Only research can feed us all

Quest to ramp up food production has never been more urgent, says Jan Davis

THE international food and agribusiness sector has a massive economic, social and environmental footprint.

Valued at more than US$5 trillion, the worldwide industry represents 10 per cent of global consumer spending, 40 per cent of employment, and 30 per cent of greenhouse gas emissions.

Yet never has the task feeding people been more urgent — or more daunting. Today, there are 400 million more people in the world than there were five years ago. The trend is set to continue, with global population expected to reach 9 billion by 2050.

All these people will need to eat. The United Nations has estimated that feeding an increasingly crowded world will mean international food systems need to produce 70 per cent more food just to keep up.

In the overall scheme of things, Australia is not a large player in the international agricultural scene, but we’re certainly doing our bit. In agriculture, as in many other things, Australia punches above our weight and we are recognised for our innovation, adaptability and expertise.

Australian agricultural exports feed 60 million people overseas. Australia’s Chief Scientist has estimated that, if you include all the spin-offs from Australian agricultural knowledge and expertise, then that number is more like 400 million people.

But we need to do more to meet the challenges the world faces.

The only way to keep pace with increased demand is by ramping up productivity growth — through improved production or yield, and improved management of existing land and food resources. In other words, we will need to learn to do more with less.

Yet agricultural productivity has been stagnating over recent years. From an average growth rate of around 2.9 per cent pa between 1991 and 2000, it has fallen back since then, with the world average now sitting at around 1.7 per cent.

That means that agribusiness is the next frontier for the “innovation” economy. Ag-tech with its proliferation of novel, hi-tech data gathering techniques — whether drones, sensors or GPS tracking devices — will provide the tools for unlocking the next wave of productivity gains.

However, if these opportunities are to be realised, we need another green revolution — which will only be possible with significant investment.

The private sector is certainly stepping up to this challenge.

Analysis undertaken by international business consultants McKinsey shows that, between 2004 and 2013, global investments in the food and agribusiness sector grew threefold, to more than US $100 billion.

In Australia alone, more than $2 billion is added to the value of the productive assets of the farm sector every year. Most of that investment comes from farmers themselves.

These investments are paying off, too. The McKinsey research showed total returns to shareholders across more than 100 publicly traded global food and agribusiness companies increased 17 per cent annually on average between 2004 and 2013, compared with 13 per cent for energy and 10 per cent for information technology.

Longer term, increased investment in research and development will have the greatest impact in the drive for productivity improvements, efficiency gains and increased economic prosperity.

Public-private partnerships will be crucial drivers for future technological innovation and capacity building in the agriculture sector here and overseas.

The return period on research and development investments can be quite long. So today we are benefiting from the investments made by past generations, notably during the so-called green revolution in the 1950s and 1960s. But that bank of resource is running out.

So, after years of funding cuts, the public sector now needs to do its part.

In 1984, agricultural research and development investment represented

around 17 per cent of the total research investment in Australia.

By 2006, this had fallen to just 5 per cent. The government’s own analysis shows this level has stagnated since about 2007. The real value of investment in rural research is much more than improved returns to individual farms. Independent analysis of Australian rural research and development programs has demonstrated that every dollar invested generates on average $11 of benefit for the wider community. Furthermore, independent studies indicate the internal rate of return for research and development investment in agriculture is between 34 and 50 per cent — far higher than that for other sectors. That’s a pretty good outcome by anyone’s standards.

So, if farmers are to continue to deliver outcomes supporting Australia’s future economic growth and to contribute to world targets, we need more investment in agricultural research and development — not less.

Investment in initiatives to support increased agricultural productivity must therefore be a key focus for all governments in prioritising future investment decisions.

Australian agricultural exports sustain 60 million people. But we need to do more