The Agribusiness Value Chain - The Agribusiness Value Chain - is another term used to describe agribusiness and is made up of both 'knowledge' and 'effort' inputs.

Knowledge Knowledge or soft systems inputs into the agribusiness value chain include:

• Agricultural and agribusiness education,
• The 'services' sector, including banking, finance, legal, consulting and advisory services and policy and regulatory activities in regional, state and federal governments.

Effort or hard systems Effort or hard systems inputs into the agribusiness value chain include:

• The supply of inputs for the production of food, fibre chemicals and pharmaceutical substrates and for adding value or transforming commodities,
• Value adding activities such as transformation of agricultural commodities by processing, preparation, packaging and distribution,
• And the marketing and retailing of commodities and value added food and fibre products.

The Agribusiness Sector in Australia

The agribusiness value chain is one of Australia's largest and most important industry sectors. The food sector of Agribusiness comprises approximately 21% of Australia's merchandise exports and employs more than 550 000 people - or 6.5% of the total work force.

The Food System in Context.

The one thing we must never lose site of is that the worlds food systems are human activity systems.

Food systems have humans as the operators of and within the system - humans as its customers - both within the value chain and at its end as consumers.

Even though our food systems include complex and valuable economic systems, they are run on emotions, wants, needs, desires, tastes, and most importantly, perceptions.

The one thing we know about human emotions is that they are predictable only in their unpredictability.

If you discount the validity of emotions in decision making process you are headed for trouble - because the food system in a human activity system and its primary drivers are emotion.

I was recently in a discussion with a person who said that a certain groups views on the subject under discussion were simply 'emotional' and that when they learned of his 'logic and rationale' on the subject - they would change their mind.

Discounting emotion - or recognising \ allowing individuals to make decisions based on their own experiences and perceptions - is the major cause of the consumer opposition to GM crops and food in many developed nations, including the EU, Australia and Japan.

However, I will talk more about GM and associated issues later.

Development of food systems

The economic wealth generated by modern food systems is a major contributor to the wealth of countries like Australia - accounting for about one quarter of our economic activity.

However, the economic activity associated with food systems, as we know them, is a relatively new phenomenon.

Up until about 300 year ago, the world was still primarily agrarian. In major towns and 'cities', market trading of goods was taking place back to the days when 'cities' first began to appear in the Euphrates and Tigris River Valleys several thousand years ago, with the emergence of the trading civilisations.

The trend away from subsistence agriculture began accelerating rapidly with the start of mass urbanisation and the industrial revolution.

At the turn of the 19^th century, approximately 90% of the population of the United States were involved in the food system - either in production, handling, manufacturing, wholesaling and retailing of food or the provision of services to the value chain.

A hundred years later this sector of the work force is less than 5% - even thought the output of the US food sector is vastly greater now than it was 100 years ago.

A similar situation can be found in our own country, where farmers make up less than 1% of the population and the total food sector comprises 6.5% of the total workforce.

Food Systems and developing nations

India and China both account for about one in every three humans - almost half the populations of these countries are still directly engaged in primary production - in some cases using methods not too dissimilar to those used in the last century in Australia.

The Distinguished Professor of International Agriculture at Texas A&M University, Norman E. Borlaug is credited as being the 'father of the green revolution'.

He stated in a paper titled GLOBAL FOOD SECURITY: HARNESSING SCIENCE IN THE 21ST CENTURY delivered at a Gene Technology Forum, in Thailand March 7, 2000….

……..Despite the successes of small holder Asian farmers in applying Green Revolution technologies to triple cereal production since 1961, the battle to ensure food security for hundreds of million miserably poor Asian people is far from won, especially in South Asia.

Of the roughly 1.3 billion people in this sub-region, 500 million live on less than US$ 1 per day, 400 million are illiterate adults, 264 million lack access to health services, 230 million to safe drinking water, and 80 million children under 4 are malnourished (Eliminating World Poverty. UK White Paper, 1997). Mushrooming populations and inadequate poverty intervention programs have eaten up many of the gains of the Green Revolution.

