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Agribusiness Predictions for 2015

Posted By Roy Duncanson, Thursday, 1 January 2015

Agribusiness Predictions for 2015

Global Summary

For Consumers:

Population Up

Food Prices Up

For Producers:

Population Down

Profit Margins Down

1     International

1.1   Overall Summary

Globally, although patchy, this will be the last decade where globalisation is perceived as a threat to current generations. In future decades, and with future generations, globalisation will just be accepted as a normal part of doing business. This will occur despite some rise in protectionism to prevent decline of in-country agribusiness development.

World food prices will relentlessly rise in response to increasing population and declining agronomic resources.

1.2   What will increase?

  • Agribusiness industry representation fragmentation (the world will see both producer and food-oriented consumer groups forming, often with opposing policies)
  • Chinese emigration (people and capital)
  • City gardens, particularly vertical gardens
  • Commencement and slow rise of pluralism will begin to challenge partisanship as peoples seek the ‘best of all worlds’
  • Desertification
  • Emerging skills-based digital TV channels (leap frogging to smart phones)
  • Environmental Enforcement
  • Food prices
  • Food security
  • Global and in-country cold chains
  • Global food chains (GFC) as proportion of international trade
  • Grower-to-Consumer direct food sales
  • Internet speeds and mobile telephony (coverage will continue to the patchy)
  • Land evictions in developing and poor countries
  • Locavore advocacy, but not practices
  • Obesity Rates
  • On-line food purchasing (developed world)
  • Organic farming
  • Private sector agricultural industry research, development, and extension
  • Rise of online universities and vocational training institutions (across borders)
  • Rise of pluralism in international policy forums
  • Slow rise of African agribusiness in response to early stage exploitation of its vast agronomic potential
  • Supply of ‘Ag industry-ready’ labour (all levels)
  • Traceability technology, although mostly backward integration types

1.3   What will remain the same?

  • A reconfiguring of agricultural faculties and vocational training institutions in response to rising demand for food and fibre (i.e. traditional models not filling skills gaps)
  • Branding of agricultural produce stalls due to lack of innovation
  • Business confidence (overall, but wide variations based on OPEC decisions)
  • Farm-based bulk transport infrastructure
  • Food Wastage
  • Foreign lobbyists activity by multi-national agribusiness firms in developing countries (already amongst highest in the world)
  • Government support for Ag R&D will continue to decline (as global shift to private sector continues). This poses major challenges for developing countries
  • Natural resource management investments
  • On-line food purchasing (developing world)
  • Starvation (climate based). Starvation may increase, but the world now responds more quickly
  • Wholesale food markets (Developing world)

1.4   What will decrease?

  • Bio-security
  • Farm-gate margins (particularly in developed countries)
  • Fossil Fuel Energy Costs (preceding price shocks)
  • Global agricultural policies will slightly increase protectionism in response to rise of Global Food Chains (i.e. to protect in-country agribusiness)
  • Global supplies of P, N, & K (and some crucial trace elements)
  • Government transparency and accountability
  • High value agricultural lands
  • Profit margins at the farm gate (mostly in the developed world)
  • Public Sector Agricultural Industry Research, Development, and Extension
  • Trade barriers (patchy, mostly via bi-lateral agreements)
  • Wholesale food markets (Developed world)

2     Australia

2.1   Overall Summary

Although Australia has the most efficient farmers in the world, their supporting agribusiness are almost entirely domestically focused. There are no significant Australian agribusiness brands in the world today. That will continue.

Coinciding roughly with the China Free Trade Agreement, Australia will very slowly respond to offshore business opportunities, mostly generated by in-bound investment. Initially, this will be passive as Australia’s larger farmers, fishers, and foresters respond to increased demands based on existing cost structures. It will take a while before Australia’s sustained high cost structures cause shift from a reactive to a proactive pursuit of offshore opportunities. Industry restructuring and further innovation may be a prerequisite to that occurring.

