Research conducted by the ABARES and CSIRO has revealed five key ‘megatrends’ that are set to shape Australia’s food and fibre industries in the coming decades. These megatrends are predicted to pose influential opportunities and challenges for farmers, the government and the economy.
The five megatrends have been identified as:
- Growth juggernaut: Three billion empowered consumers
- Fractal politics: Beware the dance of giants
- More from less: The permanent race for advantage
- Cascading planetary risks: Coming, ready or not
- Disruptive technologies: Opportunities for the brave.
Read on to understand the impact these megatrends are set to have on the Australian agricultural industry.
1. Growth juggernaut: Three billion empowered consumers
Accelerated growth in emerging economies is expected to elevate incomes and economic capacity. With the rise in income, expectations are set to rise too. Now empowered and broadened middle class will demand high quality and a greater volume of food and fibre; emphasising more diverse diets and more protein. Greater emphasis is being placed on health, ethics and sustainability.
This rising income is occurring primarily in emerging Asian economies: China, India and Indonesia are primary drivers of this accelerated growth.
Empowered consumers will shape markets
The volume of people in high-income countries is expected to triple by early 2050. Average incomes across emerging Asia are projected to increase by about 150%, or 2.5 times 2015 levels by 2050. This will significantly contribute to global economic growth. However, shifts leaning towards greater protectionism appears likely in agriculture markets. This will risk slowing the rate of global growth. For Australian agriculture specifically, this megatrend risks reducing the extent of new trade opportunities for local exporters.
Demand for high quality food will continue grow strongly
With rising incomes, comes rising expectations. Rising incomes in emerging economies will result in shifts in food demand. Instead of grains, rice and other starchy staples, emphasis will be placed on protein rich animal products, plant-based food products, fruits and vegetables.
Consumer attitudes and expectations will continue to evolve
Emphasis will also be placed on foods that are perceived to be healthy, convenient, ethical and sustainable for the environment. While these shifts present opportunities for Australian agriculture, they also pose challenges. If Australian regulations and expectations do not align with those found in our key export markets, this may harm the Australian agricultural industry’s competitiveness and brand positioning.
Key implications on Australian Agriculture
- Rising incomes in Asia is expected to have a greater impact on export demand compared to increased global population.
- Potential environmental concerns concerning greenhouse gas emissions pose challenges for Australia’s livestock exports. These sustainability concerns have motivated Australia’s livestock industry to set a carbon neutral target for 2030.
- Australia’s geography, institutions and natural endowments have us well-positioned to supply to international markets and capitalise on these changes.
2. Fractal politics: Beware the dance of giants
The rise in multiple global powers will see changes in economic, military and cultural powers across the world. As nations place greater emphasis on their sovereignty, global trade and international relationships, as well as food and fibre markets and supply chains, will become more complex.
Seven giants will pursue their individual interests
In the coming decades, geopolitics will continue to reflect the ‘dance of the giants’. 7 nations/regions account for between half to two-thirds of the world’s food production, energy, economic activity and extractions.
This shift to a more multi-polar world may result in unstable geopolitics and economics. This will likely strain international cooperation.
Volatility, uncertainty, complexity and ambiguity require improved cooperation, but make it more difficult
Volatility, uncertainty, complexity and ambiguity are anticipated to become more evident in future decades. Implications of this trend will occur across multiple domains. One particular implication is that cooperation between different groups across nations and the globe will likely become more difficult.
Declining trust in evidence and institutions could amplify threats and weaken cooperation
Distrust in institutions, science and evidence are expected to worsen global cooperation efforts. The wide-ranging experiences that have taken place across the world as a result of COVID-19 illustrate the risk for political and cultural divides, but also the opportunity to foster bipartisan support for evidence-based approaches by government and business.
Key implications for agriculture
- Efficient market access and a committed effort to discourage protectionist policies will help Australian agricultural exporters to realise the benefits of increasing global trade volumes.
- Australian exporters are set to face greater risks concerning consumer attitudes and market access in importing nations.
- Our local reputation for supplying high-quality, ethical, sustainable and nutritious products is likely to become more important in the coming decades.
3. More from less: The permanent race for advantage
A commitment to ongoing innovation is crucial to ensuring profitable, sustainable and competitive food and fibre enterprises for Australian agriculture. Ongoing innovation will be the vehicle for better productivity and smarter use of energy, water, land, labour and materials.
Despite the importance of innovation, the benefits will not be shared evenly. Often, innovation can worsen existing pressures placed on rural industries and regional communities.