Mechanisation, modern chemicals (and some not so modern chemicals - China and India still produce and use large quantities of chemicals banned in the western world - many of these compounds are produced by western companies - an issue that raises some interesting ethical questions) and improved varieties have made an impact - but deep down the systems have poor productivity.

Borlaug goes on to say….

……Total cereal production (milled rice equivalent used) in the developing Asian nations has increased from 248 to 795 million tonnes between 1961 and 1998. During this period, most Asian countries achieved -- or nearly achieved -- food self-sufficiency in the basic grains.

During the next 20 years, Asian farmers will have to meet this current level of production plus produce several hundred million additional tonnes of cereals more than they do today.

Even with significant new production growth, Asian wheat imports, for example, are likely to increase from 30 to 75 million tonnes by 2020 (Pingali and Rosegrant, 1998).

Over the past 35 years, FAO reports that in Developing Asia the irrigated area has nearly doubled -- to 169 million hectares, and fertiliser consumption has increased more than 30-fold over, and now stands at about 70 million tonnes of nutrients.

During the next century, Asia's food supply will be produced on a shrinking land base. While there are still opportunities to bring irrigation to some new lands, rain fed agriculture will become increasingly more important for expanding future supplies of cereals.

Most Asian farmers have adopted modern varieties. High Yielding Varieties already cover almost all of the irrigated rice and wheat areas, and a fair portion of the rain fed areas.

But varietal replacement is too slow, with farmers often only changing varieties (with the exception of India) every 10 years or so.

There are important gains to be made from more rapid varietal replacement, in which farmers have early access to the newer varieties with higher yield, potential and resistance to a greater range of biotic and abiotic stresses.

India is a very large producer of wheat - quoted at a development forum in Canberra in 1999 as producing in excess of 80 million tonnes per year - Australia's 1998 wheat crop was 19 million tonnes - but their productivity is about 50^th in the world - where ours is up in the top 5.

The world population has just passed the 6 billion mark - on October the 12 1999. At least one and a half billion are either starving or living in abject poverty. Have a look at the Internet page at www.unfpa.org/modules/6billion where the population counter is ticking over.

Think of the pressures this is creating on the world food systems.

I would like to quote from the United Nations Population Fund -

At any level of development, human impact on the environment is a function of population size, per capita consumption and the environmental damage caused by the technology used to produce what is consumed. People in developed countries have the greatest impact on the global environment.

The 20 per cent of the world’s people living in the highest income countries are responsible for 86 per cent of total private consumption compared with the poorest 20 per cent, who account for a mere 1.3 per cent.

The richest fifth account for 53 per cent of carbon dioxide emissions, the poorest fifth, 3 per cent.

A child born in the industrial world adds more to consumption and pollution levels in one lifetime than do 30-50 children born in developing countries. As living standards rise in developing countries, the environmental consequences of population growth will be amplified with ever-increasing numbers of people aspiring, justifiably, to "live better."

Rather than assign blame in the debate over environmental challenges, both current and new consumers need to realise and address the consequences of their levels of consumption.

The difficulty in facing these questions is that the answers are neither simple nor complete.

The most obvious environmental impacts are usually local, such as the disappearance of forests and associated watersheds, soil erosion, desertification, or the brown haze hovering over cities. Less obvious are phenomena such as the build-up of carbon dioxide in the atmosphere, the global decline of fish catches or the pollution of land and water resources with industrial and hazardous wastes.

Some trends are already obvious, however, particularly with regard to the three "renewable" resources on which human life depends: land, water and air.

Each year, an estimated 5 to 7 million hectares of agricultural lands are lost to accelerating land degradation and rapid urbanisation.

A sixth of the world’s land area -- nearly 2 billion hectares -- is now degraded as a result of overgrazing and poor farming practices.

Another 16 to 20 million hectares of tropical forests and woodlands are lost each year.

Water is a finite resource. There is no more water on earth now than there was 2,000 years ago when the population was less than 3 per cent of its current size.

