Growing Agriculture at 41Degrees South Mark Allison Launceston, Tasmania 4 March 2019
Agenda Outlook for Australian Agriculture The Way Forward for Australian Agriculture Outlook for Tasmanian Agriculture Opportunities for Tasmanian Agriculture The Way Forward for Tasmanian Agriculture Summary
Global food demand expected to more than double by 2050 World Population Billions 12 10 8 6 4 2 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Africa Asia Europe Latin America Northern America Oceania Source: UN World Population Prospects
Australian agricultural production to exceed $100 billion in 2030 Gross value of Australian farm production Billions ($A nominal, 2016) +4% 100 40 46 47 49 +6% 51 54 59 60 62 64 65 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2030
Australia s agricultural production potential is constrained Contextual Agricultural Indicators 5,191 5,418 4,097 4,113 2,750 2,813 2,818 Australia Brazil 1,798 1,377 1,237 2,019 1,446 China Indonesia India United States 545 23 197 247 314 492 Agricultural Land Population Freshwater Resources
Australia s productivity growth has slowed considerably, reducing our international competitiveness Total factor productivity of selected agricultural nations 1 Index Average annual growth rates in Agricultural TFP, 2001-2010 Percent 0.5 1.2 1.8 2.0 2.1 2.2 2.4 2.5 2.6 2.7 2.8 2.9 3.2 3.6 4.0 Australia UK Canada India Mexico US France Japan Korea NZ Chile China Indonesia South Africa Brazil
Australia is losing market share where agricultural trade is growing most rapidly Australian agricultural exports to North Asia National share of North Asian agricultural exports
Underinvestment in R&D is driving slowdown in productivity growth Real public investment and research intensity in Australian agricultural R&D Source: Various sources including ABS R&D data
Availability and quality of critical infrastructure Transport Costs in Australian Agriculture $133/tonne Wheat in Northern NSW to Japan 48.5% $85 Farm to Newcastle (road/rail/storage) $49 Newcastle to Japan (port/ocean freight) Northern Territory $200/head Beef Cattle in NT to Indonesia 30% $46 Farm to Darwin (road/health protocols) $153 Darwin to Indonesia (port/ocean freight) Transport cost a percentage of farmgate return Northern NSW Newcastle Source: Australian Farm Institute
Australia s urban community is losing its connection to agriculture Recent research found that 27% of year 6 students think yogurt is a plant product Australian Council for Education Research
Increase public R&D, greater collaboration amongst private sector
Capital investment across the entire supply chain Real public investment and research intensity in Australian agricultural R&D OECD top 5 refers to the average of the scores of France, Germany, Spain, Netherlands and Japan on the aggregate index of transport infrastructure quality
The industry needs to actively tell its story to help shape consumer perceptions
Structural change is also required to drive growth Contribution of on-farm productivity growth and resource allocation to TFP growth Percent 2.0 1.9 Resource reallocation effects On-farm growth 0.7 2.1-0.1 1.3 0.2-0.5 1.0 0.2 0.8 1978-1990 -0.3 1990-2000 2000-2010 1978-2010
Australian Agribusiness must and can grow to meet our aspirations SETTING THE SCENE UNDERSTANDING OUR FUTURE CUSTOMER SUPERCHARGE OUR SUPPLY CHAIN GROW SUSTAINABLY UNLOCK NEW TECHNOLOGY ATTRACTING PEOPLE & CAPITAL INDUSTRY LEADERSHIP & COORDINATION 15
2030 Megatrends favour Australian and Tasmanian Growth Ambitions Driver Outlook Assessment Unprecedented demand Heightened expectations Disruptive technology Responding to climate change Consolidating communities Fierce new competition Burgeoning global populations and incomes particularly on our Asian doorstep will fuel demand for food and fibre in years to come. Improved market access will position Australia to service that demand, amplifying our geographic advantage. Environmental, health, and welfare considerations will increasingly sway purchasing decisions. Meeting these expectations presents opportunities to build on our competitive advantage. It also increases reputational risks if expectations are not met. Digital and genetic technologies promise to unlock new waves of productivity growth across the sector. Automation will continue to improve quality of life for farmers, while reshaping the sector s skills needs. Climate change will play a major role in Australian agriculture s next decade, exacerbating climate risk while creating diverse new income opportunities. Australia s policy response can position us as a global leader in low-emissions agriculture. Done poorly, our policy response could saddle farm businesses with additional costs. Without intervention, growth in Australia s major cities and regional centres will continue to outstrip that of our smaller towns. This will compound existing pressure on labour and services for farm businesses and families. Competition will intensify as developing nations modernise their farming practices and supply chains. Competition will also arrive from non-traditional sources, as alternative proteins stake out a larger portion of the market. Meanwhile, global forces threaten to disrupt the established rules of international trade. Strength Opportunity Weakness Opportunity Opportunity Threat Weakness Threat 9.8bn expected global population by 2050 88% of Chinese consumers research products before purchasing (84% globally) Australian agricultural output volumes projected to rise by at least 50% by 2050 2.7% - the projected yield impact on Australian agriculture due to climate change by 2050 35% - 65% population shift of Australians living in our capital cities between the start of the 20 th century and now $US500m - $US4bn change in beef exports from Brazil from 2000 to 2014 Projected 54% rise in food demand by 2050 More than 300 companies faced activist demands in 2014 alone Full adoption of digital agriculture could yield $20.3bn by 2050 By 2050 the carbon market could provide income of $40bn to the land sector Regional city populations have tripled to 21% in the same period 60% to 40% drop in Australia s market share for wheat exports to South East Asia from 2012 to 2017 16
The Way Forward The world needs more food and fibre Population, urbanisation and income growth driving ~70% increase in food demand by 2050 Declining international competiveness Australia is losing market share in agricultural trade Underinvestment in RD&E Public support for R&D has been declining since 1970 s, despite the large long term benefits and strong evidence to productivity growth Availability and quality of infrastructure For some agricultural commodities, the cost of transport from farm gate to an overseas market can exceed 40% of the value of the product. Consumer perceptions are critically important Consumers today want to know more about the food they eat and how it s grown and can influence agricultural policy-makers. Increasing production and exports Australian agriculture is tipped to become the next $100 billion dollar industry by 2030. Increase our productivity growth A major driver of our long-run competitiveness and profitability of Australian farmers Increased government and private investment in R&D and stronger international cooperation Australia needs to increase its public investment in R&D, the industry can t rely on private investment alone Capital investment across the entire supply chain Reliable, efficient and cost effective infrastructure, including secure water supplies, will help grow agriculture Industry needs to actively tell its story to help shape consumer perceptions Knowledge and facts are not the only drivers of perceptions and consumer behaviour.
Outlook for Tasmanian Agriculture Optimise unique natural position Mainland limitations not as impactful Specific crops and enterprises Economic and Environmental Sustainability
Opportunities for Tasmanian Agriculture Extensive grazing Intensive grazing Mixed farming Tree, vine and berry crops Medicinal and alternative crops Agritourism Food and beverage processing International export facilities
The Way Forward Best quality Lowest cost of production Most sustainable New crops, genetics and production models New technologies Early adoption
Summary Large opportunities Some challenges Tasmanian agriculture well positioned Need vision, decision and well thought through actions.