Narrow farm-level focus is ‘limiting’ Australian agri

Australia’s agricultural sector needs to increase innovation, attract new sources of investment –both foreign and domestic – and spend more on research and development to prevent its market share from declining, according to Agribusiness Australia.

Because the country’s narrow farm-level focus is limiting, structural change is needed in order to increase productivity throughout the value chain, the association’s chief executive, Tim Burrow, told Agri Investor.

“[The industry needs] the flexibility to have multiple business models available. At a farming level that means not being locked into a family farming model only, we need this model and a number of others from corporate to cooperative,” he wrote in an email.

“Government needs to get out of the way and let market forces drive the change,” Burrow said. “The 80:20 rule is alive and well in ag; less than 20 percent of farms deliver more than 80 percent of produce.”

Increased investment in R&D and infrastructure is also needed in order to boost innovation, cut costs and boost returns, according to the association.

While Australian agricultural exports have been increasing at a rate of 5.2 percent per year over the past 15 years, they have not kept pace with global agricultural trade, which has grown at a seven to eight percent annual rate, according to Agribusiness Australia. The rate of growth has been even higher in certain Asian regions, exceeding 14 percent.

Australia currently produces one percent of the world’s food from nine percent of the world’s arable land. It will need to nearly double production by 2050 – at which time global food demand is expected to increase by 70 percent due to population growth – in order to maintain that one percent status.

“Agribusiness in Australia has an opportunity to maintain its position of producing 1 percent of the world’s food requirements as they go from 6 to 9 billion mouths to feed, if and when it can secure the investment for research through to export,” Burrow said.

“As a country of less than 25 million people we simply don’t have the funds locally to develop and grow fast enough; we never have and it’s hard to see us having in the future so external funding is needed to support domestic funding of ag,” he added. “To attract this investment we need to both talk up the demand side and have consistent and objective policy settings.”