During this century, while world population has tripled, water withdrawals have increased by over six times.

Today, with water scarcity defined as less than 1,000 cubic metres per person per year, 458 million people in 31 countries face water shortages.

By 2025, close to 3 billion people in 48 countries will be affected by critical water shortages for all or part of the year.

The pollution and increasing scarcity of renewable fresh water supplies threaten human health and welfare.

An estimated 1.1 billion people were without access to clean drinking water in 1994; 2.8 billion people lacked access to sanitation services.

Waterborne diseases infect some 250 million people each year, about 10 million of whom die.

Today, climate experts worry that continued increases in atmospheric concentrations of CO2 – already 28 per cent higher than pre-industrial levels – could result in sufficient temperature increases to raise sea levels around the world and seriously disrupt agricultural production.

For the past 50 years, food production has kept ahead of rising demand. Today, in a world where two-thirds of the people depend on rice, wheat and/or maize as their staple food, 80 countries cannot produce enough food to feed their own populations from existing land and water resources.

According to FAO, world food production will have to double in order to provide food security for 7.8 billion people expected by 2025.

Compounding the environmental challenges facing us all are the needs of more than roughly 1.3 billion people living in absolute poverty.

I attended an agricultural development seminar in Canberra held by the Crawford Fund for Agricultural Development in 1999, where it was stated that the developed world wastes between one quarter and one third of the food they produce or import. In the US alone - approximately 44 million tonnes of food is wasted each year.

This leads me to develop three messages.

• First message - The world is not short of food.

The world produces enough food to satisfy global food demand, and then some.

However, food resources are poorly distributed. The distribution of food is the primary factor in causing food shortages. This is primarily a factor of economics. Food is business. The food system is primarily an economic system (increasingly political and social considerations are being subsumed by economics as domestic markets are opened to competition and deregulation).

There is no money to be made out of giving food to starving people.

That is a fact of life.

One of the chief industry support mechanisms used by the United States to support their wheat industry is the purchase of wheat by the US government to distribute as food aid.

Food Aid is a major part of the US international development aid strategy. The purchase of domestic grain just happens to support US domestic grain prices.

The Australian government and grains industry is vehemently opposed to this tactic on trade grounds, claiming it disrupts the world wheat trade by artificially increasing prices.

If you are an Australian grain farmer, you believe the US food aid purchases are a cynical measure corrupting world grain prices.

If you are a grain farmer in the US, you are in favour of Federal grain procurement.

If you are a starving person in the third world, I am sure you appreciate the increased availability of food that keeps you alive.

Who is right or wrong in this equation is a matter of perspective.

Who is right and wrong is not for me to say but for you to decide.

• Second Message - Australia is a very small player in the world scene.

Australia's total primary production is approximately one eleventh of the United States - $200 billion in 1997 against $18 billion (US).

Australia is a large exporter of wheat and meat, but our TOTAL industries are quite small.

Australia is one of the top 3 cheese exporting countries - but our total industry is approximately one eighth that of the USA.

The total output of the Indian dairy industry is about 75 million tonnes per annum - from 50 million cows. The US produced approx 78 million tonnes of dairy products in 1997 from 9.25 million cows.

Australia produced 9.44 million tonnes from 2 million dairy cows in the same period.

• Third Message - Agronomic and resource management and education can have a major effect on primary production and thus world commodity markets.

Go back to the example of India and wheat.

What would happen to world commodity markets if - through better management of the current resources - India were to increase productivity in their wheat industry up to the top 10 in the world?

The impact on world grain prices would be dramatic.

It is not inconceivable that India could become a net exporter of grain by adopting better agronomic practices and GM technology. By managing their resources better, and becoming more efficient and productive, India could be exporting wheat to Europe or Australia!

An example of the way an industry can transform its productivity can be found in the grain production sector in Argentina over the last decade.

Their industry has increased output from around 30 million tonnes to approximately 65 million last year, by increasing their cropping intensity and using chemical fertilisers. Traditionally they used to rely on fallow and pasture rotation to provide soil fertility.

