Feeding the 9 Billion- the next big export push?

The Economist magazine ran an interesting article last year on the world’s capacity to feed it’s growing population that is predicted to reach 9 billion in 2050.  The article also looked at the different output yields available when different methods of agricultural practice and fertilization were applied, the increasing global prices for many staple agricultural products, and the shift in focus from grains to vegetables and meats in developing countries as many in the population gain the financial means to vary their diet. And, no surprise, the largest growth in food demand by 2050 is expected to come from Asia with China at the number one spot. 

The opportunity for Australia in all this is to ensure we are one of the leading global food suppliers in the years ahead, as demand from the world, and particularly Asia, grows.

We have already seen the interest from abroad in taking ownership of parts of our food production and supply chain.  Will this be the next big boom for Australia after mining?  And will it become so by default or by design?

There is certainly a necessary role for Governments in this debate.  There is the involvement of science in improving the yield and quality of our production levels, the debate on genetically modified crops, the capability (and cost as identified by the Australian Farm Institute in a recent report) of the transport infrastructure to move our agricultural production offshore, the debate on land ownership, and the conflicts on best uses for our arable land and oceans.

 An example of the impact that can be made in the science of land use and methods is the amazing growth of agriculture in Brazil in the last 15 years under the leadership of Embrapa, the Brazilian Agricultural Research Corporation. Brazil has surpassed Australia in beef exports, and is also now the world’s largest exporter of poultry, sugar cane and ethanol. In soyabean Brazil produces a third of the world’s exports and growing.

Australia to it’s credit, has always been good at agricultural production in difficult conditions. Just look back to the pioneers who sourced and modified the best breeds of sheep and strains of wheat that would survive our southern hemisphere climate.  That capacity has continued and organisations like the CSIRO have been at the forefront of agricultural science.  (Perhaps at this stage we should be allocating more resources to supporting the science as Brazil has done).  

A key impediment has always been the dependence on rainfall for much of our agricultural land.  A paper from the Australian Farm Institute at the recent ABARE conference looked at the volatility of crop output across major producing nations (in the period 1961-2009) which put Australia at the top as the most volatile country for yields. By comparison, for livestock output over the same period, we come in at a more reasonable 10^th place in volatility, perhaps due to the ability to move cattle and sheep around when the droughts strike.  Another paper at the conference looked at public expenditure on R&D in the Agricultural sector. China, India and Brazil (among developing countries) have been increasing the spend on agriculture R & D, whereas Australia’s has been going backwards compared to our peers.  

This confluence of circumstances should be leading to much greater interest and support by our governments to realize the potential to be seen as the leading food supplier in the Asian region.

Currently our top markets for unprocessed food are Indonesia, Japan and China; whereas for processed food the top 3 are Japan, USA and Korea with China at number 5.  While the value of food exports is now rising, it remains small compared to other key industry sectors, and also compared to our history in the export of wheat and wool.

The goals then seem to be to:

•  Identify the key food sectors that will be growing in demand in our potential offshore markets, and develop these where Australia can gain a comparative advantage in production,  
•  Smooth out some of the volatility in production through more reliable water resources, better agricultural  science and perhaps complementary growing regions and 
•  Reduce the roadblocks to at least speed humps in the journey from farm gate to (overseas) dinner plate. Australia must be seen as a reliable, consistent and high-quality supplier.

The opportunity is there for strong export growth in our agricultural and seafood industries.  It does require the right mix of focus, planning and national teamwork to realize the potential, so that we can do our bit towards feeding the 9 billion, which would be a good thing for the world, and a good thing for Australia.

Peter Mace, General Manager- Export Council of Australia