Farming Smarter, Not Harder: Securing our agricultural economyBy Laura Eadie and Christopher StoneNovember 2012

The era of cheap food may be over

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50

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GrainsFood

2005

- 10

0

Declining or flat prices as food supply grew faster than population

Rising prices as demand continues to grow, but productivity growth slows

Long-run food and grain price indices – 1960 to 2011Real terms, 2005 dollars

Source: World Bank, 2012

The global food boom is a challenge and opportunity• Food prices projected to be higher and more

volatile

• Farm input costs are also likely to rise

• Countries with less fossil-fuel intensive agriculture, and more reliable production likely to benefit from times of high prices

• Winners and losers will emerge due to the uneven distribution of land, water and economic wealth

• Demographic pressures and climate change may increase food insecurity, particularly in Africa and Asia

Resource constraints are significant in some areasHuman-induced soil degradation

Australia has greater opportunities, but similar challenges to the rest of the world

Top exporter of grains, meat, sugar, wool

Projections we could double food-based exports by 2050

Twice as much land now exposed to extremely hot years

Australia’s challenge =increase production per hectare, minimise dependence on fuel and

fertilizers

Productivity growth slowing, natural limits to land and water, soil degradation

Agriculture =10 per cent of exports

2 per cent of GDP307,000 jobs

Improving soil could increase wheat production by up to $2.1 billion per year

?2007 A$ billionWheat production

Source: CPD analysis

Current production Full potential

4.8 1.1

0.8 0.3

Increased yield from removing soil constraints

Acidic soils(reduces root

growth, nutrient and

water efficiency)

Dense subsoils(reduces root

growth)

Low waterpermeability

(reduces availablemoisture orleads to

water-logging)

Additional $1.1– 2.1 billion

value of wheat production

Australian farmers already benefit from improved soil

• 20 years of no-tillage and crop rotations• Soil carbon maintained, erosion limited• Gross margins up 9-fold

• Stocking at 75 per cent of long-term capacity• Pasture growth with almost any rainfall• Profits up 7-fold since 2001

• Soil carbon maintained• Improved efficiency of irrigation water use• Aim to double or triple fruit yields

Horticulture

Dryland cropping

Grazing

Irrigated horticulture

Further innovation is essential to increase productivity

• From the mid 1990’s, broadacre productivity growth slowed - climate effects, slower growth in innovation funding

• Up to 35 year lag from investment to benefits of innovation

• Need to invest now to adapt to climate change–Match inputs, products and farming

practices to soil and climate conditions–Enable crops and livestock to take

advantage of favourable seasons

• Healthy ecosystems sustain long-term agriculture - e.g. trees and groundcover insure against erosion

• Knowledge shared over time and across landscapes maintains healthy soils and productive land

• The benefits of investment in land, soils and other natural capital are greater when co-ordinated across the landscape

It pays to invest in natural capital

Farmers’ stewardship is essential, and deserves support

1. Increase investment in knowledge: 20 year endowment for the National Soil Health Strategy; up to 7 per cent a year increase in agricultural R & D

2. Provide more stable funding for natural resource management:10-year joint government commitment to fund NRM bodies

3. Enable accountable community governance of land and soil management: support farming communities to develop voluntary stewardship standards

4. Align financial incentives with the long-term needs of sustainable farming communities: link assistance to stewardship standards to help farming communities take a lead in preparing for droughts

Australia has made good progress putting in place policies that support farmers as active stewards of land and soils. However, further policy change is needed in four key areas.

For more information...

Copies of ‘Farming Smarter, Not Harder’ are available at

http://cpd.org.au/2012/11/farming-smarter-not-harder/