BOURKE, Ms Rosie, Manager, Government and Stakeholder Relations, CropLife Australia CROSBY, Mr Justin, Director, Government and Strategic Relations, CropLife Australia GUERIN, Mr Michael, Chief Executive Officer, National Farmers' Federation NICOL, Mr Guy, Senior Policy Officer, Trade and Economics, National Farmers' Federation PETTERSSON, Ms Josefine, Environment Protection and Biodiversity Conservation Lead, AgForce [by video link] RAGG, Mr Warwick, General Manager, Natural Resource Management, National Farmers' Federation CHAIR: Welcome. I understand information on parliamentary privilege and the protection of witnesses giving evidence to a Senate committee has been provided to you. We are not taking opening statements today. You can table them if you want, but, basically, we're going to get to questions. My first questions are to AgForce in Queensland. What do you think has been the impact of the old and the new EPBC rules? Ms Pettersson : As per our submission to the inquiry, we can see already, from the current interpretation, that the ongoing cost of compliance to the EPBC reforms is over $3 billion. This is in excess of 15 per cent of the current agricultural output from the state and has severe consequences for future productivity, investment clarity, sustainability outcomes and the viability of agriculture moving forward. I think that there is the opportunity to inspect that in more detail as part of how the EPBC legislation interacts with the social, environmental and landscape view of agriculture. The biggest thing that we see with the EPBC Act is that it is focused on a project and/or the development basis for single projects, whilst agriculture is a cyclical activity. So the way that it manages impacts and that it perceives impacts is not in line with the routine, continual use of agriculture. What we then see is that the EPBC Act only looks at the potential negative impacts and does not look at the positive attributions of land stewardship. It does not recognise healthy landscapes, and it does not recognise the other attributes that agriculture in Queensland provides to that. For context, within the Queensland system, we have approximately 80 per cent of the state already under regulated remnant vegetation and 20 per cent of the state is under category X and/or precleared vegetation, where a key aspect is to be able to maintain agricultural productivity and resilience within that. We can see that there is a net loss of agricultural land within Queensland. We have these expectations that we need to continue to improve emissions efficiency and we need to continue to improve productivity, but our footprint is reducing. The potential implications of the EPBC reforms and the administrative and financial burdens are just an additional pressure in regard to what producers are already facing from the fuel and fertiliser crisis. CHAIR: Did you say $3 billion is your expectation? Ms Pettersson : It's in excess of $3 billion with the current self-assessment and potential referral requirements of routine agricultural activities, and this is an ongoing cost to the sector. It is within the appendices of our submission. My apologies; that was provided late. CHAIR: That's okay. Effectively, you're saying that this is a huge cost and it doesn't necessarily fit into this framework. Are you holding out any hope that this bilateral deal with Queensland could actually solve your problems, or are you hopeful of a more structural and bigger solution coming down the track in the future? Ms Pettersson : We are yet to understand the full scope of the bilateral agreement between Queensland and the federal government. We have also been informed by DCCEEW that this bilateral will not be in place until 2027. With regard to whether it will be sufficient to address what we're talking to, I think that, at this stage, the EPBC Act does not recognise food security. It does not recognise the emissions reduction statements and positions of the government. It does not recognise a lot of other legislation that producers need to adhere to, so there's a lot of work to be done, to the point that we require legislative amendments and/or legislative instruments that specifically have an agricultural pathway and/or agricultural exemptions for being able to prioritise that food security and food productivity into the future. It's that sustainable intensification of agriculture that's being expected to produce more in a smaller footprint. CHAIR: That's very helpful. I have a couple of questions for the NFF. What are the best opportunities we have to drive productivity in farming but also to improve conservation? Mr Guerin : I'd first like to endorse all that was said by AgForce Queensland. Those issues are real. Productivity is going to be affected significantly if the EPBC Act and the following regulations go through as currently contemplated. Agriculture is a continuing activity, and it looks after landscapes. There are frameworks in place in Queensland now, and the duplication so eloquently described by AgForce, both this morning and