Argentina is now the world's second largest producer of GM crops - with the majority of their corn and soybean crops being GM varieties.

In fact, GM soy has been a major contributor to the increase in productivity in Argentina, along the way enabling farmers to cut their herbicide applications but one-quarter.

Unfortunately for these farmers, much of their economic gain has been eroded by decreased world prices due to increase world grain supplies. However, the technology is working and the environment is benefiting.

Commodities.

There is a school of thought that believes a commodity is essentially 'valueless' unless or until someone is prepared to buy it.

A tonne of wheat has the nominal value to the producer of the input costs, plus an expected return - profit.

However that tonne of wheat is valueless unless or until someone buys that tonne of wheat from the producer - and presumably does something with it.

This is a somewhat challenging notion, particularly for the commodity production sector! But the notion places a commodity into a more realistic context - that being if there is no market for a commodity it has no value - and thus if not sold the producer loses the money spent on producing the commodity.

The wool industry is a classic example of how dangerous it is to value commodities artificially.

Raw wool is only ascribed a value when someone with the appropriate skill is willing to purchase raw wool (the commodity) from the producer.

Think of the wool floor price scheme and the way in which it removed value signals from producers. The scheme allocated a price to the commodity and guaranteed that all wool produced would receive a set amount.

This excluded supply and demand market signals from the production sector and led to a massive level of over production and the collapse of the industry under its own weight - and that of several million bales of 'unwanted' wool.

With the removal of the artificial price mechanism corrupting the market, true demand signals are now picked up directly by the supply sector (the producers).

We are approaching the happy situation where yearly purchases of wool from Australia this year (1999 - 2000) will be about 750 million kilograms and production will be about 600 million kilograms.

The reduction in the amount of wool produced has enabled the stockpile to be sold down; thus removing the oversupply pressure that was depressing prices. Over the last quarter of 1999 and the first of 2000, wool prices - as measured by the eastern indicator - have begun to move upward. This market movement is a direct result of the realignment of the forces of supply and demand.

It must be remembered, however, that the wool industry is not homogenous. Even during the times when the market indicator dropped to well below the 'nominal' cost of production, producers of finer wools - 19 micron and finer - were still receiving good returns for their commodity - as the supply and demand balance was more even in that sector of the market.

The major pain was felt by the sector of the industry (constituting the majority of total production) that was producing medium and strong wool - the sector that is more vulnerable to competition from cotton and synthetic fibres.

The big question is wether we will see people re-entering wool production on the back of higher prices and causing the supply \ demand comparison to fluctuate again.

One hopes that we wont see a major move back into the production of medium and strong wools and the re-emergence of an oversupply in this sector of the market.

Raw materials and value adding.

Adding value need not be a physical or effort based activity. We can add value to a commodity through the application knowledge (or soft systems inputs) - and the Internet is helping us to do that.

Commodities such as wool, grain, oilseeds, wood, milk, meat, eggs, and other primary products are nothing other than raw materials for the food manufacturing and food service and retailing sectors.

We hear farmers state that they do not get enough of the consumers retail or food service dollar. The value of wheat in a $2.20 loaf of bread is about 20 to 25 cents. The remaining $2.00 is NOT a profit that is shared between the manufacturer and the retailer.

"Traditional" value adding is carried out by transforming a 'raw' commodity into a processed, or semi processed, 'good' for sale.

However, value adding need not involve physical transformation.

The definition of 'value adding' has to be extended to encompass access to existing or new customers.

We have already established that a commodity without a buyer is 'valueless' - so ensuring that ones produce has access to a market - even at the most basic level - is value adding.

Some examples of value adding include.

• Provision of information about the commodity - including quality certification, grading specifications, trace-back mechanisms, etc.
• Provision of supply \ logistical information that may assist the purchaser to coordinate shipping \ handling \ storage.
• With modern communication, commodities can be sold to customers in a manner that is more convenient to the buyer - such as a number of producers of a commodity marketing their commodity to one or a number of buyers as a 'lot'. (This can also be a 'virtual lot' as well - were supply coordination can take place without physical collection of the commodity in one place).
• Tailoring supply of a commodity to meet specific specifications of a customer.

