You don’t need a crystal ball to know that Australia’s rural industries will face significant changes globally, nationally and locally over the coming decades. This will create opportunities and challenges for small and large farms, and will affect rural lifestyles, agricultural landscapes as well as Australian society and economy.
In a new report, we describe that future through a series of interconnected ‘megatrends’ that are expected to hit Australia over the next 20 years. As we describe below, each raises serious questions (or “conversation starters,” as we’ve called them) for Australian farmers. We don’t yet know the answers, but we do know that they will be crucial to how the industry performs in the future.
The world will be hungrier
We know the world will need more food as the population grows – about 70% more by 2050, according to the United Nations. This will come mainly from increased yields, as well as some expansion of agricultural land.
The goal is achievable but should not be taken for granted. There are competing uses of land for biofuels and urbanization; in some places the earth is degrading; and we do not yet have good predictions on the effect of climate change on agriculture. As a major food exporter, Australia has a vital role to play in supplying global food markets and in cushioning supply shocks.
We are well positioned, both in terms of geography and comparative advantage, to supply foreign markets. And although Australia cannot hope to feed Asia or the world, with wise investments in R&D, it can increase production and exports. Our ability to meet this challenge depends in large part on our ability to maintain a competitive pricing position and continue to improve returns. The key questions are therefore:
Will farms be able to increase their production and performance to meet this challenge?
What is a sensible investment in innovation and how should it be funded?
The world will get richer
Some 1.02 billion people will be lifted out of poverty and into the middle classes in Asia’s developing region alone by 2040. With wealth comes the ability to diversify food choices – richer households will consume more meat, dairy products and vegetable oils.
This presents an opportunity for Australian rural industries to identify new types of food and connect to new markets. A diversified rural export base is likely to be more resilient to supply and demand shocks in markets.
Is Australia better to focus on the commodity markets that have generated strong export earnings, or should it work hard to meet the demand for a more diverse range of food and fiber products? luxury and niche?
Does Australia have the infrastructure and perseverance to market a wider range of desirable agricultural products to Asian markets?
Customers will be more demanding
The consumer of the future will be increasingly able and motivated to choose food products and fibers with certain characteristics. This has impacts both inside and beyond the farm. Information technology will increasingly enable consumers to access, share and validate product information throughout the supply chain, from farm to fork.
Health is likely to become a particularly important driver of food choices and consumption patterns, whether it be a desire for food safety or to help prevent chronic disease. The lives of many people are cut short by unhealthy diets and, on current trajectories, government budgets could be crippled by unsustainable growth in health spending.
Questions of environment, provenance and ethics will also play an essential role. Consumers of the future will have higher expectations for these qualities in the food products and fibers they choose to purchase. Consumers will be “information empowered” and rural industries may gain or lose market share based on this increased consumer knowledge.
In the face of soaring food-related health costs, will governments increase control over the components of food and diet?
How does Australian agriculture build and maintain its clean and green reputation?
Technologies will transform life on the farm
Advances in digital technology, genetics and materials science will change the way food products and fiber are created and transported.
Many breakthroughs in plant productivity will come from genetic technology. Big data systems and digital technologies will bring better risk management approaches to Australian agriculture; weather conditions and yields will be much more predictable, and farmers will have sophisticated tools to help with decision making.
Knowledge about land use and framing practices will increasingly fall into the public domain as remote surveillance, whether from drones or satellites, makes new data available in a highly interconnected world. . Business and capital models will change with the introduction of “disruptive” technologies such as peer-to-peer lending.
Will market perceptions hold back Australian agriculture by restricting access to advanced technologies used by our main competitors?
How will farmers manage a higher level of scrutiny of their operations?
The roller coaster of risk will get more bumpy
Risk is a pervasive feature of Australian agriculture. However, the coming decades will see changes in the global climate, environmental systems and the global economy that will create new and potentially more serious risks for farmers.
Australian agriculture has shown a strong ability to adapt and respond to risks in the past. But as trade becomes global and we depend more on imported inputs such as fertilizers and fuel, the risk of supply chain shocks increases.
Increased international trade and passenger travel are leading to increased biosecurity risks. The impacts of climate change are not well understood and the need to reduce greenhouse gas emissions will create competing uses of land for biofuels and carbon storage.
Do we understand the likely implications of a global carbon price of US $ 50-100 per tonne?
Is the agricultural sector at risk of complacency and underinvestment in risk management?
Overall, Australian agriculture has a bright future, loaded with deep and diverse opportunities. The future described above will be a challenge for some producers and industries, but an opportunity for others. How effectively Australian agriculture seizes these opportunities and avoids risks will largely depend on innovation.
Over the past centuries, repeated innovation has enabled Australian farmers to expand into new land, develop water resources, and increase crop and pasture yields. As we look to the decades to come, innovation becomes more and more important. In a world of exponential growth in both technology and global trade, it’s about working smarter, not just harder.