HSBC has released a global research paper analysing future prospects for the Australian food and agricultural industry.
The report has cautioned against economic reliance on inflated ‘dining boom’ expectations, pointing out that increased foreign investment and limited natural resources could pose major hurdles in Australia’s ability to produce food on a much greater scale.
The notion of Australia becoming Asia’s food bowl has been a topic for debate over recent months as the emerging Asian middle class continues to rise and subsequently demand higher quality meat and dairy products.
The paper found that while demand for Australian food will continue to grow, it will never reach the same scale as mining, The Australian reports.
HSBC chief economist Paul Bloxham said that at present, agricultural production accounted for just two percent of the Nation’s overall economic output, while the mining sector contributes over 10 percent.
"No one should expect us to go from a mining boom-led economy to, as suggested, a dining or even wining boom, because the rural sector is simply not big enough," said Bloxham.
"Even if our rural output doubled (as the National Food Plan projects) it would still be a fairly small proportion of the overall economy.
"However good its prospects are and the food story is; agriculture is unlikely ever to be big enough to take over from the mining story in terms of its economic contribution."
The report also warned that increased foreign investment in the Australian agricultural industry will determine how significant the sector becomes to the economy in the future.
Additional challenges listed in the report included limited access to resources such as arable land, water availability and soil fertility, as well as the adverse impacts of climate change on food production.
"There is a positive story here; as Asia's middle classes expand they will require more protein, in beef and dairy; some of that demand has already arrived but there is more to come," said Bloxham.
"I'm not saying the food boom isn't real, I just think we have to be careful not to overstate how big a share of the economy or national growth it can be."