The food and agribusiness sector is faced with a number of challenges and opportunities related to demand, supply, innovation, and regulation that will shape the evolution of the sector over the next 5-10 years. From a demand perspective, the growth in the consuming class (particularly in Asia) will drive large increases in demand for food. There is also significant unmet food demand at present with almost 800 million people worldwide hungry, and over 2 billion suffer from micronutrient deficiencies, in particular, vitamin A, iodine, iron, and zinc. The supply challenge to meet future food demand will be equally significant. By 2030, roughly 175 to 220 million hectares of additional cropland will be needed to meet projected food, feed, and fuel demand (even with continued 1 percent improvement in annual yield growth). Whilst there is sufficient arable land available to meet this need, over half of this land is in places which have limited infrastructure and/or high political risk. In addition, the environmental degradation of agricultural systems will make future production increases more challenging. There will also need to be a step-change in innovation in the agricultural sector to meet these supply challenges. Yield growth has steadily fallen due to a combination of land degradation, yield growth approaching current agro-ecological potential in many countries, and a lack of investment in innovation. Finally, there is a range of issues confronting the food system that could be catalysts for regulatory change, ranging from dealing with the impacts of the consumption of high-sugar and high-fat food; food safety concerns; and mitigating the impact of the sector on climate change.
While these are a daunting list of challenges, they do create a number of opportunities for Australian businesses, given the current and potential strengths in our food and agribusiness sector. The Food and Agribusiness Sector Competitiveness Plan was launched in November 2016 in order to understand how Australia could take advantage of these global shifts. The plan outlines a ten-year vision and strategy for the industry. Four industry research and development priority areas were identified in the plan: (1) Food security & sustainability; (2) Enhanced production & value addition; (3) A global marketplace; and (4) The future consumer. The purpose of this research project is to quantify (both today and for 2025) and explore the potential opportunities in each of these four strategic areas. The aim of this research is to serve as an input into the broader analytical exercise of developing the specific areas of competitive advantage for Australian firms and the strategy for capturing those identified opportunities.
The State of Food Insecurity in the World. Meeting the 2015 international hunger targets: taking stock of uneven progress, FAO, International Fund for Agricultural Development and WFP, 2015.
Resource Revolution: Meeting the world’s energy, materials, food, and water needs, McKinsey Global Institute, November 2011
Industry Growth Centre: Food and Agribusiness Sector Competitiveness Plan, FIAL, November 2016