Andrew Leigh

Bend back Ag's U-shaped employment curve, The Land, 15 November 2016

Five years ago, a family in NSW took the plunge and started a company called Rise Above, which specialises drone technology, including precision agriculture, farming and crop management. This technology is an example of where innovation in agriculture has made it in practice, cutting the cost of jobs such as spraying and data collection. Taking innovation through to implementation, including as new businesses, is an area in which Australian agriculture can perform much better.

However, one innovator’s disruption is another person’s job loss. One of the most common questions politicians like us are asked is “where will the jobs of the future come from?” While all of us welcome the prospect of increased crop yields, greater productivity and improved efficiency in our agricultural sector, they create inevitable pressures on farm employment.

As a share of total employment, agricultural work has halved during the past 20 years. Not only is this a worse result than manufacturing, it also bucks the trend that we normally see across the Australian economy. A recent study by economists Roger Wilkins and Mark Wooden looked at employment changes across 43 Australian occupations and found a ‘U-shaped’ outcome: employment has grown in the low-paid and high-professions, but contracted in the middle-paid professions. Not only are farm workers relatively poorly paid – the number of these jobs on offer is shrinking rapidly.

Innovation is one of many factors contributing to this outcome. At the basic research level, Australian agriculture does well. Our nation accounts for more than five per cent of the most cited papers in the world when it comes to science and engineering – 10 times what our share of world population would lead you to expect. Australia does especially well in agricultural and veterinary science, which is almost twice the average across other sciences in Australia.

But Australia does less well in translating these ideas into businesses. According to former Chief Scientist Ian Chubb, just 1.5pc of Australian companies developed new-to-the-world innovations, compared to between 10pc and 40pc in other advanced countries. This is a particular issue for agriculture, a sector where just 1pc of business spending goes to research and development. Indeed, analysis from Per Davidsson and Scott Gordon suggest agriculture and construction are two of the worst performers in terms of innovation among start-ups.

Our focus therefore needs to be on promoting innovation in agriculture and ensuring it translates into business opportunities and job creation. One way of achieving this is to ensure that agricultural markets are not controlled by just a few big players. 

In some sectors – including rice growing, egg farming and cotton ginning – the four largest firms account for more than half the market. That kind of market dominance can’t be good for entrepreneurs. Encouraging new entrants means more competition, more innovation and more jobs.

Exporting agricultural products into growing Asian markets will also be critical to boosting employment. The demand for Australian agricultural produce will only increase as the Asian middle class grows, but international competition and product differentiation means selling into these markets won’t be as easy as is the case for coal and iron ore. Engaging with our region requires giving all young Australians the chance to learn an Asian language at school.

Finally, we can’t talk about agricultural innovation without mentioning the need for super-fast broadband. Since 2013, Australia has dropped from 30th to 60th in the world for internet speeds. In September, the Australian National Audit Office reported that one in four of the mobile phone towers funded under the government’s black spots program provided no new or extended coverage. If we are to be an innovative nation, the federal government needs to do a better job at delivering high quality communications services to rural and regional Australia.

Joel Fitzgibbon is the Shadow Minister for Agriculture, Forestry and Fisheries and Shadow Minister for Rural and Regional Australia. Andrew Leigh is the Shadow Assistant Treasurer and Shadow Minister for Competition and Productivity. This opinion piece first appeared in The Land on 15 November 2016.