Home > New report warns Australia may risk missing golden opportunity in agricultural growth

New report warns Australia may risk missing golden opportunity in agricultural growth

Supplier News
article image Luke Chandler

A new report by agricultural banking specialist Rabobank warns that Australia risks missing ’a golden opportunity’ to grow its agricultural sector.

The report titled ‘Agriculture in Focus 2014: Competitive Challenges’ says Australian agribusiness is facing mounting competitive threats throughout the supply chain, which require resolute and aligned action from industry and government.

The report, which examines Australia and New Zealand’s agribusiness sectors, identifies six key challenges affecting the competitiveness of Australia’s food and agribusiness industries, which are increasingly coming under threat from a growing group of highly-resourceful international competitors, including countries in South America, Eastern Europe and even Asia. 

Critical areas that need to be addressed as a matter of priority are: Rising production costs both on-farm and beyond farmgate; International market access; Logistics infrastructure (in)efficiencies; Regulatory pressures; Capital constraints; and, Product innovation and development.

According to Rabobank general manager Food & Agribusiness Research and Advisory Luke Chandler, while the rising demand for food from Australia’s Asian neighbours remains a golden opportunity, Australia risks missing the boat without a more co-ordinated effort from industry and government in addressing these factors, which threaten to impact Australia’s future competitiveness in world export markets. 

He explains that many of Australia’s competitors in agricultural markets around the world are investing heavily and becoming much more productive, which is raising the bar for the country’s agricultural industries.

Mr Chandler says food and agriculture is becoming the subject of increased focus from governments around the world as the challenge of meeting the food needs of a growing and wealthier global population places pressure on farming enterprises. However, Australia needs to realise it is not the only agricultural exporter looking to capture this increasing demand with highly-resourceful developing countries having begun over the past decade to assume a greater role in the global export trade of food and agriculture products. Countries in South America and Eastern Europe as well as major food-importing countries and regions such as China and the ASEAN-5 nations are playing a greater role in shaping the export landscape. 

As opportunities to boost direct on-farm cost competitiveness become harder to realise in Australia, the report says, the nation’s food and agribusiness sector must look to broader factors to maintain its competitive edge.

Market access challenges 

The report notes the pressing issue of improving Australia’s international market access, where the process of deconstructing trade barriers in foreign markets is proving to be ‘incredibly complicated and drawn out’. 

A case in point is international market access for beef, where increased lobbying from international competitors is risking Australia being left behind when it comes to global market access and trade relationships. 

Mr Chandler says that Australia must negotiate ‘most favoured nation’ status for its food and agriculture suppliers in key markets to ensure local suppliers aren’t needlessly being placed at a disadvantage to competitors. This includes prioritising the seven Free Trade Agreements (FTAs) Australia currently has in progress, not including the FTA with Korea, which is soon to be ratified. 

In addition, Australia’s beef industry must set itself apart by investing in strengthening relationships and knowledge exchange frameworks with their foreign counterparts.

Inefficiencies in logistics infrastructure 

Addressing the inefficiencies in Australia’s logistics infrastructure is another priority in lifting the competitiveness of the agricultural sector.

Mr Chandler comments higher on-farm costs and slowing productivity growth in many sectors in Australia relative to global peers have increased the importance of driving efficiencies in alternate parts of the supply chain. In the grain industry for example, strong infrastructure and quality improvements by global competitors is exposing a relative lack of investment in Australian grain logistics infrastructure and the corresponding level of efficiency with which Australian grain reaches export markets. 

This requires commitment to a unified industry-wide, long-term strategy to invest in infrastructure improvement, which involves unilateral input from government, supply chain operators and industry participants.

‘Road map’ for future 

Mr Chandler says that while the solution to the competitive challenges to Australian agriculture does not lie in any one direction, there is a ‘road map’ that can guide industries to build a more competitive and sustainable base for the sector into the future. 

While some competitive factors such as exchange rates and wage costs are beyond the sector’s control, many other issues can be successfully addressed through the concerted and coordinated action of industry and government institutions. A food and agriculture sector that has better access to global markets, ready access to capital, more efficient logistics infrastructure, higher value product and processes, a highly sustainable environmental impact, and more affordable production inputs will be better placed to capture the ‘Asian dining boom’. 

Mr Chandler adds that Australia’s focus needs to be on developing into high-value markets where it can compete on quality and other sought-after attributes for which consumers have the capacity to pay. In other words, Australia should aim to be the delicatessen, and not the food bowl of Asia.

Rabobank Group Executive Country Banking Australia Peter Knoblanche said ‘Agriculture in Focus 2014: Competitive Challenges’ was the first in a series of reports the bank would be releasing to examine issues impacting the agricultural sector along the entire length of the supply chain.

Newsletter sign-up

The latest products and news delivered to your inbox