Why Agriculture?

The UN estimates that the current world population of 7.3 billion people will increase to 8.5 billion by 2030 and 9.7 billion by 20501 and this population growth will be accompanied by a rapid expansion of the middle class. In 2009 the global middle class included 1.8 billion people. This figure is much higher already and is forecast to increase to 3.2 billion by 2020 and 4.9 billion by 2030. The majority of the growth in the middle class will emanate from Asia and by 2030, the Asian middle class is forecast to represent 66% of the global total more than doubling current figures.2

These forecasts represent a massive growth in food demand and greater demand for protein, dairy and premium products driven by middle class consumption patterns. Agricultural production will need to support this greater demand and in the context of finite arable land, water scarcity, pollution and more extreme weather events, food security has become a matter of global concern.

Asia

Asia is without doubt a production giant in many soft commodities however limited arable land combined with inadequate and polluted water resources in the region is forming a ceiling to agricultural supply. Factors such as changes in cropping patterns and diminishing returns on modern seed varieties have led to a stagnation of production growth in the last two decades. Simultaneously the increased use of fertilisers and chemical pesticides as farmers try to maintain productivity has significantly degraded soil quality and compounded environmental pollution. The consolidation of farmland combined with better water management has the potential to boost production but conflicting demands on the use of land, political and social sensitivities and pollution, are constraining factors. These factors will drive greater demand for imports and agricultural innovation.

Australia

Australia is one of only eleven net food exporting nations in the world and, although representing only 3% of global trade, it maintains a preferred position in global food markets with its produce consistently considered a premium product. This position has been maintained with an R&D capability ranking amongst the best in the world and is demonstrated by excellent agricultural productivity gains over the last fifty years from the application of new technologies and innovation.

The increase in Asian consumer demand, the rapidly rising middle class and the Asian local production difficulties points to a necessity for greater agricultural imports into the region. Australia has an important role to play in meeting these needs and can make a significant contribution toward regional food security. Australia’s agriculture industry can benefit accordingly.

Our objective is to provide investors with the opportunity to benefit from these changing global dynamics and the growing demand for Australian agricultural produce.

1 The World Population Prospects : 2015 Revision
2 OECD Development Centre