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'These nations will not only demand more from our industry in both quantity and quality, but in some cases they will also become major competitors.' Strongly emerging new economies, and climate change, have been identifed as two of the main drivers of innovation and change in the Australian grains industry in the years ahead. Noted Australian crop researcher and former director-general of CIMMYT (International Maize and Wheat Improvement Centre), Professor Tim Reeves, says global changes like these will present the Australian grains industry with signifcant challenges – but also opportunities if properly managed. Professor Reeves says the so-called BRIC economies – Brazil, Russia, India and China – are already “a force to be reckoned with” and will eventually dominate the global economy. “In less than 40 years the BRIC economies will be larger in US dollar terms than the current G6 nations,” Professor Reeves says. “These and other similar economies will be the new powerhouses, and where markets for Australian grain will grow. “As these economies continue to develop, their middle class will grow and their currencies will become more valuable. This has major implications for the Australian grains industry – because these nations will not only demand more from our industry in both quantity and quality, but in some cases they will also become major competitors.” Professor Reeves, an international consultant on agricultural research and development, says the key to meeting the challenge of supplying these growing markets will be a whole-of-industry approach to research, market intelligence and international alliances. “We will need much better market intelligence, and a level of research at least equal to, if not greater than, what is happening at the moment,” he says. “Australia has the capacity to increase productivity to meet likely demand. Production has grown signifcantly in recent years. However, we need a much better understanding of current and future market requirements. This also has implications for international trade agreements.” Professor Reeves says BRIC economies are also focusing on quality grain production, in part to ensure supplies meet their requirements but also for export. “Wherever there’s a middle class, there are quality issues,” he says. “They are catching up with Australia in terms of quality, and in some aspects they’re already there. Our production will have to adapt to meet increasingly strict requirements. “This is also the case in ‘greying’ economies like Europe, Japan and North America – the demand sting in these established markets is gradually easing. However they have increasing requirements on food safety and ethical issues. “The Europeans have introduced a ‘fork to farm’ framework, basically saying ‘this is what our consumers want to eat’, with strict specifcations on the use of pesticides, fertiliser, handling and processing. In other words, they don’t necessarily want what we’ve produced for them in the past. “We must stay on top of these market developments – in this case, we’re going to need superb records and traceability. Australia’s livestock industry is going down this path with the National Livestock Identifcation Scheme, and we may well need a comparable system for grain.” In research, Professor Reeves says the private sector would have to play a greater role, with the public sector flling gaps where commercial returns are harder to come by. “We can expect the private sector to make commercial decisions to invest research in areas of high proft potential,” he says. “We can’t be sure that the private sector will invest in other areas, and this is where the public sector can step in. “We will still need independent evaluation of new varieties; for example, investment in broadening the genetic base for new varieties, sustainable farming systems and niche marketing – none of these will be high priorities for the private sector. “There needs to be collaboration between the two – the privatisation of wheat breeding is a start. Growers may need to have equity in private sector research in order to have infuence.” The other major focus for research will be climate change, Professor Reeves says. “The world’s getting warmer. Research shows that in rice, there is a 15 percent yield loss for every mean temperature increase of 1C. “At the same time, cooler-climate competitors like Russia and Canada could well beneft from a warmer climate. “Climate change will impact on farming more than any other industry – it will require a whole-of-industry effort and improved communication at the global level, as well as, perhaps, growers’ political involvement.” Professor Reeves also reminds that one of the fundamentals of modern, global agriculture is that increasing grain production will have to be done on less land and with less water. “Based on existing demand, Australian grain production will need to reach about 70 million tonnes by 2025,” he said. “But after considering emerging demand, this fgure doubles. An example of emerging demand is rising world consumption of meat and milk – in 20 years Asia will consume an additional 100 million tonnes of meat (mostly pork and poultry) and 200 million tonnes more milk, and this will impact greatly on the grains industry. All those animals need to be fed. “But we are losing prime agricultural land to urban development and degradation. “The pressure on water will be even greater. It’s been said that the next major wars may be fought over access to water supplies, and certainly there will be competition for water between agricultural and urban users.” Professor Reeves also sounds a note of warning on the increasing competitiveness by farmers in the emerging BRIC economies: “Farmers are the same all over. It doesn’t matter where they are – they’re all striving for better yields, better systems, better quality and greater effciency.” For more information: firstname.lastname@example.org Professor Reeves has been contracted to Southern Farming Systems (SFS). Part of his new role is to coordinate communication between growers and the GRDC. FeatuRe 23 DeCemBeR 2004 Another BRIC in the trade wall THE CHALLENGE OF GLOBAL CHANGE By RichaRd hendeRson new forces: Professor tim Reeves. The editor and chief executive of the Irish Farmers' Journal, Mr Matthew Dempsey, who is also a farmer, recently told Australian growers that they did not have much to fear from Europe as a competitor: "For the future, forget Europe as a competitor in commodities," he said. Speaking at the recent 2004 International Innovative Farming Conference in Canberra on 'The Future of Farming' from a European perspective, Mr Dempsey said that while Europe would continue to try to compete with the best in high quality foods and wines, he could not see the global move towards free trade changing, and this presented significant opportunities for "a country and continent as well set up as you are". He said Australia had advantages in both its scale of operations and regulatory standards and because farmers here had much lower levels of government support they were better placed competitively if the free trade push succeeded. However, he acknowledged that Australian farmers were, for the moment, still lonely players on the "level playing field" and the crunch issue was the level of import pressure being put on US producers. Mr Dempsey echoed the predictions made in the 'Single Vision' Australian Grains Industry Strategy 2005-2025 that the value of wheat as feed stock for energy production was likely to become increasingly significant: "As with sugar for ethanol for energy in the US, you might be finding wheat knocking up to US$120 a tonne as an energy feedstock, and putting some kind of base value under wheat that will stop the perennial collapses we have seen over the past 20 to 40 years." -- Kay ansell FORGet euROPe aS a COmPetItOR, SaYS IRISH eDItOR european perspective: matthew Dempsey.
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