Agriculture needs major investment to grow

Australian agriculture will need an injection of $87 billion in new investment over the next decade to meet the sector’s ambitious 2030 farm gate production target.

The National Farmers’ Federation has set a government-endorsed goal of boosting production to $100 billion by 2030 from about $61 million this financial year.

But a new AgriFutures report released on Monday warns capital investment in agriculture has fallen behind over the past 10 years.

The Natural Capital Economics paper estimates $8.7 billion a year in new investment will be needed over the next decade to achieve the growth.

Australian Bureau of Statistics data indicates that average annual net investment in the sector has been about $1.2 billion over the past 30 years.

“This gap is a significant problem for agriculture, fisheries and forestry industries as capital investment is key to lifting productivity and is needed at every stage of production,” the report says.

“Having access to efficient capital is the driving factor behind sustaining strong sector growth over the short, medium and longer term.”

The research found under existing investment levels, farm gate returns would not reach $100 billion until 2054, about a quarter of a century slower than planned.

NFF chief executive Tony Mahar said the report was an important wake-up call for the industry.

“Agriculture’s capital drought was identified in the NFF’s 2030 Roadmap as a major handbrake on the sector’s prosperity,” he said.

“If changes are not made to make investment in agriculture more attractive and fit-for-purpose, farmers will be hamstrung in their ability to grow.”

The AgriFutures paper cites inadequate benchmarking data, lack of scale, risk and liquidity thresholds as key barriers.

It also calls for a better understanding of foreign investment rules and highlights emerging opportunities in environmental finance products.

Mr Mahar said the data complied by the federal government’s agriculture statistics agency, ABARES, needed to be improved.

“Australian agriculture is poised for continual growth. To supercharge this growth, agriculture needs to attract investment from sources other than debt and equity finance,” he said.

 

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