Wednesday, 22 May 2013 04:17
Todays guest blogger is Steve Jones (see footnote)
Reblogged from Dairy News Australia
Almost weekly I watch with interest an essential Australian industry losing credibility through its own actions. These include degrading its power base to being not only ineffective but counterproductive; ongoing non-compliance to consumer/voter expectation that causes massive disruption to their own business and the unintentional attack on the largest and most influential unofficial lobby group buying their products, the city consumer/voter.
This is the wider agriculture sector I observe. I appreciate dairy is heavily regulated and, by enlarge, complies. Unfortunately however the city consumer/voter lumps all farmers together.
I was raised by a builder in Gippsland and for many years our lives were affected by the fortunes of farmers. My old man would follow the wool price and if they were high he could count on some new sheds to build and if there was a drought or prices fell, we went from eating roast to mince. This developed true empathy for the ag sector, reconnected in the last few years with meeting my partner who works across most of the ag sector.
My path was 30 years in the oil and gas sector that culminated in co-founding engineering and design company Plexal Group. In 10 years we expanded from our head office in Perth to Brisbane, Thailand and Bangladesh, with a workforce nearing 200 and servicing majors such as Chevron and Woodside. At the beginning of this year a multi-national acquired the company and I no longer work in the industry. The views I share are mine alone and in no way do I represent Plexal Group.
In those 10 years we had our share of droughts and floods. The Global Financial Crisis (GFC) wiped out years of earnings; the flood in Queensland saw our office shut for weeks; floods in Bangkok virtually shut down our operation for two months and the Bangkok airport was taken over by protestors, isolating us for several weeks. We never received an ounce of financial support or direct bail-out.
Nor was this the case for the 30,000 small, privately owned and often family-run businesses that went under during the GFC. Reportedly the rate of small business collapses is 12% higher today than during the GFC and rarely talked of in the media. Their cries for a bail out don’t make the light of day.
During my time in the resource sector I witnessed significant growth and with it their power and influence. They understand their power base and how to use it effectively. They have adapted to the expectation demands of consumer voters far quicker than ag in the last 3-4 decades and do consumer compliance exceptionally well. This has helped grease the wheels for approvals, influenced legislation and enabled them to continue even after a major non-compliance.
It seems to me that the ag sector has the biggest stick of all in terms of power and influence over government policy – it provides 93% of all our food. History will tell us repeatedly that anarchy is only an empty belly away. In no way do I advocate blocking of supply as it is a form of blackmail. Nonetheless it is a massive stick and one I see thrown away or broken into pieces time and again by the owners of it.
Last week I watched in amazement as the WA Farmers Federation and the WA branch of the Pastoralists and Graziers Association very publicly disagreed with each other over whether the WA wheat growers should get another finance assist package or not. Divide and conquer is 101 ‘art of war’. But one you are meant to inflict on your enemy, not yourself.
Behind closed doors government members must shake their heads in bemusement and largely ignore because they are handed this gift. Then for a moment put yourself in the shoes of 70% of the nation’s voters, living in our cities. They see farmer against farmer squabbling over a finance assist package that their tax dollar is paying for…meanwhile their job is under threat if they happen to work for an east coast government or a small business. It doesn’t feel like winning hearts and minds.
And then this week my lounge is filled with sad and terrible images of mistreatment of Australian cattle in an Egyptian abattoir. Yet another non-compliance with immediate and crippling affects on the industry. I admire the swift response by the ag sector with the self-imposed ban however the NGO produced footage it is another step closer to the cliff of total abandonment of this important industry.
Self-regulation often presents internal conflict with trying to justify the endless compliance cost. It can be hard to swallow the expenditure when more pressing issues of commodity prices, falling equity, exchange rate all threaten viability. However non-compliance to regulations or, worse still, betraying consumer/voter expectation, inflicts costs that make the alternative pale to insignificance. Although the live export industry is making significant inroads to detecting and rectifying the non-compliances, it is a process than needs to be better regulated. It is fantastic to see the industry come so far and improve animal treatment in places outside of Australia. I just hope they can find the improvements to limit opportunities for NGOs to brand the whole effort as a failure before it is too late.
Unfortunately the city voter is largely disconnected from the real issues and efforts of farming groups. Compliance is not just about legislated regulations, the ag sector must always strive to hold the high ground in the eyes of voter sentiment. If the city consumer feels trust has been breached they will happily bite the hand that feeds them. ‘Consumer Expectation Compliance’ is not optional, get on board or be forced out by new and more onerous legislation.
As a CEO and then chairman I had one not negotiable policy – never, ever publicly criticise your client. Of course we had robust negotiations behind the scenes but there is nothing to gain through public spats other than alienation with the client and their customer – the public consumer/voter. We actually sang the praises of our clients in the press and I wish to point out that for 25 years there was a monopoly in the Australian Liquid Natural Gas sector.
On almost a weekly basis I can find examples of farmers and their lobby groups publicly flogging Coles and Woolies. For example I watch the milk price fight with Coles in complete bewilderment. Put yourself in the lounge of a city voter – 70% of our nation – most with a small asset and struggling to meet the mortgage payments, compared to their perception of farmers being wealthy. A ‘hectare’ in the city costs $10,000,000 if you consider an average home of $500,000 on 500m2 block. In their lounge they see the dairy farmer being interviewed lamenting how hard they are doing with hundreds of hectares of prime land in the background and discard the cry of going broke. I realise this is not reality but it is all about perception.
The government health department and health groups advertising campaigns stress you must eat a balanced diet of fresh produce. So you’ve just bought some nutritious milk for $1/litre over a bottle of coke at $2.25/litre for your kids. Coles have told you they are have provided that great personal achievement cheaper. You’re feeling pretty good about yourself. You don’t care how it has come cheaper, after all we’ve all been conditioned to expect cheaper goods for the last three decades and it has become our right not a gift.
Then they see farmers attacking Coles and that they are sending them broke.
City employees rarely understand the daily struggle of the very business that pays their mortgage let alone a farm business. So every time farmers attack Coles, they are attacking the most influential lobby group that all political parties jump to – the city consumer/voter. This does not feel like a winning strategy.
Even though the resource sector is selling all their product overseas they know they must have the heart and minds of the city voter. Next time look a little closer at the “We Agree” campaign Chevron is running. It is all about winning empathy of the Australian voter – to ensure they support their developments rather than calling for them to be stopped or shutdown. Perhaps the ag sector can learn from the resource sector?
Footnote. Steve Jones will be the keynote speaker at the 2013 Dairy Research Foundation Symposium in Kiama on 3rd July 2013
We have given Steve the brief
RETHINKING THE POWER OF AGRICULTURE: The mining and energy sectors are clashing with NSW agriculture over land use – to an extent where one could be excused for thinking that agriculture has little power or influence when it comes to mounting its case. Steve Jones is an oil and gas industry stalwart and former chairman of oil and gas engineering company Plexal Group. Steve is in a unique position to observe
the missed lobbying opportunities for agriculture and believes ag has a ‘big stick’ – it just doesn’t know how to use it! This is a powerful presentation that will force some out of the square agricultural thinking.
More information of the Symposium can be found here