While many of these things may seem to be basic production activities - they will increasingly become barriers to entry - where commodity producers who cant add this type of 'value' to their commodities will be excluded from markets - or the value of their commodity will be reduced to the lowest in the market.

World trade

On November 30^th 1999, I wrote the following in an Association newsletter.

The Seattle round of the WTO \ GATT is about to commence. Australia and the Cairns group is pushing very hard for the inclusion of agriculture in the reduction in world trade restrictions.

Do not be too surprised if the outcome is less that favourable to Australia's interest. We have more to gain than most from freer world agricultural trade. Other major agricultural producing countries have a lot to gain economically, but much to lose socially and politically.

This turned out to be a rather prophetic statement. As we now know, the talks were disrupted by violent anti WTO and globalisation \ trade Liberalisation demonstrations.

Following on from this I wrote in an article in the Australian Farm Journal - February 2000

After much hype and a huge build up be the press and politicians, the Seattle WTO talks turned out to be a fizzer on a scale not dissimilar to Halley's Comet. The event of a lifetime was nothing more than a damp squib.

It is expected in the US that direct government payments to the farm sector will compensate US farmers to the extent where total returns will be not much below the record year of 1997!

Imagine producing wheat, maize, soybeans, or oilseeds and not having to worry about world prices because Uncle Sam will pick up the tab for the difference!

The same happens in Europe where I heard a figure - I can't verify its accuracy - of $54 billion US as the total yearly cost of the Common Agricultural Policy (CAP).

Do we really expect the governments in the two largest agricultural producing areas to remove these essentially social policies, for the benefit of countries such as Australia?

Government support for primary production and regional areas encapsulates a complex set of political and social issues. One cannot simply apply an economic principal or theory to what is a complex web of social, historical and political - as well as economic - issues (and now increasingly environmental issues are also being considered - not only sustainability of the farming enterprises, but maintenance of the regional environment - social and ecological - under the banner of multifunctionality).

 These countries have to balance off the predicted decline in food prices and increased availability from the reduction of trade barriers, against the political, social AND economic cost of reducing the size of their own rural sector.

Realistically, who are the government of the EU going to favour when it comes to this balancing act - their primary sectors and regional areas or those of countries like Australia?

This is not to say that the process of removing trade barriers for commodities and food is a waste of time - far from it. As is most areas of change - there will be winners and losers. The government of respective nations \ trading blocs want to ensure that they win more than they lose!

Just don’t expect rapid change. This process will take generations to change - not only in the actuality but also in the practice - not the fall of the Berlin wall, as our political masters would have us believe.

Biotechnology

I wrote a paper during my Masters studies here (UWS Hawkesbury) in 1993 questioning the claims being made by the proponents of biotechnology - that they were the 'saviour' of the worlds food systems, the 'cure all' for environmental problems and the answer to agricultural sustainability.

I was sceptical and identified that the major problem with biotechnology would be its overselling by proponents. I was also sceptical about the success of the strategy of selling the technology on the basis of benefits 'remote' from the consumer.

Proponents of agri biotechnology - initially called genetic manipulation and now genetic modification - ignored all the basic rules of marketing and change management - the most basic of which is you MUST be able to demonstrate a clear benefit to customers if you want them to accept (buy, consumer) your product.

A second hand promise of a benefit to another person in a part of the world remote from your customer is not a receipt for sales success!

A couple of 'if onlys' -

• If only science had a more holistic understanding of the world, we would not have the science \ business versus the community debate over biotechnology at the moment……..
• If only science, business, and the media were to communicate 'discoveries' in a more sensible and realistic manner - the general public would be more understanding of the products of science………..
• If only management in 'life science' companies had an understanding of the fact that, they operate in a food systems and not crop or animal production…….
• If only food manufacturing companies accepted that their business IS the consumers business and they have every RIGHT to know what is in the food they purchase - because they ARE the customers and it is THEIR money they are spending……..

