A multi-billion dollar agribusiness opportunity

At the weekend, the Federal Government published its Agricultural Competitiveness White Paper

Pitched as ‘an investment in our farmers and our competitive strengths in agriculture’ it outlines a plan with five priority areas designed to create a more profitable and resilient sector. This, along with other white papers and measures announced in the Federal Budget, demonstrates a strong signal from the Federal Government that they are behind our agricultural industry.

In the third instalment of our Building the Lucky Country series, the agribusiness sector was identified as one of the stars of the next 20 years for the Australian economy. The world is on the cusp of a leap in demand for higher-value food products due to Asia’s growing middle classes boosting their protein/food consumption. Australia has plenty to offer to tap into this global opportunity and there are some fundamental areas that will need a change of tact for success to flow:

  • Market access – moving from an environment where we cut trading with key partners (Indonesia) to opening up new free trade agreements (Japan, Korea and China) has been a welcome change in direction
  • Infrastructure – in recent decades, governments have supported the resource sector with investments in rail and port infrastructure. The time has come for a different lens to be applied, this time to agriculture. The measures are relatively modest as they relate to elements such as the development of CSIRO’s Strategic Investment Tool (TRANSIT). Though when coupled with the measures within the Northern Australia White Paper, they signal the intent for infrastructure spend, which is much needed. This also includes water infrastructure, which is after financial returns due to the increased privatisation within the sector.
  • Too few students and the role of R&D – the $100m pledged to extend the Rural R&D for Profit Program to 2021-22 is welcomed. While we think more can be done to address the decline in agriculture students, at the heart of it, making the industry more attractive and able to offer real returns for those looking to make a career within the industry, is an important step.

When looking at the package of outcomes delivered not only by this White Paper, but also the Northern Australia White Paper and the Federal Budget, there are some real measures to assist at the financial level for farmers, including: greater utilisation of Farm Management Deposits as a loan offset; opting back into tax averaging after 10 years; and, other accelerated tax measures, such as immediate deductions for fencing and water infrastructure.

Some of the fundamentals now playing out within the sector, such as low foreign exchange rates, the opening up of free trade agreements, and record prices for some commodities, including beef, sees the signs as very positive. The White Paper is a strong endorsement of the industry from the Federal Government to ensure Australian agribusiness can lead the global agenda.  As with many projects though, the proof will be in the execution of the initiatives, some of which need alignment and collaboration with the various State and Territory governments.

 

 

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