Growth opportunities for Australian agriculture


 

Fiona Simson

President
National Farmers’ Federation


Jan Paul van Moort

Executive Director NSW
Acil Allen Consulting


Question 1: Why is a growth target important for Australian agriculture?

 

Fiona Simson

The National Farmers’ Federation (NFF) has a gutsy, but achievable vision for Australian agriculture to reach $100 billion by 2030.

Agriculture is already on a trajectory of growth. In 2016–17 the farm sector notched up a record $63 billion in farmgate output. Strong export demand for many of our staple and developing farm commodities has largely driven this growth.

If we were to do nothing more than the status quo agriculture would continue to grow in value. Forecasts estimate a business-as-usual approach would get us to $80 billion by 2030.

However, Australian food and fibre has not arrived at where we are today by not challenging boundaries. So, as is the sector’s trademark, the NFF is proposing we push the envelope and encourage disruption!

To achieve anything worthwhile, no matter what the scale, you need a plan. Underpinning our $100 billion target is a Roadmap, a set of tactics that outline the shared and common industry goals needing to be reached in order to realise ambitious growth.

 

JP van Moort

Focus and progress. Australian agriculture is a diverse sector which involves many people, enterprises, institutions and policies in producing an incredible range of valuable goods for consumers across our nation and global markets. While diversity is our biggest strength it also makes the why, who, where, when and how of what to focus on, challenging.

Agriculture is an industry, and industries need to develop and evolve with the times. The way each of the regions, commodities, value chains, markets and associated communities, that make up the agricultural sector varies; but there is much in common. One commonality is that simply defending what we have and the way we do it, is insufficient in the face of changing environments and markets. We need to grow and be prepared to make changes to make progress.

Many have called for a vision for Australian agriculture that everyone can work towards. The $100 billion by 2030 target proposed by the NFF provides such a vision and has resonated because it is clear and tangible.

We know improved productivity, sustainability, competitiveness and profitability are critical to achieving the target. They have underpinned agricultural development since Federation. So our challenge is how best to use the focus created by the vision to progress Australian agriculture over the next decade.


Question 2:  Is Australian agriculture well positioned to capture the most significant opportunities for growth?


Fiona Simson

Our farm sector is in the box seat when it comes to capturing the opportunities before us and translating them into the tangible growth we seek.

The world’s population is forecast to reach 8.5 billion by 2030, up from 7.7 billion today. In parallel, demand for food is projected to rise by a whopping 54% by 2050. Much of this growth is in the burgeoning south-east and northern Asian countries to which Australia is in close proximity.

Our global customers are increasingly discerning when it comes to the quality and integrity of their food. Australia has a formidable reputation as a provider of quality, safe food and fibre and is well equipped with the sophisticated systems that underpin the provision of such products.

Digital and genetic technologies promise to unlock new waves of productivity growth across the sector. Automation will continue to improve the quality of life of our farmers, while reshaping the labour requirements of the sector. With new market opportunities and new ways of operating, come opportunities to attract bright new entrants with varied skills sets, to our industry.

The AFI predicts that the full adoption of digital agriculture could be valued at $20.3 billion to the sector by 2050.

 

JP van Moort

Absolutely, provided we are willing to change so as to focus on sustainable net performance. Australian agriculture is mature with a large resource base, capable people, sophisticated institutional fabric, developed supply chains, proximity to key markets and a long history of successful innovation. There is no reason why we can’t continue to adapt the way we use these established advantages to pursue opportunities.

Growth for growth’s sake should not be our only focus – Australian agriculture needs to pursue opportunities which increase profitability by lowering the unit cost of production and realising the best available price per unit.

An export orientation is central to improved profitability to avoid domestic gluts and ensure we have markets for what we produce.

Alignment within and across value chains and our institutional fabric, which is often fragmented, will need to improve because without that, what we will see as a gain in one area will be a loss in another resulting in no net change – be that a farmer, processor, wholesaler or retailer and the associated consumers and communities in Australia and overseas. Adoption of technology and better use of information along with post-farmgate innovation, off-farm infrastructure improvement and market access/development will all need to improve to realise opportunities.


