.

According to the land audit and consultation with the Bowen Gumlu District Growers Association (BGDGA) there are a number of key constraints to the expansion of horticulture in the region despite the abundance of suitable land. Horticulture is the highest value commodity per hectare and it is reasonable to say that if it was a viable option then it would already be happening.

Water Availability

Horticulture is 98% irrigated and as such needs year round access to reliable water. The current growing area is largely supplied by groundwater accessed by bores or on-farm storages. This supply is usually adequate but in dry years water entitlements are reduced. The current water availability does not allow for further expansion of horticulture in this area. Every additional 40,000 ha under horticulture will require an additional 200,000 ML of water, therefore to fully utilise the land deemed suitable for horticulture in this region a further 500 000 ML of water would be required.

Recommended options to increase water supply to this region include the building of the Urannah Dam south west of Proserpine and the raising of the Burdekin Falls Dam and Bowen-Broken pipeline.

Markets

Most of the existing produce is consumed in the domestic market, however it is already saturated for some product lines even with the counter-seasonal window. For that reason, for the potential of this region to be realised there needs to be a strong focus on building an export market. The Bowen Gumlu region has the capacity to produce a huge array of crops and the current major commodity lines may not be the predominant crops grown in the future. The common refrain from growers in the region is “tell us what the world wants to buy and we will grow it”.

An ongoing frustration of growers is that there is a push by government to expand production before the markets have properly been developed. This is a complex issue and recommendations relating to building the export market are discussed later in this submission however there strong message from the region is that needs to be prioritised by government in the short term and will not just occur organically.

Infrastructure

A large percentage (75%) of produce from the region goes via road to Brisbane with the remainder being trucked north to Townsville. This heavy reliance on the Bruce highway means the industry is vulnerable to issues with the highway in a region characterised by extreme weather events. If export markets were properly

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developed then there would be a need to invest in port and airport infrastructure capable of transporting large quantities of horticultural product. Examination of the feasibility of rail as a transport option also needs to be undertaken.

Biosecurity

This region will always have to contend with heavier pest pressure than many southern cropping regions due to the year round warm weather. That said, The Bowen Gumlu region has identified and funded research locally into the use of area-wide management techniques for pest management. Research projects to date have utilised area-wide management tools as part of an overall farm strategy to control the spread of pest, disease and viruses. The use of area-wide management techniques into the future, are going to be key to maintaining and developing current and future markets.

This response is reflective of a cohesive and strategic group of growers, which is not necessarily found in other horticultural areas. Actively facilitating such approaches would be a key mechanism for effective biosecurity in the region and fits well with the new “shared responsibility” approach underpinning modern biosecurity legislation.

Labour access

The region is heavily dependent on backpacker labour and at this stage, demand is being met (just). The industry is vulnerable to a reduction in tourist numbers and therefore it is within the horticulture industry’s interest to ensure that major tourist destinations such as the Great Barrier Reef are not adversely affected. Growers in this region are heavily involved in the Australian Government’s reef protection program and a very significant proportion have changed management practices as a result of this investment

However, to ensure the region’s full potential is realised a more stable and strategic approach to workforce development needs to be implemented. Growcom, with funding from QDAFF, developed the Queensland Production Horticulture Workforce development plan to ensure that the key industry priorities of attracting good workers, upskilling them and then retaining them can be realised. A key element of this plan was the funding of regional workforce development officers as it has been recognised that labour issues differ significantly in different growing regions. One of these officers is currently placed in Bowen and the long-term funding of this position and equivalent positions in FNQ are a clear priority. Workforce development within the horticulture industry has clear knock-on benefits for regional communities as a whole and can provide meaningful career opportunities in these regions.

Conflicts with the resources sector

The Bowen Gumlu area is in close proximity to the Abbot Point Coal Terminal. An early proposal for rail corridors earmarked large tracts of prime horticultural land for resumption. Growcom lobbied heavily to ensure that these areas would not be impacted and the Queensland government responded quickly and effectively. That said, these areas should never have been included in the first place and we seek more effective planning protection to ensure high value horticulture land is not adversely (and needlessly) impacted. Uncertainty kills investment, particularly in the horticulture sector where farms have large packing sheds and other expensive

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infrastructure. This area, and others like it, will not be able to realise their potential if there is not a level of comfort around planning protection.

That said, growers have rightly pointed out that there are advantages to being proximate to a mining region as it increases investment in infrastructure such as dams and rail lines.

