AUSTRALIA IN THE ASIAN CENTURY – A series examining Australia’s role in the rapidly transforming Asian region. Delivered in partnership with the Australian government.
Here, Dr Peter Batt looks at Australia’s potential to feed Asia’s rapidly growing population.
Asia has the fastest-growing population in world. This will increase the demand for food, but greater urbanisation, westernisation and rising personal wealth is changing the form in which food is consumed.
There is a rising demand for more animal protein in the diet, more dairy products and a greater variety of fresh fruit and vegetables. There is also more demand for value-added food: food that is convenient, safe and which has been produced more sustainably.
While it is the objective of most sovereign nations to be self-sufficient in food, in much of Asia it will be exceedingly difficult to produce enough food. There are major resource constraints in the form of arable land and water. Farmers are often unable to access appropriate technology, and the lack of infrastructure imposes major constraints on the efficient distribution of food.
Opportunities and challenges
To the south, Australia is well positioned to take advantage of the emerging opportunities. However, Australia must also find a way to address the many impediments that threaten to restrict market opportunities in the future.
Agriculture is the most volatile sector of the Australian economy. Seasonal variations, primarily in rainfall, have a direct impact on productivity. While productivity per area continues to grow, the rate of growth has slowed considerably. This is because the public is contributing less to research and development expenditure, and because many farmers can’t make the necessary investments in technology, equipment and machinery, due to their diminishing equity position and lack of confidence.
The economies of scale, which once favoured greater farm aggregation, are becoming more elusive. As input costs continue to rise and prices trend downward, the terms of trade are eroding.
While more accurate long-term weather forecasts may provide farmers with the information to make better decisions, the full impact of climate change is expected to place a considerable burden on the public purse. Huge investments in infrastructure will be necessary in much of the country to provide a regular and reliable source of water.
If the potential for agriculture in north Australia is to be realised, transport and logistics systems will need to be enhanced to ship the products to population centres.
Conventional plant breeding systems are likely to give way to the increasing use of genetic modification. Many consumers have concerns about the introduction of genetically modified plants.
But if the technology can be shown to reduce the use of agricultural chemicals and fertilisers, water and fossil fuels, and to deliver positive benefits to health and nutrition through enrichment, consumer resistance should diminish. This is even more likely if the use of GM reduces the costs of production and if that cost reduction flows through to consumers.
The high value of the Australian dollar is putting pressure on producers both domestically and abroad. Domestically, competition between the two major supermarket chains is driving food prices lower, often to the point where farmers’ profit margins are so small they can’t invest in new technology and new product development.
And more liberal terms of trade enable many food ingredients to be imported at prices well below the costs of production. This is forcing many food processing plants to close, with a commensurate negative impact on employment, farmers and rural communities.
The food bowl of Asia
As markets evolve, there is an increasing demand for higher quality products. Beyond the tangible characteristics of the product itself - such as size, shape, colour and appearance - consumers are now also expecting sustainably produced food. Australia leads the world in the implementation of quality assurance systems, but the uptake of sustainable farming practices has been slow, despite Australia having one of the most fragile ecologies.
To access world markets, Australian food producers have to show that their product has been produced using good agricultural practice. But competition between global retailers is continuously raising the bar, imposing additional costs on all food producers. These costs are seldom recovered, and this absence of sufficient financial incentives provides the major barrier to the more widespread adoption of sustainable farming practices.
However, there is a long-term public benefit in supporting the more sustainable use of resources and encouraging the more widespread adoption of integrated crop management.
If Australia is to become the food bowl of Asia, we need to start making changes now.
This is part fifteen of Australia in the Asian Century. You can read other instalments by clicking the links below:
Part Twelve: Dealing with the threat of deadly viruses from Asia