Future of Australian agriculture ripe for the taking

This robust position hasn’t come about by chance. The industry has worked hard to reach increasing levels of structural efficiency, resilience and innovation while taking advantage of good production seasons and high prices for most agricultural commodities.

“It’s certainly a great time to be part of Australian agriculture. While there will be challenges ahead that should not be downplayed, there is much to be confident about.”

However, the industry is fundamentally aware this period is likely to be a unique window of opportunity.

ANZ has just published “Greener Pastures 2 - Critical Pathways to Capture Global Agricultural Opportunities” (GP2), a report looking into the factors which have contributed to Australian agriculture reaching this position.

The latest report comes 10 years after ANZ’s initial “Greener Pastures” (GP1) report. The sector – and the conversations being had – has changed a lot since then. At that time, discussion centred around the likely boom in demand for Australia’s agricultural products, particularly regarding the rapidly growing middle classes in China and other parts of Asia. The challenge was to secure capital so Australian producers could meet the demand.

The initial report forecast the level of investment Australian agri would require to meet production demand going forward, while also discussing how much of this both could and should be sourced from outside Australia.

With the benefit of hindsight, GP2 finds Australian agri did better than forecast in the 2010s.

ANZ originally forecast Australian agriculture’s gross value of production (GVP) would grow by a base case rate of 2 per cent over the decade, rising to $58 billion by 2019/20, amounting to a cumulative gain of $45.5 billion in extra production value. In reality, GVP grew stronger than the base case, growing at 3.2 per cent to produce $61 billion over the decade.

AUSTRALIAN AGRICULTURE GROSS VALUE OF PRODUCTION

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Similarly, agricultural exports also surged beyond expectations. From an initial optimistic forecast that Australia may export an extra $80 billion worth of agricultural goods above the point at the start of the 2010s, the ultimate figure was much higher, at $111.5 billion, reflecting the surge in beef exports, especially to China.

GROSS VALUE OF AUSTRALIAN AGRICULTURAL EXPORTS

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AUSTRALIAN AGRICULTURE EXPORTS OUTLOOK (2030)

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In terms of investment into agriculture, perhaps the most contentious topic, the initial forecasts were once again substantially outstripped. While it had been cautiously estimated Australian agri would require investment of $151 billion over the decade, the industry ultimately saw an investment of $212 billion in agricultural production. This figure reflected the eventual major inflow of both domestic and global investment into the sector.

GP1 also noted Australia’s proactive program of industry deregulation across several agricultural sectors had played a major role in developing innovation across the industry. This is particularly apparent in the low agricultural price support levels in Australia compared with many other countries.

In our latest work, GP2 discusses some of the major areas the industry needs to focus on today and in the coming years to 2030. The report highlights the industry’s need to streamline trade flows and enhance established trading relationships while at the same time continuing to seek new markets.

One focus will be on improving the process of capital flows into Australian agriculture. This includes capitalising on the growth of domestic super funds, helping farmers become ‘investment ready’ and enhancing the marketing of Australian agriculture investment opportunities globally.

FOREIGN INVESTMENT REVIEW BOARD APPROVALS BY COUNTRY IN AUSTRALIAN AGRICULTURE, FORESTRY AND FISHING

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In addition, while the adoption of agtech is now widespread, there are still immense opportunities for many agribusinesses to increase their utilisation, especially of robotics. Unsurprisingly, GP2 has a strong focus on agriculture utilising sustainability for economic advancement across a range of areas from reduced inputs and water usage to the possible gains from carbon capture and credits.

Importantly, the report highlights the need for the wider agri sector to continue to build on its strong innovative history and expertise to ensure it is at the forefront of relevant sustainability discussions.

There’s also opportunity to build on the sector’s momentum and ensure all stakeholders across the wider agri landscape balance ongoing robust debate with a commitment to advocacy and industry cohesion.

It’s certainly a great time to be part of Australian agriculture. While there will be challenges ahead that should not be downplayed, there is much to be confident about.

Michael Whitehead is Executive Director for Agribusiness Insights at ANZ