The world may be growing hungrier for agricultural products, but we've lost our competitive edge in the global export game, according to Agribusiness Australia.
Sliding Australian farm sector productivity, inefficient transport networks, a serious shortage of fresh investor capital and research spending, plus rising competition from other exporters mean the industry will almost certainly fall short of its $100 billion agricultural production goal for 2030, by at least $12b.
If Australian agriculture only maintains current production growth trends and commodity prices do not lift much in the next decade our farm productivity value - currently $59b - may even struggle to reach $80b.
A straight shooting "state of the industry" report from the organisation representing farm service providers, processors, major producers and exporters said Australia was "continuing to lose market share in global agricultural exports".
It found the sector required at least $125b in new investment (plus current debt and retained farm earnings) to achieve the 2030 production target.
Private investment in agriculture was stagnant here, compared to other countries such as the US.
Opportunities to value-add and multiply value post-farmgate should be heavily considered in any future strategic planning for sector growth
Our industry still relied too much on pre-farmgate profit and production goals which were vulnerable to volatile climatic conditions, fickle commodity markets and nervous investing habits.
"The key to achieving productivity and profitability targets over the next decade may lie with the post-farmgate sector more than pre-farmgate," the report said.
"Opportunities to value-add and multiply value post-farmgate should be heavily considered in any future strategic planning for sector growth."
More post-farmgate investment strategies and research efforts could also help limit the industry's exposure to unpredictable factors such as the weather, and help alter agriculture's less attractive image among domestic investor groups.
- Stronger ASEAN ties needed
- Candid talk on China trade from AACo boss
- Ag exports mostly defy coronavirus setbacks
Agribusiness Australia president and Elders managing director Mark Allison said an industry-wide approach was essential across the agribusiness value chain.
The reality was that for every dollar created on-farm, the agriculture sector supply chain could create a further two.
While our farm sector exports were still growing relatively solidly at about 5.2 per cent annually, the value of global agricultural trade was growing much faster at 7pc, the report said.
South America in general will provide a challenge to the growth and profitability of Australia's agriculture sector
Global imports by our valued Asian, African and Middle East customers were outpacing our output even faster, growing about 14pc in the 18 years to 2014.
"Australia is slipping in market share and competitiveness," the state of the industry report said.
Rivals getting tougher
Although we were still competitive globally, and production was still growing and export markets were still solid thanks to free trade agreements, Mr Allison noted there was an increasing threat from other nations with lower production costs (often supported by government) and they were rapidly improving their quality.
"These competing exporters are also able to take advantage of Australia's variable climate to ensure their supply is constant, thereby further eroding Australia's marketing edge," he said.
"South America in general will provide a challenge to the growth and profitability of Australia's agriculture sector."
The report said Australia not only had the current challenge of recovering from drought, but also reclaiming lost market share.
It highlighted how the beef industry had lost markets to South and North America and Black Sea exporters had stormed our grain export territory, partly assisted by China's Belt and Road trade infrastructure efficiency initiatives.
"It will not be enough just to get back to pre-drought (beef) production levels, Australia will have to regain those lost markets, too," the report stated.
National plan needed
Mr Allison said government, agribusinesses and farmer organisations needed to get cracking on a substantial national plan for advancing the agricultural sector.
The report suggested more, deeper analysis of economic trends and post-farmgate data be recorded and shared to provide more valuable benchmarking of our industry's competitiveness on a global scale.
We need to think about providing transparency which allows good investment choices to be made
Agribusiness Australia treasurer Mark Barber regarded information transparency as a way to attract investment.
"In the US, a number of emerging private companies and the USDA do an excellent job of providing important statistics that potential investors can use to benchmark various investing options," he said.
"We also need to think about providing transparency which allows good investment choices to be made."
Agribusiness Australia's report was released last week at an industry summit involving a roll call of 50 leading private and public agribusinesses ranging from Macquarie Bank's Paraway Pastoral to grain giant's CBH and GrainCorp, the Australian Agricultural Company, and Bega Cheese, plus international names such as Cargill, Syngenta, Bayer and Nutrien.
Although Britain's split from the European Union in December represented "one of the biggest geopolitical uncertainties affecting global trade in modern history", the agribusiness body felt Australia was being extra active in developing new northern hemisphere trade opportunities.
"Australian agriculture has a once in a generation opportunity to push for increasingly favourable trade deals with a post-Brexit UK and Europe," its report claimed.
This opportunity might include agricultural technology, not just commodity exports.
Belt and Road ties
Closer to home, we could also cash in on greater long term regional co-operation and connectivity between China and its trading partners as they aligned to take advantage of Belt and Road trade routes and investment.
The B&R would even "bring Europe closer to Australia" via new high-speed trade routes.
"B&R has potential to have a profound economic and trade effect on Australia's immediate economic region," the report said.
While physical B&R infrastructure already included road, rail and pipeline corridors across Eurasia, sea port developments and maritime channels through the South China Sea, even New Zealand was connected directly to China after establishing a sea lane as part of the trade initiative.
"Significant transport time benefits are occurring due to connections the B&R is opening up, with container transit times reduced by up to 50pc between China's eastern seaboard and London."
- Start the day with all the big news in agriculture! Click here to sign up to receive our daily Farmonline.
The story State of industry report says ag exports and growth could do better first appeared on Farm Online.