By “Prime” Ag News, Apr 27, 2018
Australia’s wealthiest woman is on a crusade, and she has the red tape choking the agricultural sector in her sights. If the sector is to survive and prosper, says Gina Rinehart, government must urgently cut the regulatory burden.
Rinehart says that while there are opportunities in agriculture, they won’t be realised until barriers facing business are reduced.
“Each of our agriculture industries needs to be focused on what can happen when government burdens get too high, hence costs get too high,” she says. “And in turn they should speak out continuously against increasing red tape and compliance burdens, payroll tax, escalating stamp tax and licences, and other government burdens, to help protect their very future.”
She says there is no helpful place for government intervention in the commodities export market “but our international customers will buy our products, if they remain cost competitive and reliable.”
Whenever people hear the names Rinehart and Hancock, they think of the mining sector. Rinehart’s wealth is built on iron ore, but it’s Australia’s agricultural sector that is gaining her attention.
In 2016, Hancock bought the $386.5 million cattle empire S Kidman & Co as a majority partner in a joint bid with Chinese group Shanghai CRED. And just before Christmas, cattle and properties in western Queensland acquired from veteran Australian wagyu producer Wally Rea were added to the stable.
The acquisitions made Hancock one of the top beef producers in Australia, but Rinehart says few people know that the family has owned cattle stations stretching back decades earlier than Kidman.
Her great-grandparents founded several of the first stations in the north, including Ashburton Downs with its famous cattle brand, Hancock 3 b.
“Our international customers will buy our products, if they remain cost competitive and reliable.” Gina Rinehart
Rinehart was raised on Mulga Downs station, in the north west, owned at that time by her grandfather and father. Then it was a sheep station, but later switched to cattle and remains in the family’s hands. “I loved my life on those stations,” Rinehart says.
The combined Kidman and Hancock herd will reach 300,000 head, placing Hancock among the top three beef producers in Australia. Last year, The Hancock Group launched its new full-blood wagyu beef brand for export to Asia.
There is also strong demand for the 2GR brand in the Australian fine dining market, Rinehart told the Financial Review earlier this year. “We are very pleased to be moving our 2GR wagyu into Australia’s best restaurants, and would like to maintain this as a priority,” she says. Rinehart wants to highlight the critical need for Australia’s agricultural industry to be cost competitive. In 2015-2016, according to the Australian Bureau of Statistics, the total value of Australia’s agricultural production was $56 billion. “Internationally, given the important fact that most of the markets for our agriculture are actually overseas, we must compete globally to underpin our cost competitiveness and enable Australian agriculture’s sustainability,” Rinehart says.
According to PwC’s 2018 CEO Survey, Australian leaders claim regulation is the biggest threat to growth in the year ahead, alongside cyber security.
Rinehart says we need to lower all forms of government cost burdens, be that red tape, compliance, taxes or ever-increasing licence costs.
She says if cattle giant Sidney Kidman faced the current government tape and compliance burdens, the empire he created would never have been possible. Rinehart would like Australians to receive more education about where things come from and the contribution agriculture and its related industries make to Australians’ lives.
She says 16 per cent of Australia’s private sector workforce is based in agriculture or related industries and every year each Australian pastoralist and farmer provides enough food on average to feed 400 other Australians and export enough food to feed about 600 people living overseas.
“Let’s think about those 1.6 million employees in our agriculture industry and the income tax they pay, and the tax from the 130,000 agribusinesses in Australia, not just company taxes but payroll tax, stamp duty, the GST and licences,” Rinehart told the National Agriculture and Related Industries dinner in Canberra recently.
“These business and employment taxes help to show a very important picture of agriculture, an industry vital to our country and its future. And I haven’t even spoken about the importance of reliably feeding Australians with fresh and clean produce.”
PwC Food and Agribusiness advisory partner Tim Lee agrees that there is strong demand for Australian agricultural products, and there are opportunities to grow the sector through promoting Australia’s clean and green image.
“In Asia, especially, there are opportunities for Australian produce, where clean and green food is sold at a premium. Having healthy food that is safe to eat is something we take for granted in Australia,” he says. “As we continue to export more food the need and demand for food security and trust in the supply chain continues to grow.
We send lamb to the Middle East, beef to Vietnam, Korea and Japan, and have recently exported live cattle to China from northern Australia. Australia’s almonds go everywhere, especially India, in large volumes, and our fresh fruit and vegetable produce is well-regarded in Asia. Australia punches above its weight on the export market due to our small population and relatively large production base.”
Lee says free trade agreements with the US, China, Japan, Korea, Singapore, Thailand and Malaysia have helped Australian food producers and will continue to do so over the next decade.
“Export tariffs on Australian beef to China, which are currently up to 25 per cent, will cease by 2024, making Australian producers more competitive. There really are genuine opportunities across a range of commodities as a result of these sorts of agreements,” he says.
With the trade environment becoming more favourable for Australian producers, the focus will turn to production rather than trade and making the most of resources in Australia, such as land and water.
Rinehart says Australia is a lucky country. “Lucky that we have abundant land and water and sunshine. But we will be unlucky if we don’t use it.”