in their submissions, is a really important part of the conversation. As it relates to the broader question around the environment and productivity, we bring forward four thoughts for the committee, included in both our earlier submission and our conversation for today. I table the opening statement, which talks to that in some detail. Firstly, water—with a focus on the Murray-Darling Basin and the consequences of the buyback programs—is a really important conversation. With the review currently underway, it is a really important time to bring some of those conversations forward. Water, more broadly, is critical to agriculture. It has a great overlap with productivity, and the Murray-Darling Basin review is a really important part of that, given 40 per cent of Australia's food is grown in the Murray-Darling Basin, linking back to the food security comment made by AgForce just before. Second is nature repair, which includes the missed opportunities from not prioritising feral animal control on the ground. More broadly, for the committee, I'd make the following observation, and that is that, internationally, we are building standards which go to nature repair and go to natural capital more broadly, including the TNFD framework out of the WTO. They are amazingly powerful frameworks that Australia could link into and augment with the uniqueness of the Australian landscape in a way that will look at productivity, environment and the EPBC Act changes in a very different way and align with those international standards, with obvious consequences for things like trade negotiations and productivity more broadly. Third is the Australian Carbon Credit Unit Scheme, where we are lagging on fit-for-purpose methodologies such as integrated farm and land management and the feed additives piece. This is an incredibly frustrating area. The ACCU Scheme has been talked about for years and remains not fit for purpose at a time when carbon trading—alternative revenue sources, mixing landscape improvements with productivity improvements and food production, lowering emissions and thinking about our environmental concerns in Australia—is missing and has a significant upside opportunity for productivity. Fourthly—and I refer to the AgForce Queensland submission—the EPBC Act reforms are a significant challenge in the context of transitioning to the new laws. Our colleagues at AgForce have provided some good insights this morning, and we stand behind that work, 100 per cent. CHAIR: I just want to ask you two questions about what you just said. Firstly, in terms of the ACCUs, are you advocating for a system that is more compatible with other financial products? Mr Ragg : Both colours of government have supported the development of a thing called the integrated farm and land management method, which is supposed to be this smorgasbord where you choose your own methodology from within an overarching methodology. As yet, six years after it was agreed to, that has not been delivered. We need methodologies that work in the agricultural landscape rather than methodologies that just promote the establishment of environmental planning in the agricultural landscape. There are a range of opportunities available to agriculture coming online, like reducing methane emissions through feed additives or improved pastures and managing nitrogen volatilisation better. CHAIR: Is that not captured under the current ACCUs? Mr Ragg : No. There's just been a recent announcement that the beef herd methodology will be remade and feed additives will be added, but we have to do it. Senator McKENZIE: That's right. It's no good announcing it. Mr Ragg : We've got to get there, yes. CHAIR: We have too many questions and not enough time, but I want to ask you about what you said about restoring habitat and the like. I think that was your third point. Are you mainly talking about invasive species and those sorts of things here, or are there other things? Mr Ragg : Yes, predominantly. What we do really well is identify and declare war, if you like, on things like feral cats. We come up with a management plan, and then we fail to invest. We fail to invest by not appropriately developing a nature repair methodology that will allow that capital to flow to managing those in the landscape, and we fail to invest in the actual eradication program. We've got the strategies; there's just not enough money floating around. There is public and private benefit from this. If you think about feral cats and you look at the way TERN analyse threats to biodiversity now, it is invasive species that are now the biggest single cause beyond habitat, so we need to intervene. There are 25 million pigs running around. We don't know how many cats, but there are more than enough. We need to take a serious approach to reducing those numbers for the benefit of agricultural productivity and for the benefit of biodiversity in the landscape. CHAIR: I agree. Senator McKenzie. Senator McKENZIE: I wanted to go to the loans that the government has actually announced around using the Economic Resilience