Acotanc: Making Landcare Profitable

Making Landcare Profitable

Author: Bill Davey
Organization: Countrywide Forestry Services P/L
13 First Avenue Mt Lawley WA 6050
Phone: +61 8-92718725 Fax: +61 8-92712661

Suggestions about the future form and direction that Landcare options should take, with especial reference to Western Australia.

I’m going to talk to you about making landcare profitable. I think that is what has to happen in WA for this place to succeed, really. I am out on site, talking to farmers all the time. Every time new farmers come, they say, “I’ve got this land, it is getting worse and I want to revegetate it, but I want to make money.” This has been happening for 12 years.

I am going to talk to you about what is happening at the moment. There is light at the end of the tunnel as far as growing trees is concerned. It is going to overlap with what ITC are doing. ITC has investors and they have to watch their IRRs and things like that. That is good; they are a public company. But there is a lot of investment being done and going to be done in the next three or four years out in the wheatbelt. I will throw a few views around; you might not agree with them, but it will create discussion, and I think that is what landcare is all about.

When I learned about this conference, I thought the theme was more than a conference on tree crops, it was about changing attitudes about sustainable land use. Really, that is what we have to do, change attitudes of everyone out there to realise that just because they are in a 200 to 400 mm rainfall area they can grow a crop that they can reap some benefits off, down the track.

2.5 million hectares of land is affected.This could increase to 15 million hectares.

  • Capital value of lost land is almost $700 million so far.
  • Lost agricultural production is $130 million a year and rising.
  • Damage to infrastructure costs $100 million a year.
  • Saline seepage is affecting 80 country towns across Australia causing problems in footpaths, parks, sewage pipes and housing.

I will start by talking about the severity of the problem. I will try to be as positive as I can towards the problem. There is not too much point talking about what has been done in the past because it is done and you can't blame the old guys. We have to look forward and get things going.

At the moment there are probably about two and a half million hectares of land which is affected, and it is probably more than that, and that is increasing to about 15 million hectares. So it is not a small problem. The capital value of the lost land is well over $700 million. The loss of agricultural production is something around $130 million, depending on which year you are talking about. The biggest damage to the lot is to infrastructure and towns. That is causing over $100 million per year. A lot of these old hotels, been there since the year dot are just falling down with the rising water tables. A lot of streets and drainage...some towns are worse than others. They know of it, but it is just a huge problem. You can throw as much money as you like at it and only scratch the surface. You have to remember that salinity is basically a natural component in Australian landscapes; it is here to stay. Investment will only occur if the benefits are greater than the costs. We have to produce economic incentives to make landcare profitable. This is what we want to start doing.

The biggest thing with salt is through the wet years. We had one not long ago. The problem is just huge. This year we have been dry and we are really seeing where these areas are. Visualise a catchment, maybe think of it like a bathtub. Fill it with soil and tilt it slightly on an incline. When it is under trees like it was originally, the water kind of leaks through the root zones and plants and is like a dripping tap. Under natural Australian vegetation, it is very slow. It just flows slightly through and goes out the hole at the other end. It takes small amounts of salt and it is stored deep in the soil structure. But if you wipe it all out like we have done, got rid of the deep-rooted vegetation and the shallow-rooted vegetation and arable crops we have put in are there now, then the leakage is a lot greater. Using the bathtub analogy, the tap drips faster. If this is greater than the discharge capacity of the catchment, the water tables rise and the salts come closer to the surface. I reckon that sums up what is happening. People ask me how salt occurs, especially people in Perth who don't know what happens on the other side of the Darling Scarp.

What's going wrong in WA?

  • Too much free money.
  • Free money is going to administration rather than remedies
  • Lack of drainage incentives
  • Does land care rely on funding? Government or private ?

What is going wrong in WA is over the last few years has basically been too much free money. It has generated a lot of discussion and got a lot of work done, there are a lot of trials going on which is OK, but they are doing trial on top of trial. There are people in this room who know what has to be done, but it is a matter of getting in and doing it. A lot of the free money has been going into administration rather than to remedies. As one of the farmers summed it up last week, "There's a whole lot more utes running around with aerials out in the wheatbelt."

What's going wrong in WA? (continued)

  • Government assistance--hindrance or help
  • Are we winning the battle?
  • "The price of land"--"We will just buy out the neighbour's property! It is cheaper than rehabilitating the land."

There's no doubt a lot of trees are going in, but whether the trees are going into the right spots, and whether they should be going out further east, because that is where the problems are, rather than into the trendy catchments like the Blackwood, is the question. It's a huge problem, a big catchment, but we have to move our east. If we can get some investment out there, it will happen a lot quicker.

