Agricultural commodity context

This study considers supply chains that represent five of the major commodities in the Blackwood Catchment. These case study industries are briefly explored below with reference to the interaction between these commodities and environmental, social and economic sustainability issues. Even though livestock is a major component of agricultural production in the catchment, no meat products were involved in the study for two reasons. Foremostly, at the time of the study there was no ‘sustainable’ meat supply chain available for the study in the study area. Wool rather than meat was the major focus of the grain and wool growers considered in the study. Secondly, the large amount of resources needed to track meat products through the supply chain was considered prohibitive for the resources in the study.

2.4.1 Wool

Australia is the world's largest producer of wool, and remains the main exporting country (NLWRA 2001). In the South West region, sheep are the second most common land use (after beef) particularly in the Upper and Middle Blackwood (Hanslip et al. 2007). In the Upper Blackwood sheep are used in combination with cropping on most grain-growing properties (ibid).

There has been a decline in profitability for Australian wool growers since 1991, with some fluctuations since that time such as the recovery in Australian wool prices in January 2006 (The Land, May 31, 2007). Markets for organic, low pesticide and uncontaminated wool markets are receiving increased prices and increased demand. Certified organic wool gathered by Elders in May 2007 received up to 20% above premium price (The Land, May 31, 2007).

Considering sheep production (e.g. wool, mutton and lamb) across the pastoral and higher rainfall areas across Australia, farm business profit in 1998 was negative, with an average loss of $31,000. Farm debt averaged $135,000, being less in the wheat-sheep zone (NLWRA 2001). Weeds, soil acidity and dryland salinity were identified as the most serious problems in the high rainfall and temperate zones for sheep farmers (NLWRA 2001). Lack of domestic processing and labour shortages are also key economic viability issues for the wool industry.

2.4.2 Grains

Approximately 75% of the grains produced in Australia are exported, earning about $6 billion a year (NLWRA 2001). More than half of the exports are wheat and Australia produces about 3% of total world production (NLWRA 2001).

Western Australia, after an initial decline in the area producing grain during the late 1980s, has shown expansion to new record areas with approximately 7 million ha committed to grain in 1997 (NLWRA, 2001). A national grain industry survey in 1998 showed that Western Australian grain producers identified soil acidity, dryland salinity, waterlogging, water erosion, weeds, and loss of soil structure (in that order) as the most important natural resource management issues (NLWRA, 2001).

The survey also indicated that the industry average for total adoption of nominated best management practices was around 7%, despite evidence that 74% of farmers had changed their farming practices in the last five years directly due to new information, and 57% had changed their farming practices in the last two years (NLWRA 2001). NLWRA identified best management practices as being associated with; tillage (minimum tillage and stubble retention), rotations (use of crop and pasture legumes), soil fertility assessments, maintaining cover on drainage lines and use of contour banks (NLWRA, 2001).

2.4.3 Horticulture

The National Land and Water Audit and Horticulture Research and Development Corporation’s (HRDC & NLWRA 2001) assessment of Australia's horticultural industries showed that improvement in environmental performance is occurring across all horticultural crop groups with industry changes being driven by new and revised codes of practice including best management practices and quality assurance standards. They also note an increasing focus on integrated solutions to pest and disease management, improvements to the structure, management and planning of industry organisations and greater investment in research and development (HRDC & NLWRA 2001). Signals for improved environmental management in horticulture are also emerging from the marketplace (HRDC & NLWRA 2001).

HRDC & NLWRA (2001) suggest sustainability issues in horticulture that need to be resolved include poor linkages between programs (particularly research and development and codes of practice), inadequate industry databases for monitoring environmental and economic performance, and the lack of resources and skills in some crop groups to adopt better practices.

NLWRA (2001) suggests that the horticultural industry is generally ahead of other industries on quality assurance and equal with other industries on environmental management practice; however, its fragmented and multi-commodity nature creates barriers for introducing environmental initiatives. The body propose that accountability for food safety and environmental compliance will be increasingly important to future (horticultural) markets and that access to resources (especially water) is considered the key industry risk (NLWRA, 2001).

Horticultural producers are generally aware of the regulatory environment and the limitations of resources. A study into adoption of sustainable irrigation management practices by stone and pome fruit growers showed that there were some growers who are unlikely to change unless the policy or external operating environment were to change (Boland et al. 2005). Boland et al. (2005) suggests that voluntary adoption of more sustainable irrigation practices on a large scale would require extensive resources using a one-on-one extension methodology. They argue that other non-voluntary mechanisms (e.g. regulation) may need to be introduced to achieve government policy in relation to natural resource management (Boland et al. 2005).

2.4.4 Viticulture

This industry is characterised by issues related to gluts in supply and a strong focus on the international market. Between 1995-06 and 2005-06 there was a large increase in the wine sector. This includes a 125% increase in the number of wine companies, a 97% increase in employment in the sector and a 143% increase in hectares under vines (Australian Wine and Brandy Corporation and the Winemakers’ Federation of Australia , 2007). At the same time, the average price per litre dropped by 18% (ibid).

The value of promoting the wine industry as using sustainable practices has been recognised and has been part of the industry’s marketing strategy for some time, as depicted in the 1996 Strategy 2025, The Australian Wine Industry. More recently, the report Sustaining Success (Australian Wine and Brandy Corporation and the Winemakers’ Federation of Australia, 2006) identifies cause marketing, and environmental cause marketing in particular as an important strategy for the industry. Australian Wine and Brandy Corporation and the Winemakers’ Federation of Australia (2006:8) also summarise the priority environmental issues for viticulture including:

 Water quality and use in viticulture, winemaking and packaging

 Generation and disposal of wastewater from winemaking and

 packaging

 Management of solid waste products, such as grape marc, filter material

 and treated timber vineyard posts

 Maintaining and enhancing natural ecological systems and protecting

 biodiversity

 Conflicting land-uses with local communities and other industries

 Ramifications of future greenhouse gas-induced climate change on viticulture.

2.4.5 Dairy

In 1998/99, 3% of Australia’s dairy farms were in Western Australia, largely in the South West region. Western Australia averaged the largest farms (199 ha) and the lowest stocking rates in Australia (1.1 cows/ha), however the latter is likely to have changed with the development of several larger (e.g. 1000 cow) dairies in the South West in recent years. The dairy industry has experienced declining terms of trade since 1978 (NLWRA 2001), however since 2007, the industry in Western Australian has experienced improved returns.

Water availability is a critical limitation for the sustainability of the dairy industry. WA dairy farmers were using considerably more water than the Australian average in 2001 with WA farmers using an application rate per hectare for irrigation at almost double the rate of the average (NLWRA 2001). In 2005-06 Western Australia, irrigated pastures, which would be largely devoted to dairy cattle, represented 79,315 ML or 25% of total state water used in agriculture (ABS 2008).

In terms of the dairy industry's attitude to resource degradation, around 50% of dairy farmers surveyed nationally in 2001 considered dairying in their regions was having minimal impact on land and water degradation and over 30% considered 'environmentally friendly farming' in their regions would reduce farm profits. Issues identified for dairy farmers nationally are related to effluent management, wet soils or pugging, soil acidity, soil structure or compaction, irrigation- induced salinity and weed invasion.