Opportunities in Asia

The recent Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES) conference in Canberra highlighted some of the difficulties that Australian producers will have in capturing opportunities in Asia.  The forum noted that Australian farmers face a range of challenges in the next few years including a high Australian dollar and increased competition from countries in South America and Eastern Europe. 

The analysis was in sharp contrast to the much of the commentary over the past few years with focus being on an impending food crisis and what a struggle it will be to feed a world population of nine billion people by 2050.  There have been various predictions of huge increases in food prices as demand soars in Asia with limited additional land available to meet the demand for more food. 

Instead of forecasting soaring food prices, ABARES are predicting a much more modest increase in prices out to 2050.  In fact, the medium term price outlook is subdued despite the increased demand from Asia. 

The ABARES analysis confirms what most producers, who are generally sceptical by nature, have believed for a long time.  That is that there will be no “free kicks” from increased demand in the Asian region.  Any opportunities that arise from growing populations and incomes in Asia will require hard work on the part of Australian producers and marketers.

Productivity improvements will underpin the ability of Australian producers to capture opportunities that arise in coming years.  Improvements in productivity are the way that farmers have coped in the past with falls in output prices and rising input costs and will no doubt continue to be in the future. 

The Government must play its role in encouraging productivity improvements.  A key area is in fostering investment in the sector by creating a healthy investment environment which addresses sovereign risk issues. 

The Government must also play its role by ending subsidies to unproductive industries, improving trade relationships with our Asian neighbours and improving infrastructure.  Other important areas for Government are ongoing investment in research and development and reducing the regulatory burden placed on business. 

Australian farmers have proved themselves to be innovative in the past and can meet the challenges that the Asian century will bring.  The Government changes required to meet these challenges are not onerous and will likely benefit the wider economy in addition to the agricultural sector.