Advancing Australian Agriculture in partnership with Asia – the good times can be even better

Doug Ferguson, Partner in Charge, Asia & International Markets

Let’s be clear eyed and pragmatic about Asia. Australia’s agricultural future is now well and truly connected to Asian markets and will remain so for many decades, if not forever.

In 2015, eight of Australia’s top ten agricultural export markets were in Asia, including China as the largest followed by Japan (3), Indonesia (4), and the Republic of Korea (5). Sixty two percent of our agriculture exports already go to these Asia countries and most markets are now covered by FTAs.

Demographics and economics will continue to underwrite Australia’s food sector opportunities with Asia.

By 2050, the earth’s population is projected to reach over 9 billion. That’s another 1.4 billion people from now, or, based on my maths equivalent to adding 1.8 times Australia’s current population every year, over the next 32 years. India, China and ASEAN will be key drivers of this frightening population reality.

ANZ predicts 85 percent of the growth in the world’s growing middle class is expected to be in Asia. The UN Food and Agriculture Organisation predicts food supply will need to increase 60 percent to meet global demand. Yet, the OECD predicts a slowdown in agricultural production growth in Asia over the next decade.

Whilst food production in Asia is expected to increase, self-sufficiency in core food staples other than rice remains an unattainable goal for most Asian governments. In order to meet this new and changing demand, there will be a need for Asia to significantly increase food imports to complement domestic production.

Australia is well positioned to benefit, but the competition is intense. There are many factors that contribute to Australia’s competitive advantage and you will be very familiar with most including:

  • Australia’s well-earned reputation as a clean, green and healthy food producer of fresh and high quality food, underwritten by our strict bio-security regulations.
  • Australia’s geographic proximity to Asia for perishable foods
  • Counter-seasonal food production capacity that avoids direct competition from the US, Canada and EU

There is another emerging driver…Australia is becoming a very large and popular inbound tourist destination for over 1.5 million Chinese annually as well as many wealthy Indians and other Asian nationals. They are visiting Australia, tasting and enjoying our delicious fresh food and wine and wanting to buy more of it back in their home.

The National Farmers’ Federation predicts the value of Australia’s agriculture sector will almost double in the next 15 years, creating Australia’s next AUD 100 billion industry. Success within key Asia export markets is absolutely central to achieving this objective.

Despite the hard work of our 90,000 Australian farming companies and industry participants, based on Australian Bureau of Agricultural and Resource Economics (ABARES) statistics the forecast for Australian agriculture exports to 2022 is pretty flat while Asian food demand is on a 45 degree growth trajectory out to 2050. We are simply not making enough ground fast enough to be a major competitor in this Asian food game.

Read the full report; Advancing Australian Agriculture in partnership with Asia

One thought on “Advancing Australian Agriculture in partnership with Asia – the good times can be even better

  1. Driving productivity increases in our farms and wider food processing industries is a challenge that really excites me – the constant driver of “everyone needs to eat” is only accelerating; and clearly so in Asian markets more than Australia itself. Adoption of technology, a need to constantly innovate, investing in infrastructure and facilities and adapting our means of delivering food to high demand export markets (while satisfying our own local demands) at speed is critical. The future may be a little uncertain, but there is no doubt we as KPMG can play a role in rising to the challenge of overcoming it.

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