Farmers and food businesses urge immediate action to turn Australia into a global food superpower

4 December 2024: Australia’s agricultural and food industries are at risk of losing their competitive edge unless urgent action is taken to transform the food system. Leveraging its strong foundations, Australia’s food industry has the potential to become a second engine of economic growth that mirrors the resources sector. 

The call to action comes from the Australian Food and Agriculture Industry Taskforce, a peak body of 14 CEOs and Board members from across Australia’s food value chain, who are committed to unlocking the industry’s full potential as an export-orientated growth driver that also helps Australia deliver on its net zero and nature-repair goals.

Launching its maiden report Land of plenty: Transforming Australia into a food superpower, Taskforce Chair Mark van Dyck said Australia’s food system is at a tipping point. 

“Agriculture and food production are Australia’s oldest industries and a source of national pride. Together they are responsible for almost 1.4 million jobs, add $187 billion to the economy annually, and feed 75 million people every year,” Mr van Dyck said. 

“However, there are forces at play that challenge this position: the increasing frequency and severity of climate events, trade tensions, a shifting geopolitical environment, and the evolution of global markets at different speeds fuelled by regulation and government subsidies, creating an unequal playing field. It’s no wonder that 44% of farmers believe we are losing our competitive edge.

“We need to see action on three fronts. First, the impact of climate change on soil quality and catastrophic weather events presents real threats and opportunities to agriculture. When it comes to implementing climate-smart practices, our farmers are world leaders, but they need more support to go further and really bolster the climate resilience of their farms.  

“Second, amid growing geopolitical instability, it is unacceptable for Australia to be dependent on importing key inputs like fertilisers and machinery. Onshoring the supply chain will reduce the risk of geopolitical shocks disrupting food production while boosting the economy and creating Australian jobs, particularly in regional areas.

“Finally, we must renew our efforts to sell Australia to the world as a producer of clean and green foods with world leading agri, food and bio technologies, allowing us to open up new markets and strengthen our position in current ones.”

Taskforce founding member and Deloitte Australia National Consumer Industry Lead Vanessa Matthijssen added that achieving these actions and helping the Australian food system realise its potential requires the creation of a public-private Australian Food System Coordinating Body.

“Australian agriculture and food production is world-class, but the reality is that past performance is no indication of future success. With the speed at which global markets are evolving, inaction will see Australia go backwards,” Ms Matthijssen said.

“A thriving food system has the potential to provide Australia with a stronger economy, help deliver on our net-zero and world leading nature-repair aspirations, and offer food security and affordability, not just for the next 10 years but for generations to come.

“But this will require a unified, national, and bipartisan response. Currently, Australia has three levels of government, nine departments of agriculture, 250 industry bodies and dozens of additional government agencies that have oversight of agriculture and food production – yet there is no overarching body to unify these entities and pursue a common strategic ambition.”

Land of plenty: Transforming Australia into a food superpower calls for change on the following three fronts: 

1. Climate-smart farming 

Challenging climate conditions, along with low levels of subsidies, have long fuelled Australia’s on-farm innovation. Operating in this environment necessitates the adoption of climate-smart practices.

Australian farmers already have relatively high adoption levels – but 75% of farmers say they’d go further with additional financial support that could be provided through patient capital, co-funding and incentive programs financed by the industry and government.

Taskforce member Mark Wiessing said; “Adopting climate-smart practices often comes at a cost to farmers, which value chain participants can’t expect the farmer to bear alone.”

Scaling climate-smart practices will deliver substantial social, economic and environmental benefits. Deloitte analysis and modelling shows that a further 20% increase in adoption of climate-smart practices by Australian farmers by 2030 could increase farmer gross margin by 22%, equivalent to $6.9 billion, and generate $350 million in additional net revenue from carbon markets. Furthermore, it could reduce our yearly national greenhouse gas (GHG) emissions by up to 9% (36.2 million tonnes), increase the area of habitat for native biodiversity by up to 7% (9.3 million hectares), and 4% improvement in soil health (13.3m hectares).  