Whilst many of Australia’s farmers and fishers are export conscious, with very few exceptions, their supporting agribusiness allies are not. The majority of existing Australian agribusiness companies will struggle to expand their markets beyond their existing ones, until they find new methods to enter new export markets or expand existing markets.

With few exceptions, Australian agribusinesses will remain domestic market focussed and be restricted to niche market exploitation in offshore markets for the remainder of the decade. As a result, competition in the domestic market will intensify and most Australian-owned agribusinesses will struggle to maintain markets and profits. Market competition will be further increased by heightened activity of Australian owned subsidiaries of multi-national corporations, as their share of global food chains increases (i.e. as part of a similar trend in overall global value chain dominance of international trade).

2.2   What will increase?

  • Activity of lobbyists commissioned by multi-nationals (all jurisdictions)
  • Ag-industry representation fragmentation (4000+ grower groups and rising)
  • Chinese immigration seeking private ownership (people and capital)
  • Commencing the rise of brands (particularly at the producer end)
  • Domestic food processing company bankruptcies
  • Farmers markets
  • Farm-gate costs
  • Food prices
  • Foreign investment and ownership of land and water resources
  • Free trade agreements (FTA)
  • Grower direct food sales
  • Internet speeds and mobile telephony (coverage will continue to the patchy)
  • New entrants to the food retailing market
  • On-line food purchasing (fastest growing retail sector).
  • Rise of wider community understanding about the root cause of farmers and fishers exiting their industries (i.e. declining margins).
  • The commencement and slow rise of pluralism will begin to challenge traditional representation/partisanship models as all peoples seek the ‘best of all worlds’
  • Traceability technology will commence shifting from backwards to forward integration
  • Trade barriers (as a consequence of FTAs)
  • Volume of carbohydrate foods (as a percentage of diets)

2.3   What will remain the same?

  • Australia agricultural policies will remain largely unchanged (despite the rhetoric)
  • Bio-security provisions (But a North-South divide will merge)
  • City-based food production (struggling to move beyond demonstration concepts)
  • Rate of farmers and fishers exiting the industry
  • Farm-gate income
  • Food security (pockets of food insecurity will continue in Australia)
  • Investor confidence in Colworths oligopoly
  • Land tenure
  • No cogent drought policy (all jurisdictions)
  • Obesity Rates
  • Organic Farming
  • Rise of wholesale plant nurseries
  • The Australian Agricultural Competitiveness White Paper will largely endorse continuance of the status quo (i.e. no major changes)
  • The recommendations of the Senate Inquiry into Australia’s Agriculture Levy System will not be implemented
  • There will be no successful re-structures of any agribusiness sector industry representation groups, including the NFF due to status quo inertia

2.4   What will decrease?

  • Business confidence overall, including domestic agribusinesses
  • Commencement of declining food retailing profit performance by Australia-owned food retailers
  • Drought support mechanisms (all jurisdictions)
  • Environmental Enforcement (various)
  • Farm bankruptcies
  • Farm-based bulk transport infrastructure will continue to deteriorate
  • Farmer, fisher indebtedness (assume average season)
  • Farm-gate margins
  • Food based reality TV shows start slowly giving way to online equivalents with more emphasis on ‘how to’ skilling
  • Food Wastage, although patchy and mostly constrained to food transport and manufacturing challenges
  • Fossil Fuel Energy Costs (preceding price shocks)
  • Government support for Ag R&D will sharply decline (some jurisdictions will commence exiting)
  • Government transparency and accountability
  • Hegemony will continue to drive the long-term decline of rural and regional partisan groups (all jurisdictions)
  • High protein foods (as a percentage of diets)
  • High value Agricultural Lands
  • Natural Resource Management
  • Private foresters entering the industry
  • Profit margins at the farm gate
  • Public confidence in Colworths oligopoly
  • Quality of rural and regional journalism as Internet challenges traditional media networks
  • Supply of ‘Ag industry-ready’ labour (all levels)
  • Wholesale food markets (slow decline continues)

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Tags:  Agribusiness Predictions 

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