Australian Food and Agribusiness 2017: Key Themes
2017 is a year of opportunity and challenge for the Australian food and agribusiness sector. We anticipate an uplift in food and agribusiness M&A activity, and have identified 6 key themes that are likely to play out in the remainder of 2017.
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Opportunities and Challenges – 6 key themes
Three key opportunities
1. Global demand and population growth:
Rising incomes of developing nations such as China and India, coupled with evolving diets, is increasingly driving demand for high value, trusted quality foods and more diverse products. In Asia alone, with over 1 billion people expected to move out of poverty as average incomes rise, beef consumption is predicted to rise 120%, while dairy consumption will double by 2050. So how can Australia capitalise on these opportunities?
2. Partnering with foreign and institutional investment:
The Australian Government’s farm register, compiled by the Australian Tax Office, shows 13.6% of Australia’s farmland is foreign owned, with UK-based investors holding 27.5 million hectares or almost 53% of that. Australian Treasurer Scott Morrison has said that foreign institutional investment is integral to Australia’s economy as it contributes to growth, productivity and creates jobs.
By 2050, the world’s food suppliers will need to produce 70% more food to feed an increasingly populated world. One way we can continue to unlock productivity growth in Australia is through new technologies, more innovative management solutions and capital investment.
Three key challenges
1. Foreign investment regulation:
In recent years, one of the more contentious aspects of doing business in Australia is the Federal Government’s tightening approach to foreign investment approval.
2. Food safety regulation:
Australian food and agricultural products are increasingly being exported to consumers prepared to pay a premium for safe, secure food from a pristine provenance. Accordingly, food safety/purity is particularly important to the food and agribusiness sector and is the fundamental value proposition for Australian exporters.
3. Non-tariff barriers:
Exporters of Australian food and agricultural producers continue to face numerous market access restrictions in overseas markets. One of the main areas of concern is trade impediments caused by technical specifications, product standards and other administrative rules (non-tariff barriers).