Besides financing the transition, the next challenge to overcome is climate and nature data collection, measurement and sharing. 55% of Australian farmers see this as a barrier, which is exacerbated by complexities and inefficiencies associated with a lack of standards, measurement tools and frameworks. Farmers and producers can find themselves in a difficult position where they are required to provide climate or nature data to multiple players - processors, retailers and financiers – each using different formats, methods and data points.  

Taskforce member Holly Kramer added; “Today’s climate and nature reporting landscape is fragmented, lacks coordination, and is considered inefficient and uncompetitive on a global level. A standardised open-source measurement and reporting framework, supported by an independent verification body and data exchange is needed. In the interim, retailers, food processors and banks are looking to work with farmers and producers to support measurement and data collection.” 

While the responsibility to deliver farm level change sits largely with landowners, the full value chain relies on, and will benefit from, the transition. To further ramp up the adoption of climate smart practices, the broader food system and value-chain partners must be part of the solution.

Many organisations have ambitious climate and environmental targets set for 2030, leaving a mere six seasons to plan, deploy and achieve significant change. The time for all parties to step up and act is now.

2. Sovereign supply chains 

For the entire food system to thrive, Australia must look beyond the farm and consider the full supply chain. 

As a net exporter, Australia sends approximately 70% of its produce overseas. Statistics like these could make it hard to see food security as a relevant issue for Australia. Yet the ongoing trend in offshoring, coupled with the rising levels of imports of processed foods, means our local food system has become less resilient to global shocks and thereby less reliable. Furthermore, the high cost of food relative to income means Australia tops Deloitte’s Food Frugality Index out of the 20 nations surveyed, so while we have a plentiful supply of produce there are many who struggle to afford the food they need.

Strengthening sovereign capabilities across the food value chain can improve food security and temper price shocks, but where and when Australia produces or processes food onshore must be carefully considered. Trade-offs will need to be made. Sovereign capability of production and processing should only be built where Australia has an advantage, where it is cost competitive, and where value can be created. 

Targeted, strategic investment in our sovereign capabilities across onshore production and processing, smart technologies and food innovation can create a more reliable and circular food supply, while increasing economic value-add and lowering the industry’s carbon footprint.

Taskforce founding member and Deloitte Australia National Consumer Industry Lead Vanessa Matthijssen added; “Given the relatively high cost of manufacturing and labour in Australia, produce is often shipped overseas to be processed, only to end up back on Australia’s supermarket shelves. Not only does this lengthen the supply chain with a likely increased carbon footprint of the product, the global risk exposures go up. It could also mean Australia misses the opportunity to capture the full value that is created throughout the process.

“Sovereignty of food supply chain in Australia deserves a rethink, given how inextricably linked food security is to national security. While food supply sovereignty is guaranteed to drive greater resilience, it does not mean Australia will unquestionably benefit from bringing critical inputs and value-add onshore. Australia’s ability to be cost competitive will have to be carefully considered, and investments in technological innovation and automation will be critical to ensuring potential economic benefits are realised.” 

3. Global markets and competitive positioning 

Australia has a unique food and agriculture story, but it is not well understood or clearly presented to ternational markets. The opportunity exists for Australia to secure its strong position and grow its premium value in export markets, by investing in its brand narrative and supporting data to underwrite the claims.

Given its strength in innovation, it also has the potential to diversify its exports beyond produce into value added products and food and agricultural technologies. A stronger, evidence-based brand Australia that incorporates knowledge and intellectual property can have a material impact on economic contribution and resilience.

Countries like New Zealand, Ireland, the Netherlands, and Denmark have created unified narratives for their food industries, helping exporters secure access to key markets. There is an opportunity for Australia to do the same, highlighting its resilient and innovative food system that consistently delivers safe, green, and quality produce.