John H Howard, 30 Nov 2018
The recently announced drought and rural support package is a welcome initiative to address the problems encountered by farmers in drought periods. But does it go far enough in outlining an agenda to secure the future of Australia’s rural economy?
The recent Regional Universities Conference was conducted on the theme “Regional Universities: Anchor Institutions Transforming their Regions”. Several presentations made the case for universities to take a lead in the development and implementation of Rural Innovation and Industry Strategy.
There is a common perception that rural industries are part of the “old economy”, but the reality is that they are very much part of the “new economy” involving the widespread application of advanced biology and biochemistry, computer and data science, analytics, artificial intelligence, robotics and mechatronics. Farms are getting larger, more productive, and a new cohort of professional farm managers is emerging.
Much current rural policy reflects a concern with the future of traditional farming, and particularly broad acre farming. This form of farming is embedded in Australia’s social and political culture, but it is undergoing rapid technological change reflected in the contemporary interest in AgTech and GeneTech. Nonetheless, farm based production remains a vitally important component of Australia’s rural economy. But it is not the only one.
The rural economy transcends a highly integrated value chain that starts with upstream components (sustainable use of land and water, biodiversity), research and development, through primary production (agriculture, fisheries, forestry, fibre), to processing (manufacturing and fabrication), to further downstream service elements (marketing, branding, product positioning), and through to recycling and reuse.
The performance of Australia’s rural economy has substantial impacts on the national and regional economies including regional cities, towns and rural communities. Currently, the Agriculture, forestry and fishing component contributes 2.3% to Australia’s GDP. Agricultural exports make up 5.6% of total exports, but when combined with food processing the proportion shifts to 11.7%. The proportion increases further when rural services are included.
More significantly, however, Agriculture, forestry and fishing create biological materials and utilise biological processes that impact on national innovation capability in multiple ways. These materials and processes provide the feedstock for a wide range of biologically derived downstream value adding activity including food production, textiles, clothing, forest and wood products, construction, and energy from biomass.
Unfortunately, current policies and strategies to develop and grow Australia’s rural industry and biologically derived economy are fragmented, siloised and often inconsistent. Adding a new national “drought proofing” policy for farming, however well intentioned, is unlikely to have much impact unless it is delivered in within a framework of a National Rural Industry Strategy that encompasses multiple policy domains.
The Australian and State Governments have, or have on the drawing board, separate policies for agriculture, forestry, regional development, rural research, development and innovation (RDI), rural education and training, rural health, regional infrastructure, rural finance, rural energy (including renewables and biomass), land use, investment and risk capital (particularly in relation to the emerging AgTech field), international trade and market access.
All of these policy domains fall under the responsibility of different Ministers, different Departments, and different jurisdictions – Commonwealth, State and Local. Some domains relate directly to the development and growth of rural industries, whist others are more tangential – but they have a critical impact on capacity and capability for the rural economy to grow and prosper. There is no effective mechanism for these influences to come together in a consistent and coherent way.
Innovation, the successful application of new ideas, can be a critical enabler and integrator for a rural industry strategy as rural industries are being disrupted by the application of new technologies, the emergence of new markets, and the increasing power of customers to demand full traceability and provenance, and stakeholder requirements for a “social license to operate”.
In addition to critical ‘hard’ infrastructure investments such as water, road, rail, broadband, the rural economy must be supported by knowledge based investments in research, innovation, education and training, health, OH&S, and community services. These are essential capacity building investments for knowledge creation, integration, and translation and ensuring the availability of people with the essential skills for the future. These are new economy skills for what is being referred to as digital and autonomous agriculture and data enabled agriculture.
An industry strategy for the rural economy must be place specific – different places need different approaches. Other nations are developing place based policies in a context of regional innovation ecosystems. Regional Innovation Smart Specialisation Strategies, a ‘bottom up’ approach to policy and strategy development, have traction in Europe and the UK.
Who can drive a rural and regional innovation and industry strategy? Australia does not have a system of regional governance. Governance at regional level is highly contested and fragmented – there are multiple rural and regional based organisations, including devolved responsibilities of Commonwealth and State Governments, with resource allocations made in Canberra or State capitals.
Can universities take the lead? Regional universities certainly have a vested interest in ensuring the economic and social vibrancy of the regions in which they operate. Several universities, through their Councils and Vice-Chancellors have taken on this integrating and leadership role.
Australia’s rural industry future will to a large extent be defined by its knowledge base, and capacity to develop and apply knowledge in the creation and delivery of new and improved products, processes, services and ways of doing business. This is already being reflected in the growing number of rural and regional based incubators, accelerators, coworking spaces and seed investment funds. At this stage these developments are not matched by a rural based venture based/risk capital fund.
To build and sustain the contribution of rural industries to the Australian economy and to rural and regional communities, Australia must take an inclusive approach to industry development and growth through a Rural Innovation and Industry Strategy - one that covers the whole of the rural industry value chain and embraces all interacting policy domains. That Strategy must be also internationally focussed around lifting Australia’s participation in Global Value Chains.
During 2018 Howard Partners is celebrating 20 years as an independent public policy research, advisory, and management consulting firm.
Howard Partners was honoured to have contributed to the Innovation and Science Australia Strategic Plan, Australia 2030: Prosperity Though Innovation, released in early 2018. Our Consultations Report and Expert Opinion Survey was released at the same time.
Howard Partners has recently completed the Performance Review of the Rural Innovation System for the National Primary Industries Research and Innovation Committee. Publication is expected shortly.
The firm has also recently completed an innovation narrative of the Canberra Innovation System for the period 1998-2018. Publication is also expected shortly.
Dr John Howard
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