Landcare over the last five years has been driven a lot by grants, with the sale of Telstra and things like that. That money is slowly drying up. They seem to find more money and keep selling the back paddock kind of thing to fund this. It is going to stop. I really think we need to take it out of the government's hands and put it into private enterprise. This will get things moving a hell of a lot quicker. Having said that, I think there is still a huge role for government. The Agriculture Department, CALM and people like that should be used for research and development and working along side private enterprise to help get things going. They should be like a quality control consortium, where if something is not being done right, they come down and work out what is happening. I always say there is no such thing as a free lunch, and a lot of farmers have been having a lot of free lunches lately. You get a bad year like this year, and if the grants are not out there, nothing gets done. The next couple of years are going to be hard.

We have to loosen up the bureaucracy so farmers can take control of where they want to go. It is always the case that 10% of the farmers do it and 90% talk about it. That 10% will always do something whether they have a grant or not. The other guys are sitting on the fence waiting for grants. Someone might be waiting for a grant for five years and is still sitting on the fence; meanwhile he couldn't get a crop off his paddock last year, whereas if he had got into it three or four years ago, put some trees in or done some drainage or something, he wouldn't have lost the land. It's one of those things.

I think what we have to do is start...drainage is a huge area. I think you have to do a combination of drainage and trees. We have to channel more money into drainage issues. As soon as water stops, you have a problem. You have to keep water moving. I know it is hard to move water from A to B, especially if B doesn't want the water. It is a huge problem. But I think in the next couple of years we will start having huge drains going through the countryside pushing all the water into these natural lake systems.

The price of land has also been an issue. Land is so cheap over here and you are still finding land for $50, $60, $100 dollars an acre. The big farmers, rather than fix their land, will just buy the neighbour out. The big guys are getting bigger and bigger. Why put tens of thousands of dollars into fixing your landcare when you can put a fence around it and write it off and buy the next-door neighbour. That is what has been happening, but it is slowing up now as land prices increase.

ACTION What About?

  • Tax driven investments
    • Injection of enough capital to get the job done properly.
    • Injection of continuous capital.
    • Off farm participation.
    • Commercialisation.

I am not sure if people like ITC have actually looked far into the wheatbelt. We are not doing as much trials but we have a consortium we are dealing with at the moment. The way I think things should go, we should get into some tax-driven investments going for landcare, get some money out of Perth and into the wheatbelt. OK, you are not going to get a return off your landcare in dollars, but surely if you gave people say, 120% tax reduction and make it a 5 or 6 year contribution so there is always funding coming on,...and not so much get the returns but get that extra tax deduction. It is something that may come about. There are probably loopholes that might prejudice things.

Private Enterprise

  • Governments have had a go--let private enterprise do it right!
  • Tax relief to corporations who want to invest directly into land care.
  • Offer farmers incentives to leave marginal land fallow. Provide farmers with long-term incentives to grow timber on salt land.

We need an injection of capital out of Perth, out of the city, and into the wheatbelt. Tax-driven investments seem to be the way to do it. It is very hard when the goalposts get changed all the time. They would need a couple of people full time just trying to keep up with what the Tax department are trying to do. Commercialising landcare, getting tax investment money out there, with investment in drains and revegetation and things like that.

What is happening up north... Andy was saying, take it over to Queensland. Well, why take it to Queensland when we have huge areas here that can be made productive? I know we are looking at irrigated eucalypts at the moment. Up north around Karoo we have options on just over 60,000 hectares, where we have trials in from last year and more going in this year of hybrid trees under irrigation. We are getting huge growth rates and have this problem of sawing the timber. With modern technology the way it is, trees can be crosscut and sawn. There is a lot of unproductive country up there and very good water sources, good water quality. Land is relatively cheap. What you save in land you have to pay in irrigation. We have done Internal Rates Returns and it is looking very favourable at the moment. Because it is new, we have to make sure all the i's are dotted and the t's crossed before we get too excited about it.

How we can commercialise landcare

  • Leasing degraded land from landowners
  • Introduction of high-grade timber trees that are salt tolerant-- Casuarinas hybrids, Australian Eucalyptus crosses.
  • Lease catchments on a 99 year lease
  • Get the government and the tax office to work together.

Another thing we are looking at are mining companies who want to offset tax also but are prepared to lease marginal land for using hybrid casuarinas growing on marginal country. That is looking very good. Individual farmers have thousands of acres and will lease land. If they can get trees growing on their land and don't have to pay for it, and if they can sell it and the trees still remain with the investors. That is happening this year. It is another option and you will probably hear a lot about that in due course.

It all comes back down to introducing high-growth timber trees and crossing them with salt-tolerant trees. What you guys are doing with your river gums Eucalyptus grandis is the way things are going to go. We have to get timber trees out of poor-quality ground. Guys like ITC and TimberCorp should move out that way too. There are possibilities out there but it takes a little bit longer and you have to watch what you are doing.