Program to help farmers and industry with fuel shortages. Are primary producers able to access the billion-dollar concessional loans that the Prime Minister announced at the National Press Club when he said: So our government will extend their credit to help them, and the farmers and producers who rely on these supply chains, to weather the storm. Do you have a comment around farmers' access to support during this fuel crisis? Mr Guerin : I'll take the question on notice in the detail. Senator McKENZIE: Thank you. That's fine. I have limited time. We have also seen Twiggy Forrest launch an advertising campaign with a nurse very concerned about her power bill going through the roof and blaming the fuel tax credit scheme for that increase. I would have thought it was 100 per cent renewable policies and net zero. What is the NFF's view of the fuel tax credit scheme and the role it plays in primary producers being able to keep harvesters and tractors that aren't using public roads going? Mr Guerin : We've been resolute in the support for the current system for a long time, and we remain that way. Vehicle owners who don't use the roads not paying road taxes makes absolute sense and has been an underpinning for all industries that have off-road vehicles that remain off road, agriculture being one of them. Our position remains unchanged. Senator McKENZIE: Excellent. We have Woolworths with us later today. I'm interested in the ability of farmers, suppliers and primary producers to pass on the increased fuel, freight and fertiliser costs on the production of food. I would like you to just quickly talk us through the impact that is being felt right now through this crisis. We've seen dairy saying prices are going to go up 20 per cent. Horticulture is saying businesses are going out of business. Grain are deciding whether or not they will put seed in, whether they'll be able to harvest, given the extent of the crisis. Can you talk us through the impact. What are the big supermarkets offering primary producers through this crisis? Mr Guerin : We and most producers in Australia are still in a moment of shock. Put aside supply issues, which I'll come back to in a moment. The costs of fuel and fertiliser, two significant inputs into agriculture, are at a level where it's very hard to see how we can make money by growing food. Producers are faced with the decision short term, assuming they can get supply, of deciding whether to plant and lose money or whether to not plant and lose less money. But if they don't plant to lose less money, which for a family farm may be an important decision to make given obligations to the banks et cetera, then it starts to put food security at risk not far down the track. In the shorter term, with a shorter rotation like vegetable growing and in the more medium term for broadacre—for example, animal industries—with the current cost of fuel and current cost of fertiliser, it is very hard to see how a skinny margin business that relies on those inputs so heavily can make any money. In fact, it's very easy to see how they can lose money. That is the short-term decision that producers have in front of them. It's a terrible decision to have to make. In cases like the dairy industry, where you can't turn dairy cows on and off depending on the price of fuel, it's a very confronting position for them to be in. Supply appears to be settling in the short term, but the supply concerns remain real. If you plant a crop now in the winter planting season, which is underway right now, and you don't have certainty of even supply for fertiliser for the in-crop fertiliser which you rely on for productivity, that makes it worse. Senator McKENZIE: What about the supermarkets? What about the ability to pass these input costs on? Mr Guerin : This is a really important conversation for us right now. If producers cannot make money producing food, they have to have a release valve to enable them to do that. Otherwise, we will lose food security in the short term. Senator McKENZIE: Are you saying they can't? Every other business, when costs go up, can just charge their customer more. Why can't a farmer do that? Mr Guerin : It is an excellent question, and those are some of the conversations we're having right now. Producers who cannot pass on those cost increases will stop producing food because they have no other alternative. So those conversations, whether it be down the supply chain, whether it be passing on the costs to consumers or others in the supply chain, whether it be other sort of relief in terms of underwriting shipments et cetera, are all elements of a critical conversation right now short term. Senator McKENZIE: Well, conversations are one thing. Have you contacted the Treasurer around the code of conduct that he implemented for supermarkets? Mr Guerin : Yes, we have. Senator McKENZIE: And what's he said? Mr Guerin : We're in conversation. Senator McKENZIE: That's not very comforting, Mr Guerin. Mr Guerin : Producers across Australia are feeling very uncomfortable right now. Senator McKENZIE: You're having