Commodity mix way of the future, says Norton

Despite a tumultuous past few years for WA's agriculture sector, outgoing WAFarmers president Mike Norton sees a sunny future for farming in WA.

Mr Norton said global financial pressures and foreign investment approaches were two major threats to WA farmers going into the future.

But it was shift in banks' approach to lending and farmer spending that was a distinct and major change during his time in office.

"Before 2008, farmers were buying land, tractors and headers, but all of a sudden it stopped. Land values are in decline, which affects the equity of everyone else," he said.

"The banks have given very mixed messages to agriculture."

According to Mr Norton, that means growers who overcommitted themselves during the past few years could be in financial trouble.

"Between the (2009) frost and the (2010) drought, a lot of those cropping operations had two or three bad years in a row, which was nearly enough to take them out of the business," he said.

Despite of those dark clouds, the Capel dairy farmer believes the future is bright for some producers, particularly those with mixed enterprises.

"I've been advocating for some time that you need a good safe commodity mix," he said.

"Whilst the consultants and bankers have been able to make grain figures look very attractive as a return per hectare, when things don't go right you can go down the gurgler very quickly.

"You need some livestock too - you don't want to be totally reliant on just one commodity."

But while there might promising times ahead, farmers would need to change their approach to succeed in a new environment.

"I think there is a very good outlook for agriculture in terms of the big picture," Mr Norton said.

"People that are in it for the long run will have to structure their businesses quite differently in the future to the way they have done in the past."

Like it or not, the agricultural climate is changing and Mr Norton pointed to Emerald Group chairman Alan Winney's discussion about consolidation of the grains industry to articulate that.

"We think Coles and Woolworths are giving us a hard time. I think the 'New Order' is going to be the name of the game and some of these (grain) companies are going to be much bigger and more financially robust than what Coles and Woolworths are," he said.

Foreign investment in Australian agriculture has never been far from the headlines during Mr Norton's term as president and he was quick to point out the issue needed to be approached cautiously, particularly when it came to the issue of food security.

"We've got four billion people sitting on our doorstep and they are looking for long-term stable supply of raw material for food production," he said.

"These countries are looking to Australia, because we've got some land, water and a stable government.

"The opinion of farmers is we're letting them in too cheaply. Nowhere else in the world can foreign investors and sovereign governments come in and buy land and operate like we let them do in Australia."

Mr Norton called on the Federal and State governments to tighten restrictions on foreign investment, to prevent a 'closed-loop' approach.

"If we are not careful, the model we are going to finish up with here is a closed-loop system, where foreign investors minimise the amount of money they spend onshore in Australia and ship the product back to where they want to consume it," he said.

"Our politicians are pretty much asleep at the wheel on this issue."

Looking back over his four years at the helm of WAFarmers, Mr Norton said there were quite a few highlights, significantly the group rejoining the National Farmers Federation (NFF).

"There are a lot of big changes going to be made in agriculture over the next few years and to affect those changes you have to be in Canberra and have input into those ideas when they re at the embryo stage," he said.

"All the financial decisions that are made in this country are made in Canberra and it is pretty hard to have an influence on the decision making process in Canberra if you are stuck in WA.

"That's why getting back to NFF has been very important."

He said WAFarmers relationships with Emerald Group, 4Farmers, Ravensdown and CBH were also important.

"The deal with Emerald was quite critical to the finances of the organisation and us being able to get back into NFF," he said.

"If lobby groups are going to be successful you just can't survive on membership income. You have to develop income streams, like we did with Emerald and Grain Growers and 4Farmers and Ravensdown - all these companies that are sympathetic to the genuine cause of farming families."

Mr Norton said though WAFarmers membership was on the decline, it was not dropping as rapidly as it had in past years.

"We were losing quite a few members but our membership isn't declining anywhere near as bad as the number of farmers leaving the industry," he said. "I think we're in a good position to go forward now and grow membership."

Dale Park replaced Mike Norton as president at the close of the WAFarmers conference on Thursday March 22.