Germination in Aus grain industry

The resurgence of rural and regional Australia is real. We are seeing fresh evidence of renewed confidence almost every week.

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" Rising global demand for animal protein, such as red meat and dairy, could generate an additional $A47 billion in accumulative additional export earnings for Australia by 2030"
Christine Linden, General Manager, Regional Business Banking, ANZ Australia

Last week it was the continued overseas investment in Australia's largest dairy business Van Diemen's Land Company and prior to that the bidding for the Kidman cattle stations.

Three months ago, an ANZ dairy industry report demonstrated that just moderate growth in milk production (8.4 to 15 billion litres per year) could net Australia another $A1.3 billion in export value by 2025.

Last year, a cohort of our nation's wealthiest business people turned their attention to primary industry through major local agricultural investments.

And this week, an ANZ research paper, The Grains Muster, concludes the rising global demand for animal protein, such as red meat and dairy, could generate an additional $A47 billion in accumulative additional export earnings for Australia by 2030 - if wheat production increases by 20 per cent from 25 to 30 million tonnes.

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This buoyancy in agribusiness comes at a critical time for our economy. With the mining construction boom moderating and our manufacturing capability waning, Australia finds itself at a key economic juncture.

Add to this the new commitment to innovation through the federal government's National Innovation and Science Agenda - which includes agriculture - as well as Australian businesses' renewed research and development focus and we have a fascinating economic transition in play.

It's a transition with a local – and globally relevant – narrative: recapturing the romance of our farming past while embracing the growth possibilities of our innovation future. This narrative provides a union that will deliver vibrant regional industries and communities. And that is very much in our national interest.

The Grains Muster paper argues the keys to seizing the opportunity in grain, and other agricultural sectors more broadly, are investment and productivity gains.

Infrastructure investment, in particular, is necessary to improve efficiency and is a critical driver of farm profitability. But broader investments are required in innovation, technology and R&D and are likely to come from outside the industry.

This is where the agribusiness sector needs to show leadership by taking stage with our nation's best innovators and committing to better cross-sector collaboration.

Agriculture has long enjoyed the position of being the “lifeblood of regional Australia" and it's a sector that instils pride and passion in the hearts of many Australians. Critically, it's also a strong contributor to regional prosperity through employment, creating sustainable communities and supporting regional GDP.

Agriculture is also the next sector to benefit from the Asian Century through our land, water, skills and geographic location. The value of Australian agricultural goods exported to China, for example, was $A7.7 billion in 2014, up 75 per cent on 2010.

The critical central role of Australian farmers, agribusiness men and women and regional commercial leaders means they can contribute plenty to Australia's economic transition. These are the people we need to support to lift agriculture's contribution to GDP up from just 2.5 per cent.

We should recognise high end corporate investment is not the only plank needed for vibrant Australian agriculture. We need the right balance between corporate and family farm investment to continue as well as driving on-farm profitability.

We should also reflect that in some areas of Australia, farming is a difficult industry to be in with the impacts of seasonal conditions and commodity prices hindering output and prosperity.

Holistically however, the opportunity is here to compete globally by playing to our strengths through an increase of volume, the driving of greater value and continued production of high quality produce.

By embracing innovation, capitalising on the immense Asian opportunity and working together across sectors, we will see further elevation of agriculture as an essential economic driver.

I look forward to seeing next week's evidence of Australia's rural and regional resurgence.

Christine Linden in General Manager, Regional Business Banking, Australia.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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