a conversation? That's, quite frankly, not good enough. If I were one of your members, I would be pretty upset that that was your response. What are you doing to get the government to use their own code of conduct against the supermarkets to help your members? Mr Guerin : Everything we possibly can. Some of those conversations are in confidence because we may get better results. Some of those conversations are in the public. We continue to make those decisions day by day in the best interest of agriculture, as best we know. Senator McKENZIE: But are Woolworths and Coles treating your suppliers well or not well? CHAIR: I'm going to Senator Grogan next. Senator GROGAN: I might go to CropLife now. Your submission notes that 80 per cent of broadacre cropping productivity gains since 1977 have come from technology. Can you give us a sense of the major pieces there and what you think's coming next. Mr Crosby : We're citing some work that the Australian Bureau of Agricultural Resource Economics and Science have put together. When we actually disaggregate agriculture, we see that we do have a two-speed economy with regard to productivity growth. The areas where we've seen great leaps forward in productivity growth have been in broadacre cropping. They are the industries that have been real rapid takers of the innovations of the plant science industry. We particularly see techniques like no-till farming that have enabled us to harvest moisture, to be really efficient with what is a variable climate in Australia, and that's enabled us to grow our yield. But that all hangs on the fact that we are able to use no-till farming, which is reliant upon chemical fallow. It means that our farmers are able to control weeds by using both knockdowns and selective herbicides. As I said, that's enabled us to grow that yield over the 20 years. If we have a look at the period from 2004 to 2024, we saw productivity growth in broadacre cropping at a rate of 2.2 per cent, which is far and above the market rate and, in fact, far above agriculture. Senator GROGAN: Where we stand now, with the innovations or developments—because it's not always the grand silver bullet that makes a difference—what are the challenges, particularly in a regulatory sense, or things that government can influence that you see that could either slow down or stop or that could actually open up the market, make it easier and make it swifter? Mr Crosby : That's a really good observation, because it ultimately is an investment game. Our members invest. They have deep supply chains of R&D. It costs over $450 million to get a single pesticide product registered in the major markets and more to come into Australia. They do that over 12 years, so they have long, patient investment that needs returns. What we see in that is there's a real need to have a regulatory framework that's open to investment. That doesn't mean that we need to take down our regulatory standards. We need to use science and risk-proportionate regulation to ensure that members have certainty when they come to Australia. Unfortunately, to the point that you made there, when we look at the current status of on-time registration of new products by the Australian Pesticides and Veterinary Medicines Authority, it's lagging behind. For that series or that type of new product, we saw an on-time rate at 37 per cent in the last quarter. When our members are looking where they should invest to bring these products—should they take them to South America or should they take them to Australia?—they're looking at market size and they're also looking at that regulatory efficiency. One of the main things that we do and we've been talking to government around is an opportunity for the APVMA to improve its management efficiency, improve its on-time performance and create greater certainty to that investment. The corollary of that is that we've been talking to government about the opportunity to invest in the Australian Pesticides and Veterinary Medicines Authority because it is the only pesticide regulator in the OECD which is fully funded by cost recovery, yet it delivers large swathes of public good in terms of compliance. We think that there's an opportunity for government, as it asks for more from a regulator, to actually fund more, and that will enable science based regulation that is on time, efficient, science based and risk proportionate and delivers farmers the tools that will actually grow productivity. The beauty of growing productivity in agriculture is not only that it creates export earnings but that it actually creates the supply of fresh fruit and vegetables that keeps the price affordable for families as well. There's a double-edged sword here. It not only helps our national exports but also helps deal with that pain that people have in their pocket every time they go to the check-out. Senator GROGAN: Are you seeing any other science based or technology based scenarios or initiatives? Mr Crosby : Improving the APVMA is probably the No. 1 thing. Also, in terms of our regulation of genetic technologies, we