INSIGHT
Agtech could transform trade across the region
As published in The Australian
Mark Whelan, Group Executive Institutional, ANZ | March, 2018
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While the benefits of agtech to Australian agriculture will undoubtedly be immense, the potential benefits for the wider region are even greater.
While the benefits of agtech to Australian agriculture will undoubtedly be immense, the potential benefits for the wider region are even greater.
Although many recent news headlines about food demand have focused on China, the importance of the growing ASEAN market cannot be underestimated. The 10 nations of the Association of Southeast Asian Nations make up about 8.7 per cent of the world’s population, and the region enjoys a healthy economic growth rate of about 5.1 per cent. The region is forecast to become the world’s fourth largest single market, with GDP of $US10 trillion by 2030 — behind only the EU, the US and China.
This level of economic growth, complete with rising incomes and growing populations, will mean far greater food demand from consumers across the region — and Australia stands to play a key role. This growth is likely to play out in a pattern not dissimilar to China, where agri-consumption soared about 170 per cent between 1996 and 2016. And with about 30 per cent of ASEAN’s food requirements imported, compared with 17 per cent for China, this trend could see the region becoming a growing player in the global agri-trade.
For Australia, the agricultural export opportunities to ASEAN will span all sectors. More affluent consumers will need more meat, vegetables, dairy products and noodles from Australian grains. They are also likely to drink more Australian wine and wear more clothing made from Australian wool.
The majority of member nations will require food imports not just to feed their populations, but to continue to drive related domestic secondary industries such as milling, processing and retail, in turn boosting employment. At the same time, the need for food imports needs to be balanced against the livelihoods of small farmers in the region. Despite the growth in food demand, many of these farmers struggle to make a living in relatively challenging conditions. In addition, small-holder farmers throughout the region face the challenge of being able to grow their crops or animals in a sustainable way.
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“With about 30 per cent of ASEAN’s food requirements imported, compared with 17 per cent for China, this trend could see the region becoming a growing player in the global agri-trade.”
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Perhaps most importantly, the health of each nation’s farming sector provides the foundation to their food security policies. Whether as a standalone policy or as part of a broader framework, each ASEAN nation has its own criteria for providing their population with the certainty of a sufficient stream of food.
With this in mind, developments in agtech have the potential to provide the ASEAN farming sector with immense opportunities, including in areas of sustainability, marketing and financing, production, and food quality and safety, as well as in national and regional planning.
Both regionally and globally, Australia is a world leader in the development and use of agtech. This reaches across the spectrum of new technologies, including sensors, drones, robotics and artificial intelligence, as well as the growing use of detailed data analysis; an agri-robot with infra-red cameras can calculate the growth potential of a horticultural crop many times faster than the human eye.
Australia’s non-subsidised agricultural sector has long been forced to seek new efficiencies to remain profitable. As a result, our farmers are innovative and the sector overall has been ready and willing to embrace and enhance the latest developments in agtech.
Across ASEAN, the widespread arrival of agtech has the potential to significantly improve efficiencies across the entire supply chain, from farm production to processing and packaging. In particular, it could transform the speed and structure of cross-border trade flows, where imports have too often been held up in ports.
Australia is in a prime position to play a role in this, by working closely with the ASEAN members to structure and drive a program to share and extend the benefits of agtech throughout the region.
This could be viewed as an agtech version of the Colombo Plan — driven through a centralised strategy and timeframe. With Australia’s renowned agricultural higher education sector increasingly focusing on agtech research, the program could include training ASEAN’s agri-leaders.
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“Developments in agtech have the potential to provide the ASEAN farming sector with immense opportunities, including in areas of sustainability, marketing and financing, production, and food quality and safety, as well as in national and regional planning.”
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The program would also provide the opportunity for world-leading agtech expertise to work on the field, particularly in less developed economies. It could also ensure the supply routes of the Australia-ASEAN trade network become the most efficient in the world.
The sheer scale of the benefits of implementing and using agtech across ASEAN are immense. ANZ modelling shows the use of agtech within ASEAN could see the regional food production growth rate lift by 25 per cent by 2025, with overall food volumes lifting by 21 per cent to 252 million tonnes in 2025.
The impact on the overall GDP of ASEAN could be about $US65bn — the equivalent of adding a new Myanmar to the region. The result would be gains in efficiency and productivity for millions of farmers, leading to huge improvements in environmental sustainability and the growth of secondary industries and new export opportunities. Australia has taken a leading role in generating prosperity and stability in the region in the past. The time is right to seize the agtech opportunity and lead again.
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