agriculture, food

Five trends that are driving Australia’s agricultural industry

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The Global Food Forum seeded a number of critical discussions that sets the scene for Australia’s agricultural industry. I was in serious company sitting in a table with infrastructure engineers who wanted to build an integrated supply chain using rail to move food. There were also investment advisors who were there to sound out potential investment opportunities for their global clients looking to invest in Australia. The topics discussed and questions posed covered a broad spectrum of areas but if I had to focus on five trends coming from this forum, they would be:

  1. The agricultural industry will save the Australian economy

Australia’s mining boom is well and truly over and the agricultural sector has been tipped as the saviour for our economy. It is estimated that food exports is valued at $36 billion and the food and beverage industry creates 553,000 jobs. Food is expected to be a $1.7 trillion opportunity for Australia from now to 2050. The agricultural industry has the potential to double by 2030 if we had the right investments. This will justify our push for free trade agreements, initiatives and incentives that underpin the ag industry’s growth.

  1. Brand Australia is highly regarded

Food security, wealth and the growing middle class in Asia continues to drive the demand for Australian produce. From Asia’s desire for safe and nutritious food to Chinese investors such as Harry Wang from Ningbo, who drove around to search for diary farms in Victoria to acquire, the world is increasingly hungry for Australian agricultural produce. If we took Harry’s estimate that only five percent of the Chinese market will pay the premium for an Australian product, we would be looking at potentially 70 million customers – three times the size of Australia’s population.

  1. Australian grocery buyers remain price sensitive

Australian grocery shoppers continue to be price driven and the cost of a less expensive import will be more attractive than an Australian product. John Durkan from Coles said consumers would buy tinned tomatoes that are imported at 80 cents versus $1.20 for an Australian product. If continued, this behaviour could potentially lead to ‘Australian Grown/Made’ becoming a niche product. The chatter for ‘organic’ has increased but large-scale producers are finding it difficult to scale to a size where the price can be more affordable.

  1. Food allergies and healthy food are the new growth categories

Goran Roos from Swinburne University alluded to how urbanisation generates allergens in populations and this creates opportunities for producers to sell niche or higher value products. This ties in with how the demand for chia seeds has grown according to John Foss from The Chia Co. as consumers are seeking healthier products that have greater nutrient density. 5. Infrastructure to support our expansion is lacking If there was a word cloud to depict word trends, “infrastructure” would have stood out in many conversations. From Australia being the most costly country to freight food within the country or for export, the need for better road/rail infrastructure to move goods to the infrastructure needed to make Northern Australia a viable agricultural basin. Maybe we could find a solution right at my table where all the delegates were seated. Or perhaps we are due for another round of soul searching with yet another competitiveness white or green paper that we will need to debate.

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