are seeing genetic technologies be a really important tool for farmers, particularly as we face climate change and are not only trying to manage pests, weeds and disease by having different plants but also trying to move into new products that consumers want and will need. There's an opportunity to use both new genetically modified crops, which we already have in Australia, and new breeding technologies. Using genomic editing, which is based on the Nobel Prize winning technology CRISPR, we could actually speed up our plant breeding and develop crops that could be bred conventionally but do it in a fraction of the time. In terms of where our regulatory framework is at for that, we're 3,000 days behind in a reform process that started back in 2017. The opportunity is for government to get in and reform that process rather rapidly to provide the certainty, which will provide our members the opportunity to invest in Australia and actually support that plant breeding process. But there are also other benefits that will bring to Australia, because that regulation is one of the underpinning things that will help the bioeconomy approach in terms of biomanufacturing and medical biotechnology advances. As I said, there's an opportunity for regulatory reform that is well overdue to actually create that signal and put Australia in a position of leadership. The last thing we would say that is a great opportunity for Australia is that we need to change the conversation about Australia as a place to invest in. We think intellectual property law is a great way we could actually do that. Australia is a small marketplace. For pesticides, we're somewhere between 1½ and three per cent of the global market, but we have really high costs of regulation. This opportunity to create a patent credit would actually change the conversations in boardrooms around the world. When people go, 'We've got a new product. Should we bring it to Australia or should we take it to South America?' they can go: 'Australia's actually hungry for this innovation. They've got good, strong, risk based, science based regulation. They understand that in terms of the market size they're small, and they're trying to change that conversation.' Speed up and bring forward the APVMA reform process. We're having good conversations with Assistant Minister White around bringing forward that reform and finally seeing it to fruition after those 3,000-plus days. Then change the conversation, through using intellectual property laws, to make Australia a place where the plant science industry globally wants to invest. Senator GROGAN: Thank you, I really appreciate that. That's very helpful. Mr Crosby : Thank you. CHAIR: Senator Ananda-Rajah. Senator ANANDA-RAJAH: I have a couple quick questions. In your submission you've noted that productivity in the farming sector has declined over the last two decades. To what extent do you think that's due to climate variability or changes to global commodity prices? I know farmers are, of course, on the front line of climate impacts, and those have been intensifying over this period of time. Mr Crosby : If you have a look at some of the work we've cited in the graph that we've placed in our submission, what we can see is that where Australian agriculture has accepted or rapidly taken up new innovation, such as pesticides that help no-till farming or genetically modified crops, we're actually seeing productivity grow quite strongly. As I said before, in the period from 2004 to 2024 our broadacre cropping industries had productivity growth of 2.2 per cent. That is by far and away not only above agriculture but well above the market economy growth rate. To illustrate that, where we see technology being invested in, where we see technology being commercialised in Australia and where we see it being adopted in the paddock, we're seeing productivity growth. For other industries, some of that growth and investment hasn't been available, which goes to the point around Senator Grogan's question. Having regulatory processes that make Australia an attractive destination for that investment is really important, particularly to agricultural productivity growth. Senator ANANDA-RAJAH: If I could just summarise, what you're saying is that you think some of the innovations that have been adopted by farmers, like GM crops, no-till farming and so on have gone to some extent to mitigate the impacts of climate variability. Is that what you're essentially saying? Mr Crosby : There's some work that's been done by CSIRO, by an academic called Zvi Hochman, that actually notes that, whilst there is an impact with regard to climate change, the technology growth and technology application—particularly in the broadacre cropping sector—have actually seen productivity growth despite those headwinds. Mr Ragg : In the context of the climate change question, one of the features of agriculture is its capacity to adapt. We have continued and will continue to adapt to climate change variability. What we're seeing is perennial crops moving further south, recognising