By Mirjana Prica, managing director, FIAL
Food and agribusinesses are well acquainted with navigating challenges – drought, floods, fires, trade tensions, and changing consumer expectations.
It is arguably this familiarity with adapting that unknowingly prepared the sector for the disruptions to markets and supply chains unleashed in 2020. As the year rolled on, the sector’s position as a critical component of our national fabric was confirmed.
It is thanks to our sector that Australia is one of the most food secure nations in the world, with Australians having access to a wide variety of foods. Further, thanks to our sector there are over 538,000 Australians with jobs, and this is expected to grow. Testament to this sovereign capability and competitive advantage was the recognition by the Prime Minister of food and beverage as one of the six priority areas that will drive Australia’s economic recovery.
Since 2013, the Food and Agribusiness Growth Centre, trading as FIAL, has been working with the sector to drive its productivity and competitiveness. As we all step out of 2020 and into a future that will be defined by disruption, this role as a catalyst is more critical now than ever before.
Further, the economic and geopolitical climate demands action that will see the sector operate to its full potential, accelerating the speed at which our economy once again prospers, and more jobs are created for Australians.
Building upon the work of the National Farmers’ Federation in setting a 2030 target for the sector to strive toward of $100bn in economic value, we looked at the whole supply chain, as opposed to stopping at the farm gate, to answer some fundamental questions.
We asked ourselves, “how could we, as a sector, be extracting more value,” “how could we, as a sector, be operating better?”
This extensive analysis revealed that food and agribusinesses need to be focusing on the value-added opportunity. As opposed to economic value, the price paid for a good, value-add is the difference between the price of a product and the cost of producing.
By not value-adding, the nation’s food and agribusinesses missed out on a whopping $64bn during 2020. This is more than double the current value of the sector – $61.3bn – unrealised.
This finding solidified what many have been saying for years – that the sector needs to reorganise the way it operates. Working in isolation is not the way forward. Duplicating effort and resources is not the way forward. Competing rather than co-creating is not the way forward.
To begin capturing the $64bn in untapped value-add, the sector needs to coordinate around increasing the difference between the price of the product and the cost of producing it. Increasing value-add can be done by optimising efficiencies pre-farm gate and further processing raw commodities post-farm gate. As it stands, only 10% of agricultural production is value-added.
We have a massive opportunity in front of us. This targeted action will see us build a more sustainable food and agribusiness value chain, at least double its current value.
To lead this charge, we at FIAL undertook the first step of analysing the 10 factors impacting food production and consumption in Australia and its key export markets. This allowed us to distil the major growth opportunities to which value addition should be aligned. These range from manufacturing functional and nutritional foods to feed the growing and ageing population, through to greater adoption of precision agriculture and big data to optimise efficiencies.
We then set about working closely with industry to identify and coordinate the actions that will support the nearly 180,000 businesses in our sector to capitalise on these growth opportunities. This is #Project2030. #Project2030 is an industry-led movement to build a sustainable and future-ready food and agribusiness sector. #Project2030 is about identifying what needs to be done and driving the coordinated approach, from the ground up, that will make this ambition a reality.
I encourage you to join us, and the hundreds of other food and agribusinesses, as we continue this mission of setting our sector up to reach its potential.
Despite the challenges of recent years, it is an exciting time to be a food and agribusiness, the future is looking very bright.