Predictions for Australian
Increased policy influence over food system
Food Prices Up
Producer Numbers Down
Profit Margins Remain Thin
Australia continues to have no cogent agribusiness development policy; Commonwealth, State, or Territory. As a result the real value of largest single and sustained contributor to national productivity goes largely unrecognised by public policy makers. As a consequence, Australia will continue to understate and undervalue cogent policy treatment to the sector.
Australia does have a farming-centric approach to agricultural policy, and as a result do have the most efficient farmers in the world. Without addressing farmers supporting agribusinesses (roughly 10 times the size), farmers operating on thin margins will continue to experience supply cost pressures upstream and marketing pressures downstream.
Australian agribusiness is almost entirely domestically focused. There are no significant Australian agribusiness brands in the world today. That will continue without further policy treatment
Australia will continue to seek and sign multilateral and bi-lateral trade agreements, but the agribusiness industry itself will respond slowly to offshore business opportunities (due to the dominant domestic focus). Most industry development will be reliant upon by in-bound investment.
Examples of Australia’s larger farmers, fishers, and foresters responding to increased export demands by investing will remain weak. It will take a while before Australia’s sustained high cost structures cause shift from a reactive to a proactive pursuit of offshore trade opportunities. Further industry restructuring and innovation may be a prerequisite to that occurring.
In overview, whilst many of Australia’s farmers and fishers are export conscious, with few exceptions, their supporting agribusinesses are not. This is a major growth inhibitor for Australian exporters. The majority of existing Australian agribusiness companies will struggle to expand their markets beyond their existing ones.
Strong export demand in some sectors will hide underlying problems in the wider Australian agribusiness 'system'. Because of structural challenges facing media, both mass and rural media will publish success stories, but seldom focus attention on underlying structural issues.
With few exceptions, Australian agribusinesses will remain domestic market focussed and be attracted only to niche premium-markets servicing 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.
Increased consolidation will occur in the farm input sector, and the industry will struggle with rising costs of accessing key trade-related infrastructure, mainly due to privatisation as a result of rising government asset sales programs.
What will increase?
Ag-industry representation fragmentation (4000+ grower groups and rising)
Chinese immigration seeking private ownership (people and capital)
Consolidation and takeover activities in the farm input sector
Consumer policy influence over food system
Cost of accessing key trade-related infrastructure
Domestic food processing company bankruptcies
Farmers markets (including non-genuine farmer markets)
Foreign investment and ownership of land and water resources
Free trade agreements (FTA)
Grower direct food sales
Internet speeds, mobile telephony, satellite usage (telephony coverage patchy)
Industry re-structuring will increase, albeit weak (i.e. commencing early stage consolidation)
Innovation, innovation infrastructure, and emphasis upon it
- Land tenure debate, particularly in Northern Australia (new trend)
New entrants expand operations in the food retailing market
On-line food purchasing (fastest growing retail sector)
Organic farming (non-broad acre)
- Private-sector R&D investment, weak then strengthening
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 (and related trials of it)
Use of brands (particularly at the producer end)
Volume of carbohydrate foods (as a percentage of diets)
What will remain the same?
- Absence of a drought policy for world's driest continent
- Agribusiness lobbying activity by multi-nationals
- Agricultural policies will remain largely unchanged (little interest outside the farm gate)
- Bio-security provisions
- City-based food production (struggling to move beyond demonstration concepts)
- Rate of farmers and fishers exiting the industry
- Food security (pockets of food insecurity will continue in Australia)
- Obesity Rates
- Red tape
- Public perceptions about farming and agribusiness
- Wholesale plant nurseries (slow to react to rising export opportunities)
- The Australian Agricultural Competitiveness White Paper largely sees continuance of the status quo (i.e. no major changes)
- The recommendations of the Senate Inquiry into Australia’s Agriculture Levy System will continue to be largely ignored (although patchy by commodity).
- There will be no successful re-structures of any agribusiness sector industry representation groups, including the NFF due to status quo inertia
What will decrease?
- Bank support for the sector (despite the rhetoric, internal bank risk ratings remain high, i.e. poor for farming)
- Business confidence overall, including domestic agribusinesses
- Commencement of declining food retailing profit performance by Australia-owned food retailers (particularly Colworths)
- Drought support mechanisms (all jurisdictions)
- Environmental Enforcement (various)
- Farm bankruptcies
- Farmer, fisher indebtedness (assume average season)
- Aggregate farm-gate margins
- Food based reality TV shows start slowly declining due to oversupply
- Food Wastage, although patchy
- Fuel Energy Costs
- Support for public sector Ag R&D will continue to decline (jurisdictions will exit)
- Government transparency and accountability
- Hegemony will continue to drive the long-term decline of rural and regional groups (all jurisdictions), including political groups.
- High protein foods (as a percentage of diets)
- High value agricultural land
- Investor confidence in Colworths oligopoly
- Natural Resource Management and Landcare funding
- Private foresters entering the industry
- Public confidence in big-food (juxtaposed against rise of direct market forms)
- Rural and regional journalism (as parent company retract to city media to contain costs)
- Supply of ‘Ag industry-ready’ labour (all levels)
- Wholesale food markets (slow decline continues)