• If only those in senior management and policy making positions in the developed world took into consideration the views and opinions of the masters of the food systems - the consumers, and UNDERSTOOD the industry in which they worked………

…….. things in the GM debate would be quite different.

The push by, led by Monsanto, to ram through major changes to the structure and operation of the worlds food systems, with the introduction of GM crops, is a text book example of NOT to introduce change.

Decisions made by consumers in relation to food are based on myriad factors of culture, economics, religion and other major and micro factors (including on how you happen to feel at a particular time on a particular day!).

There is emotion involved.

Even the most untalented kitchen psychologist - such as myself - knows that one cannot expect to force radical change in a system where emotion and perception play such a key role.

Acceptance of GM foods in the developed world will be slow, primarily due to the damage already done by the botched introduction to date, and because there is enough food in developed countries already and we don’t need any more!

However, the situation in less developed countries is different.

There is not enough food there, and there is a clear need to increase productivity AND production to meet the needs of an expanding population and diminishing resource base.

In China, the central government has stated that by 2005, greater than 50% of their food crops will be GM varieties. Other countries less developed countries will follow this lead.

The social, economic and political cost to countries such as India and China of NOT adopting GM technology, alongside better agronomy and resource management, IS SIMPLY TOO GREAT TO CALCULATE.

Their populations must be fed from diminishing resources, so all productivity tools must be used to avoid food shortages and the consequent global political and economic unrest.

In the West, we can afford to turn our back on biotechnology - but only for the time being.

Another excerpt from the paper I wrote on November 30, 1999 for a presentation to Regional Agribusiness Development Officers.

Monsanto Admits to Mistakes

The face on the giant video screen looming above the hotel conference room was drawn and ashen. Robert Shapiro, chief executive of Monsanto Co., was admitting corporate sin to his worst adversaries.

' We have probably irritated and antagonised more people than we have persuaded, ' he told a conference organised by Greenpeace, the environmental group. ' Our confidence in this technology and our enthusiasm for it has, I think, been widely seen - and understandably so - as condescension or indeed arrogance. '

It was an extraordinary admission for the chief executive of one of America's proudest companies. Shapiro promised to stop lecturing and start listening in Monsanto's campaign to sell the world on the benefits of genetically modified food.

Too late Mr Shapiro. You have botched it. The foolish handling of this issue by Monsanto will lead to the eventual disappearance of Monsanto as an entity within 2 years.

Rumours are already circulating in Wall Street that Novartis is sniffing around with a view to acquiring Monsanto. The brand is, from the perspective of a marketer, effectively dead.

Monsanto is now the equivalent of Leyland and the P76.

Its not only consumers in western countries who are jumping up and down about GM foods. Many primary producers are extremely wary of being 'locked' into vertical production relationships with seed and chemical companies.

As you well know, farmers value their 'independence' above almost anything else. This is a major floor in their identifying business opportunities and in the long term will lead to the virtual disappearance of the small self-funding farm operation in Australia.

(The situation is quite different in the US, Europe, Asia and South America where there is a culture of belonging to a 'Co-op' or other similar organisations - where economies of scale can be achieved in input supply, technology and marketing).

Well; wasn’t I pleased when I saw the reports at the end of December that announced the merger of Monsanto with Pharmacia - UpJohn? A decision on the Monsanto brand for the agri industries has yet to be made - but don’t be surprised to see a new company name on Roundup and other brands in the near future!

Opposition to biotechnology

Apart from the already mentioned farmer fear of being dominated by large seed and chemical companies, most of the opposition to biotechnology has come from consumer and environment groups.

Most anti biotechnology, sentiments expressed by groups can be classified into three areas - social - economic and political - with the addition of an increasing concern for food integrity issues in more developed countries.

