Ag must adapt to megatrends to drive Australia's economic recovery

Ag initiatives critical to recession-busting rebound for Australia

Agribusiness
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COVID-19 has curtailed freight movements, shackled sales and led to new agricultural export barriers, but new farm trade opportunities are on the rise.

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The world's hunger for Australian food exports is shrinking as the coronavirus recession undermines global trade and exposes our relatively unsophisticated agricultural supply chains as a risk to the nation's economic recovery.

Global merchandise trade contracted more than 14 per cent between March and July and worldwide foreign investment activity is likely to sink 40pc this year as economic growth falls to minus 4.5pc.

Fortunately, however, while COVID-19 has curtailed freight movements and prompted new tariff barriers in some agricultural markets, there are new farm trade opportunities on the rise.

According to a megatrends report compiled by CSIRO and Austrade, beause the coronavirus crisis had caused supply chain disruption and created export risks and uncertainty, buyers increasingly want secure, safe and reliable food supply and distribution systems.

Australia should therefore seize the chance to expand its supply chain efficiency, transparency and reliability.

It should also promote investment in further developing our agricultural technology industries to ensure even higher food production standards.

New market era

We must expand food and agri-tech exports to help speed up our economic recovery and remain globally competitive in a tighter post-pandemic era marketplace, said the Global Trade and Investment Megatrends report's authors.

They noted a generation of Australians would now train, work and live in an economy which was primarily concerned with rebuilding and recovering from the COVID-19 shock.

In coming months early and strategic "first mover" action would be necessary to win a market advantage in a shrinking global economy where dairy consumption had slipped 5pc, meat 3pc, seafood 2.4pc and wheat 0.2pc.

Australian seafood exports alone fell 12pc in 2019-20.

"Although the economic conditions are extremely challenging, there are good reasons why the Australian and global economies can bounce back," the report said.

"We can achieve the `Roaring 20s' again in the 2020s."

Australia must rapidly adapt to some notable megatrends reshaping global trade and investment, including investing in supply chain resilience, rapid digital transformation, and understanding a significantly changed economic landscape.

Strategic priorities

In a bid to set the nation up for recovery success, the report highlighted nine strategic actions for government and industry, ranging from expanding our food, ag and agri-tech exports and research capabilities, to developing natural disaster resilience technology and making better use of machine learning.

Austrade's global client services deputy chief executive officer Sally-Ann Watts said the world would not return to the way it was before coronavirus.

"The pandemic has fundamentally changed our world, hastening the global shift to digital services delivery, disrupting supply chains and permanently altering the trade and investment landscape," she said.

For a start, the report estimated a decade's worth of digital transformation had occurred within just a few months.

Director of CSIRO's digital arm, Data61, Jon Whittle said Australia's momentum of rapid digital transformation during the pandemic must be maintained.

There were chances to further develop Australia's data-science capability for trade strategies and investment attraction which, in turn, would drive our economic recovery and build our future resilience.

"Digital technologies such as artificial intelligence, robotics and data science can help generate new wealth for the nation, and shift the dial for Australia on an international level," he said.

Freight cost challenge

The report said while the trade and consumption of some food exports had fallen because of coronavirus, digital technology was essential in identifying how to boost Australian farmers' export options, including cutting transport and freight logistics costs, locally and overseas.

CSIRO's own TraNSIT data science capabilities had already been used to assess the benefits of infrastructure upgrades and remove export bottlenecks to Vietnam and Indonesia.

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The report also backed findings from last year's AgriFutures investigation by Deloitte Access Economics which described logistics as the largest single cost factor in the production of many agricultural products and their availability to consumers.

Other food logistics, manufacturing, packaging and tracing technologies could help exports reach distant buyers more cost effectively.

Meanwhile, the rise of zoonotic illnesses such as COVID-19, which spread from animals to humans, were placing livestock production systems under greater scrutiny, as would a growing risk of antimicrobial drug resistance, exacerbated by incorrect antibiotic use in some countries.

Safe, reliable food

"Australia's high standards of hygiene, food safety, animal welfare and environmental performance will increasingly differentiate our products in world markets," the report said.

"The know-how associated with these high performance systems can also be exported.

"Australia's agtech industry has considerable room for investment attraction and export expansion and to respond to surging demand for disease-safe livestock production systems."

At the same time, after experiencing supply chain turmoil this year, governments in locations such as Singapore, the United Arab Emirates and Hong Kong introduced food security strategies with a deliberate interest in Australian produce.

Our farmers were also actively adapting to changes prompted by COVID-19, securing new distribution channels, including e-commerce, while innovative export traceability solutions should help further expand sales options.

While the global trade and investment marketplace would grow more competitive, the megatrends document declared Australia had significant sources of comparative advantage.

"There's likely to be a flight from risky to safe assets and supply chains and ... we have maintained reliable supply chains and a stable economy throughout the crisis."

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