2 June 2016
Building the nation, Northern Australia in particular, into a food bowl to feed the emerging middle class of Asian nations has been on the government's agenda for some time. The Coalition's 2030 Vision for Developing Northern Australia, released in 2013, proposed that Australia's agricultural output could be doubled in the next 15 years to make use of vast tracts of inhospitable land that have long sat dormant.
Now, over two years later, Australian agribusiness is in need of a shakeup, according to the Business Council of Australia (BCA). With the value of global food demand estimated to grow by a whopping 77 per cent by 2050, now is the time for all stakeholders, from the government right down to individual producers, to seize the coming opportunities.
What needs to be changed?
To fulfill the potential outlined in the government's plans, there is work to be done in the agribusiness sector. According to BCA Chief Executive Jennifer Westacott, one of the most pressing issues is a lack of development funding.
"A priority is the need for substantial investment to enable the sector to develop its productive capabilities. Given the current shortfall, this investment will need to come from both domestic and foreign sources," she said.
For Australian farmers, preparing for the growing demand should be at the front of mind - starting with investment in new equipment.
Preparing for growing demand should be at the front of mind for Australian farmers.
Favourable tax legislation making its mark
The announcement in 2015's federal budget of tax breaks related to business equipment purchases was met with enthusiasm by Australian companies, and analysis of the first six months of the scheme suggests many agribusinesses have benefited.
According to a survey by the Commonwealth Bank of Australia (CBA), around 40 per cent of farmers who are considering increased investment in equipment, technology and innovation were encouraged by the $20,000 allowance.
Geoff Wearne, Executive General Manager for regional and agribusiness at CBA, spoke of the positive impact the concession could have on the industry as a whole.
"This has the potential to lead to a more profitable and successful industry as a whole. Coupled with historical low interest rates and the flow-on benefits of rising Asian demand for Australian agricultural products, this is an incentive for farmers to grow their businesses and increase their productivity and profits levels," he said.
The time is right to increase farm investment, but making sure any new assets are protected also needs to be prioritised. Speak to your local farm insurance agent today about how new equipment could impact your policy.