Smarts to power fu­ture growth

Tasmanian Country - - NEWS -

TAS­MA­NIA is punch­ing well above its weight in agri­cul­tural pro­duc­tion but ed­u­ca­tion will be a key fac­tor for the fu­ture.

Econ­o­mist Saul Es­lake was a guest speaker at the Grains Re­search and Devel­op­ment Cor­po­ra­tion Farm Busi­ness Up­date event last week.

Mr Es­lake said agri­cul­ture will be an im­por­tant part of Tas­ma­nia’s eco­nomic fu­ture, but com­modi­ties are not the an­swer.

“It’s in­evitable that the Tas­ma­nian econ­omy of the fu­ture if it’s go­ing to be eco­nom­i­cally and in other ways sus­tain­able has to be very to be dif­fer­ent from the past,” he said.

Mr Es­lake said glob­al­i­sa­tion had led to low-cost pro­duc­tion and that was mak­ing un­dif­fer­en­ti­ated com­modi­ties, in­clud­ing agri­cul­tural prod­ucts, and com­pet­ing on price alone no longer vi­able.

“We can’t do that in Tas­ma­nia given our scale,” he said.

“Our eco­nomic fu­ture has to de­pend on be­ing able to pro­duce and mar­ket highly dif­fer­en­ti­ated goods and ser­vices which em­body a sig­nif­i­cant in­tel­lec­tual con­tent, for which cus­tomers can be per­suaded to pay pre­mium prices.”

Agri­cul­ture is a key pil­lar of the Tas­ma­nian econ­omy and of­fers big op­por­tu­ni­ties.

“I re­ally strongly be­lieve that agri­cul­ture is an im­por­tant part of that,” he said.

“Agri­cul­ture is a big­ger part of Tas­ma­nia’s econ­omy than it is of any other state or ter­ri­tory. It’s al­most three times as im­por­tant to us as it is to the rest of the coun­try.

“The sec­ond thing is that agri­cul­ture is some­thing we’re ac­tu­ally good at,” Mr Es­lake said.

“An above-av­er­age pro­por­tion of Tas­ma­nia’s work­force works in in­dus­tries where pro­duc­tiv­ity is lower than the cor­re­spond­ing in­dus­try on the main­land. But agri­cul­ture is one of the hand­ful of in­dus­tries where pro­duc­tiv­ity in Tas­ma­nia is ac­tu­ally higher than the na­tional av­er­age.”

Mr Es­lake said the changes and di­ver­si­fi­ca­tion in the state’s agri­cul­ture sec­tor in re­cent years were pos­i­tive, with a move over the past 15 years to­wards dif­fer­en­ti­ated prod­ucts and pre­mium prices.

De­spite the pos­i­tives, Mr Es­lake said ed­u­ca­tion was an area hold­ing Tas­ma­nia back.

Un­like main­land states many Tas­ma­nian stu­dents do not com­plete year 11 and 12, which has an im­pact on their over­all earn­ing ca­pac­ity.

Ja­son Lynch from Mac­quarie Franklin dis­cussed the gap be­tween top-per­form­ing farms and the av­er­age.

Mr Lynch said the top 20 for farm­ing busi­nesses pro­duced a re­turn of eq­uity of about 8.18 per cent, com­pared to just 1.94 per cent for av­er­age farms.

Gen­er­ally bet­ter-per­form­ing farms are larger but Mr Lynch said this was be­cause those man­ag­ing them were bet­ter able to use those as­sets.

The best farm­ers have a dis­ci­plined ap­proach to crop­ping in­puts and ef­fi­cient ro­ta­tions.

He said top pro­duc­ers fo­cused on things they can con­trol such as mar­gin op­ti­mi­sa­tion, a low-cost busi­ness model and man­ag­ing peo­ple and risk.

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