• Part of the political opposition to biotechnology in agribusiness from the EU and Japan can be traced to the fact the leaders in this field are major US firms. A persuasive argument can be constructed that much of the government opposition - apart from that driven by domestic politics - is driven by a fear of economic imperialism from the US, and the ramifications this has on food security and a desire to buy time while domestic companies play catch up with the technology.
• Many social objections to biotechnology stem from the economic imperialism and food security angle, but also from the belief that no individuals or non-government organisations should be able to 'own' genotypes. These groups also argue against plant variety rights and plant breeder's rights and believe that this material should be part of the public domain.
• Economic objections to biotechnology have been referred to, but also encompass the cost factor of having to pay more for GM varieties, varieties being 'partnered' to particular chemicals and the possibility that crops may, when sold, may incur royalty payments.
• And concerns over food integrity - where consumers in developed countries are increasingly becoming concerned over issues such as the sustainability of the farming systems that produce food, the environmental impact of food processing, use of energy, ecology, the social responsibility of farmers toward their employees and the ethical practices of food processing companies and retailers.

Questions of food safety (defined as contamination of food by microbial agents, chemicals, etc) are secondary to these primary concerns, but are often promoted as a convenient legitimisation of concerns that, if expressed honestly, would get less mileage as issues.

Many consumers are beginning to look for more processed or 'semi prepared' foods or meals. They are also concerned about many of the food integrity issues mentioned above. The paradox here is that as food processing and handling systems become more complex, food safety risk actually increases and the harder it is to guarantee the integrity of the value chain!

The tools of biotech will be a useful in increasing productivity and enhancing sustainability, particularly for those in the developing world, enabling them to make more of the resources they have.

In the developed world, biotechnology may first find its foothold in food ingredients - enzymes and microorganisms rather than whole GM foods. (Although this poses a marketing problem - particularly as the term 'micro-organism' has a generally negative connotation - time for a new name!)

There will be a role for GM microbes in food - establishing beneficial populations that will 'protect' against Listeria, Campylobacter and E-coli and helping to ensure food integrity and reducing the risk of food bourn illnesses.

These microbes may also play a role in aiding digestion or metabolising fats, lowering cholesterol - in a similar way to dietary supplements containing acidophilus do today.

In 20 years time, GM food ingredients, GM crops and some GM animals will be the rule in farms and food processing factories all around the world - non GM (crops especially) will occupy a niche market in supermarkets, in a similar manner to organic products today.

Farming as a business

One last point I want to make is that farming is a business - it should be thought of as a business and conducted as a business.

The local cake shop, newsagent or Co-op store is no different to a farm business. Decision relating to input expenses investment, marketing all should be done with an eye or two firmly focused on the bottom line.

If a farmer is in the business of farming with the primary motivation of 'lifestyle' - then that individual has absolutely no right to call upon the government and the community for measures, industry support etc, that will do nothing other than support their lifestyle.

If you cant make money out of what you are doing - change what you are doing. If you can't change what you are doing - get out of farming. If you are in it for the lifestyle - enjoy the lifestyle - but don’t expect the rest of us to support you or hold a special place in our hearts for you.

Now far from being a detractor of farmers - I strongly believe that almost all of our commentators, theorists and policy developers get it wrong when they talk about the need for farmers to become marketers and exporters and experts in this that and something else.

They talk about a new paradigm and use other wonderful terms.

This is very hard for some people to do. In the beef industry, the talk is all about grading and meat standards - producing a homogenous product for the consumer to take home and ruin by over cooking.

How is this going to be achieved when the average sale lot going through sale yards in Australia is three head?

Specialisation

More now that ever before, the world is about specialisation.

It is ridiculous to expect a farmer who specialises in the production of raw food and fibre to be a specialist in marketing, world trade, finance, logistics, manufacturing and all the other bits of the value chain.

We don’t expect a baker to be able to grow wheat do we?

The most important thing for a producer of commodities to realise, is the point touched on earlier about the value of a commodity.

Producers are part of a very complex food system.

They have to familiarise themselves with the fact that, as a link in a value chain, their actions and decisions have an impact at another point in the system or chain - and that there is much to be gained from participating in the chain rather than being the low cost input supplier.

Thank you.