(Comment from Andy Wright of ITC) I didn't say it before but we do have trials out in the 400 to 600 mm rainfall belt of grandis x camaldulensis hybrids. We are doing a 60 hectare trial around Gnowangerup, linking with the mallee project there, trying to establish habitat for the mallee fowl. We are also doing a 100 hectare trial going in the South Stirlings, same sort of dry country trees.

I know many people don't like irrigated timber trees, and it is a costly business, but the demand for timber is so great you have to look at these opportunities. When you have water under the ground you can tap into...the mid west needed something to beef them up, give them another industry. If you can plant a couple of thousand hectares per annum with high grade valued timber and you have the water on your doorstep and just compounds it. We were talking with Western Power; they need more power up to Geraldton. Putting in power plants to generate power for pumps for water. I think pumping can be done during the night, so why not have a power station there and offload the excess power onto the main grid. They might make more money out of that than the trees. They are pretty keen to see that go through.

So, there are lots of options. The main thing is you have to look. Something a lot of government departments need to do is look beyond the scope of things. John Bartle was a guy I admired because he gets a lot of these things going and has done a lot for WA forestry. Carbon credits is something you would get onto a handle, and then something else changes.... I went to a meeting the other day...increasing your carbon levels in the actual soil type is a possibility of gaining carbon credits. Americans are getting paid about US$120 to increase the carbon levels in their soil structure by 1%. Another thing I heard was that BHP and the Commonwealth Bank together...a lot of farms are struggling at the moment, a lot of farms will be up for sale in the next 12 to 24 months...BHP are in there and will buy the farms out. BHP wouldn't be doing something like that unless they had a few other irons in their fire. Woodside and BHP are buying land down in Esperance.

Government should be involved in land care to:

  • Ensure works are carried out in accordance with the correct procedure. (A policing role).
  • Organise fastrack legislation and settle disputes.
  • Facilitate research and development along side private enterprise

I still think government should be involved in landcare, particularly as a quality-control type people, just to make sure things are being done and done properly. They have a heap of experts to do this. They should let people like ITC get on with it, get things in the ground and move things along. There are a lot of if's and but's, but I think that is the only way to go: commercialise Landcare. They have to do the research and development alongside private enterprises. Also, we have to handball them and tell them to fast-track the legislation. I don't know how they will do that.

Benefits of tree crops

  • Exports
  • Potential of carbon credits potential
  • Lower water tables--long-term
  • Capital into regional areas
  • Employment opportunities
  • Farmers take control of their future.
  • Huge PR potential for private enterprise and government

The benefits from tree crops are out there: obviously, exports, carbon credits, lowering water tables. By getting it out there in the regions we get capital into the regions, because a lot of towns out there are really suffering and need a capital injection. I'm not just talking about Merredin and Esperance. If we can get investment out there it will be two-fold, and will grow substantial industry. Of course, there are employment opportunities. I think, too, we need to put the onus back on the farmers as well, to a certain degree, and give them some credit for what they are doing, and offer them higher tax relief as well. Certainly, a 120% tax deduction would increase landcare within 12 months. The Agriculture Department and CALM can come through and make sure that the money is being spent on what it was supposed to be spent on. A lot of money is earmarked for certain projects, but doesn't get spent on them.

It is a huge PR exercise for these companies that are investing out there. They are doing this to make money, but things like sandalwood are fantastic public relations for them. It broadens their scope to people: it's not just Blue gums.

Future tree projects in WA

  • Irrigated tree crops on poor farm lands with abundance of ground water.
  • The introduction of hybrid-cross salt-tolerant tree crop species for timber.
  • Dryland tree crops--specialised timbers
  • Farm Forestry incentives

Future tree crops, irrigated tree crops, hybrid crosses, salt-tolerant tree crops, farm forestry incentives is where landcare has got to go. I always say, lets turn this negative into a positive and let the landowners take more control over what they have to do. Just release the ropes a bit, release the legislation so we can get something going out there. I think in the next three or four years you will see huge developments, as long as the goalposts don't get changed around. That is what worries me at the moment. You go off on a tangent, and then you have got to come back again.

We have approximately 30 hectares of hybrid casuarinas going in on what I call barley grass country, pretty average country, you can't crop it. The casuarinas are a cross of cunninghamia and glauca. The seed originated from over east on the edge of salt lake country. The mother trees are very straight and the growth rates are reasonable. She oak timber is fantastic, very decorative. With Jarrah being taken out of the system, we have to go that way. That is where the money is, huge money per cubic metre.

We have trials of other timbers as well. Grevillea robusta and Toona australis, and that is under irrigation. There are difficulties with that, but we have a lot of species there and it is all monitored. It is under fertigation, so they are getting fertiliser at the same time. They are growing 3 or 4 cm a day. Sawing is something we need to look into, sawing patterns and kiln drying and things like that.


    Lets turn a negative into a positive.

  • Let landowners take more control
  • Tax breaks, deferred on-ground cost arrangements
  • Give private enterprise incentives to invest in salinity control (tax breaks)