LOOKING TO EXPAND IN ASIAN MARKETS? THE TIME IS NOW…
Recently, CSIRO in conjunction with the Rural Industries Research and Development Corporation (RIRDC) released the Rural Industry Futures report. Authors Dr Stefan Hajkowicz and Dr Sandra Eady, principal scientists at the CSIRO, identified five “megatrends” that will affect the Agribusiness industry in the coming 20 years with a particular focus on the opportunities within Asian markets.
The five megatrends identified are noted in the graphic below:
Five Megatrends. Source: Rural Industry Futures Report – S Hajkowicz & S Eady
We have summarised the key points from each of the five megatrends identified in the Rural Industry Futures report and will be sharing them over the next 10 days. summarised in the sections below. The unique challenges and opportunities presented by each megatrend have been highlighted to show the potential for expansion in Asian markets in the next two decades.
“A hungrier world”
Current world population growth trends indicate that there will be around 2.3-2.4 billion more people on the earth by the year 2050. Most of this growth will occur in the regions of Asia, Africa and the rest of the developing world.
The United Nations Food and Agricultural Organisation (UNFAO) states that food production will need to increase by 60-70% in order to meet this increase in demand. This projected increase is based on both population growth, accounting for 70% of the increase, and predicted income growth, which accounts for 30% of the increase.
Demand for animal protein in particular will increase by 76% which requires an increased output of 1.4%/annum in order to meet this need. Demand for staple grains will increase by 46% and stock feed by 14%, requiring an increase in crop area by 10-20%.
Challenges:
An increase in world food production of 60-70% poses many challenges not only for Australia’s agribusiness sector but also the rest of the world. Resources will be under considerable pressure as increased demand on water and arable land for food production competes against potential emerging markets such as biofuel production and carbon farming.
Furthermore, drought within Australia and the impact on water resources; combined with the potential impact of climate change may have adverse effects on agricultural production.
Opportunities:
The “hungrier world” megatrend will provide many opportunities for the Agribusiness sector in Australia, particularly in relation to efficiencies in agricultural production and the use of resources.
Increased efficiencies in crop production is likely to come from improved yield growth through the adoption of improved practices and technology; in fact, the Rural Industries Futures report states that up to 90% of the required increase in crop production will come from improved yields. This will occur mostly in developing countries as they have the largest yield gap, measured as the difference between potential and actual farm yield.
With regards to protein, there will generally be higher demand for chicken and small rudiments but production in all sectors will need to increase to meet the overall demand. This will require higher take-off rates in pig and poultry production and higher carcass weights in beef and sheep production.
Summary
The five megatrends identified in the Rural Industries Futures report provide an insight into the significant market opportunities and challenges within Asia in the coming years.
Population and income growth will lead to increased demand for a higher quantity of more diverse and quality products. Consumers will be more informed and more empowered to make choices based on personal values rather than price. Advances in technology will lead to greater efficiencies in production and the risk associated with climate change and extreme weather events will lead to the emergence of entirely new markets.
The Australian Agribusiness sector is positioned for growth and the developing nations of Asia will be a key component. The industry needs to capitalise on the ‘clean and green’ image of Australia as well as available technologies to communicate and build a relationship and social presence with their customers. Emerging technologies need to be adapted to address the unique challenges presented by our climate and available resources. The extent by which the Australian Agribusiness industry can take advantage of the market opportunities presented by these megatrends largely comes down to their ability to adapt and innovate.
The full copy of the Rural Industry Futures Report can be downloaded on the RIRDC website.
We will be releasing a new Megatrend every two days and adding a related links below.