Outputs up, inputs down
The Australian agricultural industry is heavily dependent on exports – around 70% of our production is exported, with fairly low levels of government support. While net farm income has increased faster than output value, on-farm employment (which includes labour completed by farm owners) has dropped by 25% over the last thirty years. Gross value of agricultural production has increased by 26% and value-added by 74%.
This spike in productivity can be largely attributed to increases in farm scale, improved genetics, and continuous innovation in management practices.
Improved yields will increase output volumes, but consumers may benefit more than producers
Consumer access to food supply has dramatically improved over the last 70 years. This trend is set to continue with improved management practices and continuous technological innovations.
Social concerns will shape competitiveness
Reflecting increasing household incomes, many markets and countries are set to limit potentially certain technologies. For example, GMO food corps or certain livestock management practices will eventually be considered prohibited. While this may initially constrain productivity growth it will likely bring about greater environmental outcomes and new producer opportunities.
Key implications for agriculture
- Innovative farm management practices, technology and greater economic policy settings will play an important role in advancing agricultural productivity.
- The trend of fewer, larger farms is set to continue. This will facilitate greater productivity and support farm incomes. It will also contribute to a declining share of regional employment.
- Developing access to high value consumers will rely on industry and government efforts to ensure agricultural management practices stay aligned with consumer expectations. This can be illustrated from paddock to plate at relevant scales.
4. Cascading planetary risks: Coming, ready or not
Advancements to earth systems at all scales are creating risks, challenges and opportunities. Already, agriculture has been impacted by this, and has started adapting. In future, client and commodity prices are expedited to become more volatile. On the other hand, emerging markets for carbon and ecosystem services may have the potential to transform business models.
Science suggests major challenges ahead
Evidence continues to show that current agricultural practices are causing multiple environmental problems. Despite large-scale shifts towards renewable energy sources, global greenhouse gas emissions continue to rise. However, ABARES modelling has explored potential scenarios for irrigated agriculture in the Murray Darling Basin. Plus, the ABARES is working on developing capabilities to assess potential future climate scenarios across various broadacre farms in Australia.
Interactions and feedbacks often amplify risks
Greenhouse gas emissions across the globe are bringing the world closer to climate thresholds, which contributes to accelerated climate change, including rising sea levels and temperatures. These rising temperatures also risk longer and more destructive bushfire seasons.
Reducing net emissions and protecting natural assets could benefit landholders
Regional communities and consumers will increasingly demand producers protect natural assets. This includes a commitment to maintaining healthy ecosystems, water quality and protecting species’ habitats.
Key implications for agriculture
- Profitable farming needs to merge with a sustainability-focused approach to maintain access to premium consumers.
- As a result of climate change, catastrophic events including fires, floods and droughts will become more severe. This will cause agricultural commodity prices and market access to become more volatile.
- Expected hotter and drier conditions will affect the profitability of agriculture.
5. Disruptive technologies: Opportunities for the brave
Technological advancements are set to disrupt and influence how food and fibre products are manufactured, marketed and delivered. New skills and partnerships will be required as supply chains and customer engagements become more agile and interconnected.
Information-rich production systems will provide new levels of control, and accountability
The emergence of new technologies will significantly influence Australian agriculture. Connectivity across billions of devices, often referred to as the ‘Internet of Things (IoT)’, will transform supply chains in the future.
Revolutionary connectivity will enable new types and levels of customer engagement
Supply chain management in agriculture will see real-time tracking of quantity, quality and unique characteristics of food and fibre products.
Unlocking these opportunities will require new data sharing and governance
To ensure the benefits of digitisation are realised, Australian agriculture needs to establish a new operating model focused on collaboration and information sharing.
Key implications for agriculture
- Strategic decision making and informed approaches to risk management will be essential tools for Australian farmers.
- Managing volatility in the future will rely on integrated and interconnected systems.
- Efficient use of data will influence access to capital, including equity investments in family farms.
- Taking advantage of disruptive technologies will rely on new approaches to managing data and information. This will see new roles emerge in the private sector and in government, to facilitate a shared ecosystem.
Global Rotomoulding has a strong relationship with Australia’s agricultural industry. These key trends identified by the ABARES and CSIRO are set to offer both positive and challenging outcomes for Australian farmers. Global Rotomoulding has been supporting the Australian agricultural industry through our extensive supply of leading agricultural equipment. Contact our friendly team to learn more today.