Australian agriculture is arguably in the strongest globally competitive position it has ever been.
This position has come about through a combination of factors – in particular, a convergence of extended high prices for most agricultural commodities at a time when Australia had enjoyed a string of good production seasons, combined with the evolution of the overall sector to reach increasing levels of structural efficiency, resilience, and innovation.
The industry is fundamentally aware this period is likely to be a window of opportunity in a much longer cycle, given that Australia’s agricultural trade competitors will inevitably see growth in their supply and exports before too long, while Australia’s agricultural production volumes will also come off their current highs at some point in this cycle.
That said, it is the structural strength and fortitude of the Australian agricultural sector which will fundamentally underpin the long-term competitiveness of the industry.
The industry’s fortitude has evolved due to a wide range of factors. The quality and safety of Australia’s major agricultural products is unquestionably equal to the best in the world. The utilisation of technology to help create efficiency, productivity and sustainability gains has moved at a rapid pace.
This robust position of strength has been achieved by spending years building positive attributes and deepening understanding across many facets of Australia’s agricultural landscape – moving the industry far beyond just being a producer of high quality traditional outputs of wool, sheep meat, beef and grain.
In an operating environment of highly deregulated industry structures, amidst the ever-present challenging natural landscape, and in the absence of subsidies for farmers, the industry continues to embrace innovation across all sectors and right through the supply chain.
Globally, through a period of volatility in global trade relationships, Australian agriculture has tirelessly pursued new market opportunities, seeking a balance between premium markets and an even spread of risk.
The ongoing growth of Australia’s agricultural sector provides a significant return to the nation and is a vitally important component of the nation’s economy.
Directly, employment generated by the sector stretches all the way from individual farms, every vineyard and every fishing boat to encompassing every processor, storage facility, retailer or port involved in the movement of Australia’s agricultural goods.
Indirectly, secondary industries have an even wider reach, from farm services to input suppliers, to mechanics and building industries, to professional services, such as the growth in specialised agricultural legal and accounting providers.
Most importantly, in terms of continuing to fuel the growth of Australia as a nation, the agricultural sector can be relied on to provide the foundation for almost every rural and regional economy across the country.
While decentralisation from the capital cities enables many regional and rural centres to grow, much of the economic activity of these centres continues to rely on agriculture-related services. The increased population-flows from major cities to the country also brings new skilled workers closer to the opportunities in agriculture – giving rise to cross-benefits such as access to specialised labour, as well as enhancing the opportunities for new and innovative ideas to be utilised across the industry as a whole.
Agriculture is an industry that works in cycles – prices go up and down, rainfall patterns vary, and production volumes can change markedly each year. As a result, while the Australian agricultural sector may certainly enjoy the positive aspects of a series of good seasons, it is experienced enough not to get caught up in the moment. As such, while being open to the many new opportunities agriculture will provide, the industry must always be aware of all downside risks, and remain in the best possible position to work through them if necessary.
Australian agriculture can rightfully be proud of its achievements, and particularly in the share of world agricultural trade Australia enjoys despite the country’s relatively small share of overall global production of most agricultural commodities. However, it is important for Australia to be aware of the developments and strategies of the major global trading competitors, as they vie ever more strongly for world markets.
The decade of the 2010s was the vital era in which the foundations for Australia’s agricultural prosperity took shape.
Certainly, the decades prior each had their defining characteristics which permanently impacted the direction of Australian agriculture. The 1950s were the post-World War 2 recovery period, where the boom in demand for Australian agricultural exports led to strong capital flows into building both farm and supply chain infrastructure.
With the ‘Green Revolution’ changing agriculture globally in the 1960s, many Australian farms adopted an increasingly sophisticated usage of new fertilisers and seeds.
From the 1980s to the 2000s, the industry was increasingly impacted by the economic reforms, trade liberalisation and industry deregulation – highlighted by the abolition of both the Wool Reserve Price Scheme and the wheat single desk marketing monopoly.
In the 2010s, however, Australian agriculture underwent a new period of sophisticated development, capitalising on the building blocks leading up to that point. With global capital flows into agriculture production and supply chains increasing rapidly around the world, Australian agriculture moved quickly to position itself to be a key focus for new investment. As major global markets opened up, particularly in China and also across Asia and the Middle East, Australia utilised its relatively harmonious diplomatic relations and good agricultural trade reputation to gain a strong footing in many of these markets.
Domestically, during a period of challenging operating environments which included adjusting to deregulation, as well as managing a period of high interest rates, the Australian family farm gained in strength for a number of reasons, including advancements in agtech, more sophisticated farm operating structures, more employment opportunities in regional centres, and higher commodity prices.
This saw the family farm grow in importance as a source of progressively innovative production feeding into an increasingly demanding supply chain.
In 2012, ANZ published Greener Pastures: The Global Soft Commodity Opportunity for Australia and New Zealand (GP1). This pivotal publication utilised extensive industry modelling and analysis to forecast a numberof major drivers for Australia’s agricultural sectors for decades to come. GP1 modelled and forecast the different scenarios for the uptake in demand for agricultural products and the share of this which could potentially be filled by Australian exports.
The report identified the scale of capital required to achieve this potential, in terms of farm purchases, infrastructure development, and supply chain enhancement. Policy recommendations were identified, aimed at enhancing the functionality of Australian agriculture.
A decade on from the release of GP1, Greener Pastures 2 (GP2), aims to serve two important functions.
Firstly, to provide a reflection on the predictions made in GP1 for Australian agriculture through the 2010s, highlighting what actually happened and what can be learned from that period.
Secondly, to propose five major ways that stakeholders across the Australian agricultural landscape can work together – by understanding the impact of capital flows, green technology, sustainability practices, enhanced trade flows, and greater industry cohesion – to ensure ongoing growth and prosperity for the sector in the decades to come.
These five aspects of agribusiness are increasingly interlinked, including the development of sustainability components into agricultural free trade agreements and the rapidly growing demand by investors for opportunities that combine both agricultural production and carbon credits.
GP2 aims to generate vital questions and enhance the discussions that all stakeholders across the industry should be having, in an effort to give Australian agriculture the best chance of reaching its full potential.
