July 2, 2015
Agribusiness bank Rabobank has called for a lift in productivity on Australian farms, both to raise farmers’ incomes and to ensure Australian agriculture remains globally competitive.
A research report, released this week by the bank, says the rising cost of production over recent years has eroded the competitive position of Australian agriculture in the world market.
It highlights the slowing growth in productivity.
Analyst Georgia Twomey said agricultural productivity in Australia had dropped from an average 2.9 per cent per annum growth in 1991-00 to 1.4 per cent from 2002-11. The world average is 1.7 per cent.
Reviving this growth was a “particularly pressing issue”, the report warns, given the rise of emerging low-cost food and agricultural export competitors from regions such as South America and the Black Sea.
Gains in productivity would also be critical to drive future profitability and sustainability for farmers and other businesses throughout the food and agriculture supply chain, it said.
“Low to middle-income nations have seen an acceleration in productivity growth,” Ms Twomey said.
“Brazil for example – one of Australia’s major competitors in export markets in beef and sugar and a country with abundant untapped natural resources – has dramatically lifted agricultural productivity.
“The USDA reports productivity growth in Brazil has increased from an annual average of 2.6 per cent from 1991-2000 to 3.4 per cent in the decade 2002-11.
“Australia’s challenge will be making the most of any under-utilised land and water resources that exist, while driving productivity growth through the entire supply chain.”
The Rabobank report also identified a slowdown in R&D spending as an issue.
“The risk is the slow-own in our own R&D spending puts Australian producers at a disadvantage to international competitors,” Ms Twomey said.
“R&D in the northern hemisphere, undertaken by both public and private institutions, is for the most part based around production systems that differ from what is prevalent in Australia, so developments to improve productivity overseas are usually not applicable here.”
The challenge, the report said, is for Australia to ensure a policy environment that is as attractive as possible for private sector investment in agriculture, while also maintaining public sector investment.
It was also important that farmers can access technological innovations.
“Digital agriculture in the form of precision farming, big data, sensor technology and drones presents uncharted potential for productivity gains and improved management practices,” Ms Twomey said.
