INCREASED development of northern Australia for livestock production came into sharp focus with yesterday's ANZ report on irrigation in the Top End.
ANZ estimates that irrigation of forage crops and water harvesting could significantly increase beef production, boosting total exports by up to 80 per cent, or $4 billion.
The report, Molehill to Mountain: Agriculture in Northern Australia, also touches on ideas for a new grain and oilseeds industry in northern Australia, but claims it is not currently supported by global commodity prices, and that the high investment required for large scale irrigation schemes could be better directed medium term into R&D for established crops in the south.
ANZ senior agricultural economist Paul Deane said: “Northern Australia represents one of the more difficult soil and weather environments in the world for establishing agriculture”.
“However, as Brazil’s experience has proven, these limitations are not insurmountable, with the corrective technology available if the production economics are right.
“Our report provides a snapshot of the prospects for grain and oilseeds and beef, Australia’s two largest agricultural sectors, with the potential for other crop options and future technology making longer term conclusions difficult.
“One thing is clear though - a step change in output is dependent on the amount of sustainable water that can be harvested, given the region currently has virtually no crop summer production and accounts for 30 per cent of the national cattle herd,” Mr Deane said.
Nation building exercise
According to ANZ chief economist Warren Hogan, “northern Australia is one of the largest underutilised blocks of land in the world”.
“Although we do not see the fundamentals in place for a new corn and soybean industry at current global price levels, peak consumption in Asia is still at least 40 years away,” he said.
“The development of agriculture in the north is a marathon and not a sprint – any economic assessment needs to reflect this. We have time to evaluate the building blocks required for the region to significantly increase its wider agricultural output.
“The FTA with China and new processing plants in the region should open markets for the northern beef sector, improve prices and reduce investor risk.
“However, the Australian Government also has a role to play, not only in ensuring the right technologies and R&D are being developed - such as improved crop and forage varieties – but also in co-ordinating infrastructure funding. This needs to be seen as a nation building exercise,” Mr Hogan said.
Asian investors may hold the key to unlocking the longer term potential of the region for wider agricultural production, according to the report, with Chinese domestic corn prices more than double global export parity prices – potentially transforming the economics of agriculture investment.
Due to its similar subtropical environment, the report also draws parallels with the successful opening up of agriculture in Brazil’s Cerrado region and notes the central role played by Brazilian Government policy and investment.
