The medium to long-term outlook for Australia’s food and fibres industries is strong according to former Queensland treasurer, Keith De Lacy.
The world’s population trends and increasing urbanisation will ensure the future of Australia’s soft commodities – food and fibre – De Lacy told the Rural Press Club in Brisbane on Tuesday.
De Lacy, treasurer in the Goss Labor government from 1989-1996, is now a company director involved in mining and agricultural concerns. He said the world financial crisis meant forward prices no longer reflect market fundamentals.
“My very strong belief is that there are long-term fundamentals in place which will eventually lead to a boom in soft commodities,” De Lacy said.
“The first one is population growth, that’s obvious, there’s 87 million new people in the world every year.
“Just think about feeding the population of Australia four times over every year and that’s the amount of extra food that has to be generated every year.”
While that would be a challenge, the “inexorable urbanisation” of developing nations, led by China and India, will create huge demand.
“There’s 400 million people in China knocking on the door of (the) middle-class.
“There’s 20 million people per annum – that’s the population of Australia – shifting from rural semi-poverty into urban areas and developing middle-class lifestyles.
“Just imagine all of the infrastructure that’s in Australia – the houses, the buildings, the roads, the railway lines, the ports, electricity, schools, hospitals – each year they have to be replicated in China, so you can see why that is driving a boom.”
De Lacy said this urbanisation was accompanied by a dramatic improvement in diet and an increase in consumption of new food and fibre products.
Much of this new consumption of food will be powered by feed grain for meat production and current indications are that demand will not be met.
De Lacy said the era of agro-fuels had arrived and biofuels will also have a major effect on world food prices, particularly for corn.
“The US has gone from being the breadbasket of the world to being a huge fuel tank,” he said of the United States’ biofuels industry.