Australia and Brazil – Future Partners in Global Agricultural Leadership Concept

Australia and Brazil – Future Partners in Global Agricultural Leadership Concept

I have been asked to expand on the concept of Australia and Brazil as ‘G2’ Partners in Global Agriculture that I presentedin my opening remarks as part of a panel at the Australia-Brazil Agribusiness Forum recently held Sydney and I thought I could share it here as well.

My fellow panelists included the very distinguished Dr Marcos Jank – a policy and research expert from Brazil - and fellow ex Austrade colleague Tony Eyres an Investment specialist in Brazilian agriculture and the agricultural opportunities being presented in the opening up of Australia’s north.

The entire panel is convinced of the opportunity to cooperate more closely together but I chose to use the more expansive term - ‘G2’ - as a sort of brand metaphor and copying the concept from the G7 and G20 Leadership forums.

I came to the conclusion many years ago that Brazil and Australia – and only Brazil and Australia - are uniquely positioned to dominate global agricultural export production for the next several decades. The G2 concept intends to take us beyond the simple encouragement of investment into each other’s markets by businesses and into the realm of building a much wider, mutually beneficial, partnering arrangement based on sharing Government policies, regulations, research, equipment, technologies and services as well as expanding current cooperation in General Agreements in Tariffs and Treaties matters.

My other view is that the coming together of our countries and economies in this endeavor is not ‘happenstance’ ie some sort of lucky ‘accident’.

Rather it is underpinned by a number of inexorable global drivers and the unique characteristics of each of our agricultural environments that when combined, not only complement each other, but actually supplement and expand each countries capability.

And more importantly we should assume this proposed relationship is not just for our own individual country gains but actually for the benefit of the world. Therefore a G2 we should aim - as equal partners - to establish the world’s best practice in production, supply, logistics, nutrition and food safety.

Let me explain:

The resources and energy sector – where Australia and Brazil are also the worlds biggest competitors - is subject to variability caused by rapid market demand changes (think China and iron ore or coal) and oversupply through new production sources( think both west and east  Africa) whereas the demand for global food production is rapidly heading for a sustained undersupply which cannot be easily resolved because of:

·      The worlds population is inexorably growing from a current 6bn towards 10bn by 2050. Food security for human critical needs falls only behind water availability as the worlds most important issue. Some markets like the Gulf Coast Countries import more than 90% of their food requirements today!

·      There are limited world regions with greenfield arable land and water availability that can provide surplus food for exporting – in reality they number less than ten and the top four dominate ( equaling the remaining six) of which Brazil is number one and Australia is number three. The other two are Russia and Argentina.

·      Per acre productivity performance and its reliability requires very high levels of skill and technology. Subsistence farming of course still exists in developing countries but it can’t scale to meet the upcoming needs. That is this is not something you can kick start in a new region in a couple of months.

·      Climate variation causing extreme events is increasingly impacting on crop production around the world. Some existing regions cannot guarantee regular supply.

·      Food nutrition, food provenance and safety concerns are show stoppers in markets like China – think powdered milk and New Zealand’s Fonterra a few years back or mad cows disease. And it cant be just any food. It has to pack a punch in terms of nutrition. Empty calorie food or food that is susceptible to fraud/knock offs cannot and will not be accepted by any community in the future.

·      Supply chain logistics – especially cold chain related – are expensive and complex. Crop to port logistics are also major obstacles to getting crops or protein into export markets.

·      The growing demand in export markets for protein products – both premium and basic – are running into new issues around the $ cost per kilo of unit. And it’s a fodder availability as well as a water availability issue. Its why red meat from beef cattle is becoming increasingly more expensive and being substituted by lower cost chicken for example. China is one of the world’s biggest producers and consumers of pork and because of that is a huge import of fodder for those animals. So we need increased agricultural crop production for human needs and for protein production.

