HOLLAND is half the size of Tasmania, but the value of its agricultural exports is about two-and-a-half times the value of Australia’s.
It’s not raw resources, but resourcefulness that has made Holland the world’s second-largest agricultural exporter (in value terms) after the United States, Rabobank’s Gilles Boumeester recently told ABARES Outlook 2015.
Using the Dutch example, the bank’s global head of food and agri coverage gently challenged Australia to make more of its own comparatively lavish resources, and the customer base that has suddenly appeared on its doorstep.
Dutch agribusiness resourcefulness is typified in the long and ongoing relationship that the Netherlands has with cocoa.
Holland grows no cocoa beans, and annually imports about US$4.3 billion in cocoa products, but on the other side of the ledger, the country exports US$5 billion in value-added cocoa products like chocolate.
That trade flow leaves behind a tidy US$700 million in Holland, along with all the associated returns generated by manufacturing and employment.
Mr Boumeester told Outlook the Dutch agricultural sector is a product of extreme resource pressure, which drives innovation; and of its proximity to the 503 million inhabitants of the European Union, which rewards that innovation.
Dutch farmland now costs about AU$100,000 a hectare, but the returns are commensurate. Typical farmland can return about $67,000/ha from a rotation of sugarbeet, wheat and potatoes.
If the farmer builds a glasshouse at a cost of around AU$1.5 million per hectare, returns leap to AU$1.2m/ha. In 2010, about 10,000ha of glasshouses were built in the Netherlands.
Because of its resource constraints, Holland has built a strongly interlinked research, education and extension network to drive productivity based on value, not volume.
For Australia, Mr Boumeester acknowledged that there are no easy answers to the “value versus volume” question, but he clearly finds holes in Australia’s commodity-centric approach.
Australia and Holland earn roughly the same from bulk agricultural exports and “intermediate” products with a small amount of value-adding, although the ratios differ.
But Holland earns far more income from Australia in “consumer orientated” products - the difference between creating value, and accepting a globally-determined price.
If Australia doesn’t have the challenge of extreme resource pressure as a spur to supply chain innovation, it does have growing costs of production.
In wheat, Australia’s eastern States have costs significantly higher than competitor countries. In dairy, grass-based production systems give it an advantage, but that is also being eroded by innovation in other nations.
Mr Boumeester suggested that Australia re-examine the long-term future of its commodity focus, perhaps even to the extent of “de-commoditising” commodities to help increase exports and fend off competition from lower-cost nations.
“We can’t be cost-efficient and cost-effective in production, then get completely lost at the end of the supply chain and lose our competitiveness,” he said.
“I think the integration of value chains to create specialist products, to target the consumers at your doorstep - that could be a way to create further exports to improve and increase the capacity of the Australian food and farming industry.”