General Comments

Growcom has some concerns about the promotion of large green field sites such as the Gilbert and Flinders catchments as opportunities to expand production of traditional horticulture products. An assessment of the CSIRO reports examining the feasibility of these areas highlights some key issues. Firstly the cost of water ($1900 M/L) and transporting product would be far greater than in other growing regions. The reports state that these costs would potentially be offset by the fact that they are growing counter-seasonal product. This seems to disregard the fact that North Queensland is already the major source of counter-seasonal product for the commodities identified in the report and for many of these commodities there is already over-supply. For example in 2013, many North Queensland vegetable producers had difficulties obtaining prices that covered the cost of production (Bowen Gumlu District Growers Association pers. comm.). Growcom would only support the development of these areas if they were growing new commodities with pre-defined markets such as guar beans that did not compete with existing commodities grown in existing horticulture regions.

We would also like to sound a note of caution about viewing Northern Australia as a “reservoir” for agriculture, whereby existing growing areas (such as the Lockyer Valley and Scenic Rim) can be sacrificed to urban sprawl as it is perceived that there is plenty of under-utilised land in Northern Australia. One of the best attributes of the Australian horticultural sector is its ability to provide a wide range of products year round which relies on maintaining growing areas throughout the country. Additionally, proximity to major capital cities remains an important factor when growing a highly perishable product. We very much support the development of the horticulture industry in Northern Australia but only as part of a broader push to support horticulture nationally.

Ties with the Asia-Pacific regioni

Growcom sees the development of strong trade ties with the Asia-Pacific region as absolutely critical for the development of the horticultural industry in Northern Australia and in fact Australia as a whole. The domestic market for fresh fruit and vegetables has limited capacity for growth and competition from imports and the closure of processing facilities has further limited options for processed product.

The ABARES report What Asia Wants (2013)3 identifies a number of important trends and highlights that there is not a great untapped market for Australian horticultural products just sitting there waiting for us to exploit. While there is evidence to suggest that there will be increased demand for protein and dairy products that cannot be met domestically within Asian countries, the same cannot be said for the majority of horticultural products. In fact, countries like Thailand are major producers of horticultural products and have significantly lower costs of production. This doesn’t mean there are not opportunities for Australian horticultural products but rather that

3 http://data.daff.gov.au/data/warehouse/research_reports/9aat/2013/WhatAsiaWants/longtermFoodConsumptionTrendsInAsia_v.1.1.0.pdfGrowcom - submission on Joint Select Committee on Northern Australia Enquiry 7

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we have to be smart about accessing them, focussing on particular products and market windows. We support the statement within the Green paper that to take advantage of Asia’s proximity will depend on the requisite supply chains, transport infrastructure (air and sea) and business strategies being

Based on the information in the ABARES report and a recent KPMG report on Chinese Investment4 as well as anecdotal evidence from growers already exporting to Asia, the key opportunities are:

High quality products with a strong, traceable food safety dimension for wealthier Asian consumers.

Counter-seasonal products which don’t compete with local growers.

Niche products not grown domestically.

According to growers who have recently attended international trade fairs, Australia is suffering from a lack of a cohesive brand identity for our agricultural product. We can definitely supply high quality safe product but need to promote that better to our Asian trading partners. There are a number of branding strategies operated by different commodity organisations both within horticulture and with other commodities but the perception is that we need a cross-industry single brand to promote our high quality “safe” produce. We recommend the development of a single “brand Australia” spearheaded by the Australian government and a promotional strategy around that branding. Interestingly the “100% Pure New Zealand” branding which was developed initially as a tourism campaign has had crossover into the perception of New Zealand agricultural products.

Additionally we see the following actions as critical to improve our access to Asia Pacific markets:

A mapping exercise to determine what commodities are wanted and when by which countries. The What Asia Wants report is a good start but the break down into just fruit and vegetables is too broad and provides no real guidance as to what the opportunities are. There is also no insight into counter-seasonal opportunities.

Market access negotiations progressed in a timely manner for a suite of horticultural commodities and continuation of the work being done to overcome trade barriers to horticulture. This includes ensuring biosecurity protocols are reasonable and realistic.

Research into opportunities for high value commodities. Agricultural research and development extension into the Asia Pacific region Increased expertise within the Department of Agriculture regarding trade issues

with Asia and a dedicated go to person to assist with trouble shooting for each major trading partner (e.g. a dedicated “Indonesia expert”) as each country is unique.