·      As a separate issue at some point meat as we have known it will become a luxury food and hence the emerge of new forms of substitute protein. Both Brazil and Australia need to be leaders in this space.

So why does this lead us to Australia and Brazil forming a joint global approach to agricultural production and supply to the worlds market. Because only we can -  and each of us brings something the other doesn’t have.

It goes like this:

The demand for nutritious food for human critical needs is beyond our current global resources. Bread, rice or potatoes are the staple in many markets and in most of those markets basics are subsidized to ensure citizens can be fed regularly.

The new level of demand for premium food coming out of Asia is unprecedented and tipping the balance in some sectors of agriculture – dairy, beef for example.

Less than four countries in the world can generate the level of production in greenfield arable areas to meet both essential and well as discretionary premium food demand. Two of those countries today are Brazil and Australia and only our countries are based in the tropics - where 70% of the worlds future population will reside!

Neither Australia or Brazil subsidise food for consumers. Meaning we both know how to operate efficiently and in free markets.

What does this mean? In the past Brazil and Australia have been separately successful as competitors in the global market but such is the requirement versus capability to deliver to food to growing export markets there is a multiplier effect to be gained if we join forces to:

·      Create policies and programmes that support increased agricultural production to serve increasing global requirement

·      Create and share regulations that guarantee food provenance, food safety and security

·      Share research in the efficient tropical production of food and fibre

·      Share research in yield production and food nutrition

·      Share research in non-meat protein design and production

What does agricultural experience does Brazil bring to Australia?

·      It has already had its south to north experience. Brazilian farmers know how to open up and operate in hostile, stressed greenfield environments. They are ideal partners to build new agricultural production in Australia’s north.

·      Brazilian farmers understand very large, industrial scale levels of agricultural production.

·      Brazilian farmers are highly competitive business operators.

·      Brazil are world leaders in agriculture for biofuels for transport and power requirements.

 What does Australia bring to Brazil?

·      Australia’s north is a new Mato Grosso region to them. It represents more than half our land area, is mostly under developed but has almost all of our consistent water availability. Australia cannot increase in any significant ways if it does not open up the north. Brazilians are the only country experienced and knowledgeable enough to tackle this challenge and it provides Brazilians farmers the opportunity to have production source diversity.

·      Australia’s offers Brazil close proximity and easy ( and easier) access to the Indo-Pacific markets.

·      Australia’s has key FTA’s with markets of interest to Brazil.

·      Australia has an excellent reputation for food safety and regulation. This is a missing plank in some aspects for Brazil.

·      Australia like Brazil is rapidly adopting new technologies – from drones, to blockchain. Let’s work together on the best ones and export our technology and services to the world.

·      Australia has outstanding agricultural and water research institutions. Jointly we could dominate the understanding of requirements for future global agricultural production and create products and technologies that will set the global standard in markets where conditions are increasingly becoming stressed.

·      As a linked but separate issue Australia has a jet fuel availability and national reserve issue. Biofuels are an ideal substitute for fossil-based jet fuels of which we are an importer. Identifying opportunities in high performing non-food feedstock for jet fuel replacement would provide a new global technology, leadership opportunity as well as new markets such as the US DoD for example.

In closing Australia and Brazil need to stop see each other as simply old fashioned direct competitors in each other’s markets.

Global demand for safe, nutritious food is more than enough to sustain us as we stand. The question is do we want to do more? Can we do more?

My proposition is that ‘yes we can’. But in order to do so it requires us to move towards a global leadership role by partnering across all of our levels of knowledge – from Government policies and programmes, to regulation and governance, to research, equipment, technologies and services.

The information age is upon us. 5G, internet of things, big data, AI, Nano technologies, smart phones, equipment and machinery. This is the future and this is where both countries need to be. And we can and should be the best at it.

Back to my opening statement.

Australia and Brazil - and only Australia and Brazil – have an opportunity to join together and form an alliance to provide the global leadership in agriculture our future world requires.

Lets do it!