Emerging opportunities demand an agile industry
4 March 2014
Rising global demand for food and improving world economic growth will provide clear opportunities for Australian agricultural exports, but the sector must respond to market pressures to ensure long-term success.
Speaking at the launch of the 44th ABARES Outlook Conference, ABARES Executive Director Karen Schneider forecast the value of Australian farm exports to be $39.3 billion (in 2013-14 dollars) in 2018-19.
The forecast reflects expected improvement in world economic growth to 3.4 per cent in 2014, further strengthening over the next two years before moderating to an anticipated average of 3.6 per cent by 2019.
“ABARES modelling anticipates a 75 per cent increase in global food demand by 2050, with 71 per cent of that growth to come from Asia - and just under half from China alone,” Ms Schneider said.
“This is a powerful opportunity for Australian agriculture, but it's one that comes with serious global competition.”
“While Australia is currently the largest supplier of beef to China, competition from countries including India, the US and Brazil could increase.”
In the case of grains, rapid expansion in exports from the Black Sea and Latin America will also place pressure on the Australian agriculture sector.
“We must increase productivity growth to remain competitive in growing markets. That will define the future success of Australian agriculture,” Ms Schneider said.
In the five decades to 2000, productivity growth in Australian agriculture averaged 2.5 per cent a year. However, in the most recent decade productivity growth declined to average around 0.8 per cent a year.
Ms Schneider said that future productivity growth in the sector would come from new sources, including reducing regulatory burden across the agriculture sector, investing in infrastructure to support production and exports, and targeting R&D investment to improve innovation behind the farm gate.
“We need to think carefully about the costs and benefits of regulation and how we might do it better. The current Government focus on reducing regulatory burdens is a good opportunity to reflect on how we regulate.
“In the case of infrastructure, we know we need good transport, water, energy and telecommunications to take advantage of new export opportunities.
“But the reality is that much of the infrastructure currently supporting agricultural supply chains is already under pressure. That pressure will increase as Australia's production and exports expand and increase the demand for infrastructure services.”
Ms Schneider said that Australia's rural R&D system remained the envy of research providers overseas, particularly the role played by rural research and development corporations.
“But we've seen slow growth in public funding for agricultural research since the late 1970s and a fall in expenditure as a proportion of industry output,” Ms Schneider said.
“These are some of the factors we will need to be address if we are to compete successfully in growing markets.”
With a focus on opportunities for Australian agriculture, ABARES Outlook 2014 is being held on Tuesday 4 and Wednesday 5 March in Canberra.