Spotlight on Farming in 2020

Spotlight on Farming in 2020

Farming is a generational industry. Farmers need feed, water, climate stability, luck, and a smarter way forward to reduce risk and hit ambitious industry targets.

Australia’s rural industries operate in a complex and dynamic environment and often face a common set of evolving challenges and opportunities due to global, national and local change.

Where are we now?

Australian agriculture accounts for:

• 58% of Australian land use (385 million hectares, excluding timber production) and 59% of water extractions (9,434 gigalitres used by agriculture in 2015–16);
• 11% of goods and services exports in 2018–19;
• 2.2% of value-added (GDP) and 2.6% of employment in 2018–19

 

While the COVID-19 pandemic has and will continue to present challenges for Australia’s agricultural sector, the recovery from drought dominates the outlook for 2020–21. Farm production is forecast to rebound in 2020–21, after one of the worst droughts in over 100 years (in terms of rainfall).

In 2019–20 the gross value of farm production is estimated to be $60 billion. This is an upward revision of almost $1.3 billion since the March edition of Agricultural commodities and is driven by a $1.5 billion increase in the estimated value of livestock production.

 

 

Challenges facing the farming industry

Droughts, floods and bushfires; international trade tensions; battles over water and animal welfare; fluctuating prices and fickle consumers will always exist with varying levels.

However, two of the biggest challenges for the industry are market volatility and climate volatility.

Robert Poole of KPMG, said his concern was that volatility in farmgate pricing and seasons was getting harder to deal with instead of easier in an address to Landmark clients at a recent seminar in Wagga Wagga. He believes that tools such as forward sell contracts, new pricing models, multi-peril insurance, hedge or futures products, input pricing contracts and weather forecasting tools have not developed to the extent needed to effectively manage risk

Old-fashion farming was about being at the whim of the environment and the skies however modern agriculture is about controlling the controllable, about industry restructure with planning around sustainability and productivity at the heart of every business plan.

Worth noting is that Cybersecurity was an emerging concern for all companies in agri-business.

 

Future Trends

In its 2015 report, AgriFutures Australia identified five ‘megatrends’ that will drive change within the agricultural sector over a 20-year horizon:

• A hungrier world: population growth will drive global demand for food and fibre
• A wealthier world: a new middle-income class will increase food consumption, diversify diets and eat more protein
• Choosy customers: information-empowered consumers of the future will have expectations for health, provenance, sustainability and ethics
• Transformative technologies: advances in digital technology, genetic science and synthetics will change the way food and fibre products are made and transported
• A bumpier ride: globalisation, climate change and environmental change will reshape the risk profile of agriculture.

 

Other trends Australian rural industries must contend with, identified through AgriFutures Australia research, include:

• Increasing export earnings from agriculture
• Diversification in exports
• The rise of emerging economies
• The decline in land used for farming
• An ageing workforce
• A shrinking workforce
• Increasing labour productivity

Farming has and always will be a volatile industry with many factors being out of anyone’s control.

As world agriculture production continues to increase at a rapid rate to sustain a growing population, the ag-tech industry is tipped to be Australia’s next $100 billion industry, while global food demand is forecast to increase 60 per cent by 2060. Technology looks to be the future of farming in Australia. Will you embrace it?