The Executive Director of ABARES, Jared Greenville, outlined what he sees as the key concerns for Australian agriculture in the year ahead.
Whilst agriculture held up well during the C-19 pandemic, there were challenges in terms of such things as logistics, freight, labour shortages, and the temporary suspension of some government services.
In response, the supply chains were shored up and continued mainly uninterrupted. However, some issues continue such as the lack of labour supply in horticulture.
2020 had begun badly due not only to the C-19 pandemic. It commenced as the third year of production decline due to seasons conditions. However, during 2020, seasonal conditions improved leading to $66 billion worth of output, up 8%. This was a terrific rebound and included the highest wheat crop ever.
Next year, farm output should remain high at around $63 billion. However, the medium-term outlook is less clear, especially as the recovery in other sectors of the economy is less certain. Also, other global agricultural producers are recovering, so price growth is slowing.
Trade conditions are another factor. 70% of Australia’s agricultural output is exported. There have been shifts in international demand. The drought has limited export performance, and we are still feeling the effects of the bushfires, especially in industries such as forestry.
Whilst China is likely to remain the biggest importer of Australian agricultural products, it is likely to be less profitable. Even though the Chinese consumers like our products they are not prepared to buy Australian for a higher price against other similar products from other exporters.
Australian agricultural producers need to find other markets. Whilst the outlook for growth remains positive over the long term, there are also challenges. These include climate change and changing consumer tastes. For example, the method of production and the type of farm inputs will matter increasingly to consumers. Australian producers will need to respond to these changing consumer demands. There will need to be a renewed focus on value adding, not just downstream through things such as local processing, but also by increasing attributes, e.g. specialised grains, traceability, clean & green measures. Such attributes must be recognised and protected, which is where government has a role to play.