Question 3:  How can Australian agriculture overcome the greatest current threats to growth?


Fiona Simson

Many of the challenges that face Australian primary production are also opportunities.  

Continuing to manage a changing climate is a priority. Australian farmers are being impacted by more erratic seasonal patterns: poor rainfall, out of season rainfall and more extreme temperatures. As both an emitter and sequester of carbon, agriculture has a role to play in our nation’s response to a warming planet. The World Bank’s projected yield impact on Australia agriculture due to climate change is 2.7% by 2050. Conversely, CSIRO states that a carbon market could provide income of $40 billion to the land sector (including farm businesses) by 2050. To date, agriculture is leading the way in its response to climate change. For example, the red meat sector has a bold target to be carbon neutral by 2030. 

Our people are agriculture’s most valuable asset but currently farmers are unable to source the workers they need to pick and pack their fruit, harvest their grain and milk their cows. Agriculture has always relied on a combination of domestic and foreign workers. We urgently need strategic policy to attract more of both. The NFF is seeking the establishment of an agricultural-specific visa to attract the skills we need from overseas while supporting a continued strong focus on integrating pathways for careers in agriculture in our schools and tertiary institutions.

As an export-dependent sector, Australia depends on positive terms of trade. Many of our major commodities are being challenged for market share coming from new or developing ‘players’. For example, the value of beef exports from Brazil to the United States rose from US$500 million in 2000 to US$4 billion in 2014. Similarly, Australia’s market share for wheat exports to south-east Asia dropped from 60% in 2012 to 40% in 2017 with new competition coming from Russia and the Black Sea region.

To maintain and grow our market share, Australia needs to continue to pursue preferential trade agreements with valued customers. This includes ratifying the Indonesia-Australia Comprehensive Economic Partnership Agreement and getting a good deal for Australian agriculture in free trade agreements with the United Kingdom and the European Union.

Maintaining competitive supply chains is also crucial. From an on-farm perspective, this means a policy environment that encourages growth not impedes it. Farmers need less red and green tape – sensible tax and environment regulation that makes doing business easier not harder.

Visit farmers.org.au/roadmap/ to find out more about NFF’s $100 billion vision for agriculture and the 2030 Roadmap.

 

JP van Moort

Markets and the environment (including biosecurity) are traditionally, and remain, significant threats to sustaining Australian agriculture and growth. Both are volatile. The possibility of losing partial or full market access is a constant source of concern. The environmental threats of climate change, resource degradation, and biosecurity incursion, coupled with changing consumer trends and societal pressures, place constant and increasing strains on agriculture. These strains can create risks that need to be managed through technology, policy and financial instruments.

As a mature industry we also face the challenge of renewing our infrastructure and regulations, so that they are effective and efficient, while continuing to underpin the integrity and connectivity of Australian agriculture with its markets and consumers. The effort required here is as much about getting more out of what we have rather than creating and building new infrastructure and better regulations.

Across all of these dimensions, fragmentation within supply chains, across industries, among jurisdictions and between industry and government create limits to progress. These are as large as the challenge of identifying and implementing solutions. Industry and government must embrace and lead the required reforms together. If we don’t, then we will not realise the full potential of Australia’s agricultural industries.


About the authors

Fiona Simson is a farmer from the Liverpool Plains in NSW where she, husband Ed and family run a mixed farming enterprise including broadacre farming and breeding commercial poll Hereford cattle.

Passionate about the power of a unified voice for agriculture, Fiona also believes in its role in a strong and vibrant future for regional Australia. Fiona was elected President of the National Farmers’ Federation in November 2016. 

 

JP van Moort leads ACIL Allen’s agribusiness practice and has 25 years of experience working on agricultural and environmental issues across Australia. He is currently analysing the barriers and opportunities associated with achieving the target of delivering a $100 billion agricultural sector by 2030.

His work includes establishing, implementing and reviewing agricultural policies, programs and projects and organisations which are aligned to improve industry productivity and sustainability.