Should Australia aim to become Asia’s “food bowl”? How can we help farmers earn more for what they produce? And how can Australia best contribute to global food security?
Those are some of the crucial questions now being considered in the federal government’s long-term agriculture policy, which is expected to be released towards the end of this year.
I believe our future lies in playing to our strengths. The Australian agricultural business model should not be to produce cheap food for the world’s poor, but rather expensive food for rich, largely Asian, consumers.
That doesn’t mean neglecting our responsibilities to help poorer nations or to support global food security. However, this is best done through trade - such as providing technical advice and assistance - to help improve food self-sufficiency in developing countries.
The new dining boom
Food-price shocks in 2007–08 greatly increased global consumer interest in agriculture and the challenges of food security. It has also reiginited interest in boosting agricultural development in northern Australia.
As growth in Australia’s mining sector slows, agriculture is increasingly being seen as an economic replacement, reflected in the slogan ‘dining boom not mining boom’. However, even with global food demand increasing, Australia’s response needs careful consideration and focus.
Continuing growth in world population is overshadowed by the impact of growing affluence, resulting in greater per person consumption of food and demand for more expensive foods.
For a relatively high-cost food producer such as Australia - with high labour costs and a high value currency, but a global reputation for producing clean, safe food - those are trends we can harness to our strategic advantage.
Finding our niche
Global markets are large enough to take all of our relatively small agricultural production as high-value product. So at home, our farmers need to concentrate on production of niche, high-value agricultural products.
For example, wheat is the largest crop in Australia, grown mainly in Western Australia, New South Wales, South Australia, Victoria and Queensland. Most of that wheat is sold overseas, including to Indonesia, Japan, South Korea, Malaysia, Vietnam and Sudan.
Yet even with those significant exports, Australia produces only about 3% of world wheat.
Significantly, we have a good track record of extracting a higher value for our wheat through niche marketing.
Examples include the supply of wheat from Western Australia to produce Udon noodles in Japan. Australia has produced almost all of the wheat used for this product by having a wheat variety with special characteristics delivering a high-quality noodle.
Brewing better coffee - for us and the world
Agricultural research and development - such as the work done at the Queensland Alliance for Agriculture and Food Innovation - needs to go beyond just trying to increase on-farm productivity, and instead find new ways to add value to agricultural products right along the production chain to the final consumer.
Product differentiation is essential. We need to produce niche products with recognised high value, rather than bulk, undifferentiated commodities that will only attract the prevailing price in world markets.
Coffee is a perfect example. By analysing the genetic and chemical basis of coffee quality, researchers can help develop new high-quality, distinctly Australian coffee products for international markets.
Coffee is an important cash crop for many small landholders in developing countries. Those developing nations are likely to remain the most efficient in producing large quantities of coffee for mass markets. However, with the help of Australian experts, they may still be able to find ways to increase their productivity - in doing so, helping to boost self-sufficiency in developing countries.
In contrast, Australia’s coffee production needs to concentrate not on high volume, but on novel high-value products for high-value markets. If targeted with the right products, those overseas markets could take all of Australia’s coffee production.
* This article is based on an address Professor Henry will deliver to the Australian Agricultural and Resource Economists Society’s annual conference on February 7.