that there's variability in the rainfall reliability across the country. There's going to be, on average, more rain in the north and less in the south. And, going back to a point that Mr Guerin made earlier about water, what we really need is to see there recognition that the variability in water availability needs to be equally applied through the system and avoid as much as possible just accumulating water that, frankly, can't be used for the environmental outcomes it's intended for because the system is not designed to allow the water to get to where it needs to get. There are some fine lines there that we continue to walk. Agriculture will continue to engage in this and continue to look for technological and practical solutions. Senator ANANDA-RAJAH: Really quickly, because we're at time, there's the question of the ACCC supermarkets inquiry. The government has committed to acting on all those recommendations. Does the NFF consider this a meaningful step towards rebalancing market power in the supply chain? If you could elaborate, that would be helpful. Mr Guerin : The comment I would make is that this is a dynamic conversation that needs to continue and an external review is helpful to that ongoing change. Supply chains are constantly changing; they're not static. The inquiry is timely, and the industry welcomes the inquiries into and the external overview of these important areas. Senator ANANDA-RAJAH: Thank you. CHAIR: Before you go, I want to come back to NFF about the ACCUs issue. It's not entirely clear to me what you want to happen in terms of the ACCU reform. I understand that you're saying there are certain things that aren't captured for the purposes of creating an ACCU, but is there a broader opportunity to do something with ACCUs to make it more compatible with other tradeable instruments, for example? Mr Ragg : Maybe I could answer it this way: it's not the ACCU that's the issue; it's the pathway to getting ACCUs. If you think about agriculture, the burning platforms are enteric methane and nitrogen. The opportunity is for us to be able to reduce those and attract ACCUs for doing so. As we sit here today, we don't have current and valid methodologies that allow us to do that. They're now agreed to be developed; we've got to get on and develop them. The other point I was making was that, because agriculture is so multifaceted, we need a really robust IFLM that allows us to do energy, manure management and plantations—if that works in the landscape—and, as these other ones come onstream, plug them in. The important point there is the efficiency of audit, because it costs a bomb to be involved in these things. The more we can get audit efficiency and flexibility in what happens on a particular farm, the more likely we are to see the uptake from the farm sector that's really hard to attract now. CHAIR: Is soil carbon currently in or out? Mr Ragg : Soil carbon is in. Soil carbon is one of the only parts of the draft farm and land management methodology. I think it's an ongoing opportunity. The problem with soil carbon at the moment is it's quite expensive to measure. There are technologies coming online that will allow us to do that more efficiently; these are all pathways. That's why the Agriculture and Land Sector Plan recognises that we're not setting targets for agriculture. It's a hard-to-abate sector. We need more investment in innovation, which we're seeing, and we need to continue to support that and get some outcomes on the ground. Senator GROGAN: Can I have a really quick follow-up? CHAIR: Yes. Senator GROGAN: Do you see a role for AI in that auditing process? Cat and pigeons! Mr Ragg : Sorry, I'm smiling because AI has two meanings: artificial insemination and artificial intelligence. Senator GROGAN: Oh, of course! Mr Ragg : Yes to the first. To the second one—probably. I'm going to get into a rabbit hole here that I might not get out of, but there's the opportunity to use technology like drone technology et cetera for onfarm efficiency and—back to the carbon point—for remote measuring. Near infra-red technology for soil carbon measurement seems to be coming onstream. I think that's opportune. Let me go really out on a limb here. The opportunity to do that in a more labour efficient way, because labour is such a difficult thing to manage within the ag sector, is also something that we'd be keen to pursue. Mr Crosby : In terms of regulatory efficiency in our sector, that's something that we're encouraging the regulator to take up and to adapt, because we can use high science, greater consistency and greater transparency through the use of regtech options. Senator GROGAN: I think, with the ACCU's auditing, that there is some drone technology usage at the moment, but I might just put some more questions on notice so that I don't upset the chair. CHAIR: No, it's all good. Unfortunately, we're a little bit compressed today, so we're all doing our best. Thank you to the three witnesses for being here. You go with our thanks, and we'd like to have your answers back by Thursday 7 May, please..