A coordinated push into key markets to provide accurate and comprehensive market intelligence on trends and opportunities. The current situation where each State has a trade bureau in key Asian markets competing with each other is counter-productive. This market intelligence is also failing to make its way back to producers to enable them to make informed planting decisions.

4 http://www.kpmg.com/au/en/issuesandinsights/articlespublications/china-insights/pages/demystifying-chinese-investment-australian-agribusiness-october-2013.aspxGrowcom - submission on Joint Select Committee on Northern Australia Enquiry 8

August 2014

General Impediments to Growth

Apart from the issue of lack of markets for additional product, there are some key issues that need to be addressed to enable horticulture operations in Northern Queensland to realise their full potential. It should be recognised that Northern Australia is particularly prone to extreme weather events, such as cyclones and floods, and this should be factored in to all decisions made about development in the region.

Transport and infrastructure

One of the key impediments to the further development of the horticulture industry in Northern Australia is poor transport infrastructure. High freight costs, unreliable roads and limited alternative options are a real concern for our growers as they need to get a perishable product to market in short timeframes. Additionally some parts of North Queensland do not have any processing facilities, which limits growers options. Key priorities are:

The urgent need to invest in road and highway upgrades, in particular to build the resilience on the road system to natural disasters and extreme weather events.

The need to address excessive regulatory requirements and high operating costs which have a negative impact on the viability of trucking companies and the capacity of the industry to attract and retain drivers. Growers are concerned that, if these business viability issues are not addressed, in future good seasons, there may be insufficient transport resources to move product to market.

Investment in a robust and collaborative contingency planning process involving governments and key stakeholders to identify alternative transport systems for use in the event of disruption to normal services such as cyclones and floods

An investigation the potential future role of rail as a viable alternative to road transport in Northern Australia.

An investigation of the transport needs of a more export focused industry in North Queensland including an examination of port and airport infrastructure.

Regional planning and peri-urban agriculture

Major towns in north Queensland (particularly Rockhampton, Mackay, Townsville, and Cairns) are growing regional centres that are likely to have an increasing demand for both land and water resources for urban and industrial uses. Expanding urban centres pose challenges for agricultural enterprises operating in peri-urban areas. Horticultural enterprises are often located close to urban areas or regional centres for better access to packing facilities, transport infrastructure and labour. Improved regional and rural planning processes and instruments will be required to support harmonious co-existence of agricultural, industrial and urban development in northern Australia. Growcom would like to endorse the work done by the Queensland government on this issue and the recognition of agriculture as a State Interest in the planning legislation. We would also recommend

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consideration of the Queensland Farmer’s Federation’s Guiding Principles for Planning for Agriculture in Queensland5

Labour

Labour and skill shortages are currently major constraints on horticultural businesses across Queensland, including in the north. Expanded production or an expansion of agricultural enterprises across the north is therefore likely to exacerbate these problems. Access to training opportunities and providers is another important consideration, especially in more remote regions. Backpacker labour is absolutely critical to the North Queensland horticulture industry therefore we support all efforts to enhance the tourism potential of North Queensland. An ongoing issue is provision of adequate accommodation for backpackers in areas off the main tourist track. We would support the examination of the regulatory restrictions around the provision of this sort of accommodation on rural land and an investigation into innovative alternative options.

Biosecurity

Movement of produce can increase the threat of biosecurity incursions, threatening the clean and green image of Australian horticulture. Biosecurity risks are very different for horticultural enterprises in the north and management strategies that apply in southern states may not be transferable. Climate change and other factors can also increase biosecurity risks. Biosecurity risk identification and management is likely to require significant investigation and ongoing investment as is a more effective system for the registration of crop protection products for the horticultural industry.

Climate limitations

Wet seasons, cyclones and other climatic events limit the available production windows in many northern regions. Horticultural production in the north is a very different business from operations in southern states. Some horticultural lines can be successfully produced in the climatic conditions of the north, however there are other crops that simply will not be able to be produced in major quantities or at adequate quality points in northern regions.

Climate change

Climatic shifts that are already apparent and projected changes to rainfall and temperature patterns in northern Australia pose ever greater challenges to maintaining successful production of existing crops and establishing production on new horticulture lines in the north. This is an extremely important consideration for the horticulture industry, as it is particularly susceptible to temperature changes. Climate change scenarios and their impact on agricultural production potential in northern regions require detailed investigation.

5 http://www.qff.org.au/wp-content/uploads/2012/09/Guiding-Principles-for-Planning-for-Agriculture-V5.pdfGrowcom - submission on Joint Select Committee on Northern Australia Enquiry 10