Who Will Meet The Food Demand?

Rising Food Demand Makes Your Farm Your Best Asset

With a growing world population and rising affluence, Australia’s agricultural sector is set to benefit. Apart from a rise in agricultural produce values, we can expect to see the value of agricultural land soaring in years to come. After all, there is only so much land to feed consumers, and with growing demand, that land becomes all the more valuable as time goes on.

Farm Invest Australia says that agricultural land values have consistently risen at a rate that’s faster than inflation, a flipside to the residential property market which is said to be heavily overvalued.

Affluent People Eat More Meat

It’s not just the increased population that will drive Australia’s agricultural sector to new heights, but a growing demand for meat, and beef in particular. Producing beef is much more resource intensive than growing food is, and with a growing middle class around the world, this is one of the big growth nodes to watch.

But people don’t just eat meat, and even regular food production will need to be more efficient in order to meet a rising demand for food produced from a finite amount of land. There are serious food security concerns worldwide, and the agricultural sector is continually seeking ways to increase productivity per hectare.

Asia Can’t Keep Up, But Will There Be Enough Water?

According to Agricultural Economists, Asia will increase its food production, but it won’t be able to keep up with demand, especially when it comes to the less starch-intensive, meatier diet that its increasingly affluent citizens want.

But Australia, a major exporter of food to the Far East has its share of problems. Water, in particular is likely to prove an obstacle. The UN reports that half the world’s population will have to deal with a scarcity of water by 2030, and Australian farmers have plenty of first-hand experience in what drought can do to agricultural production.

On the upside, agricultural land with a reliable water supply will become all the more valuable, both in terms of what it can produce, and in the price tag it can command.

Agriculture to Become More Profitable as an Investment

In the past, Agriculture has struggled compared to industries that produce other resources or that manufacture goods. Simply put, Apple has been making more money than Apple growers, and those who provide necessities have had to invest greater sums for lower returns than those who produce luxuries. It seems that situation is set to change in the not too far-distant future.

Of course, the expected value increases are based on scarcity, which bodes ill for the less affluent, but for the farming sector, the likelihood of being able to command better prices both at home and abroad is an attractive prospect.

Your Land is Your Best Investment

A productive farm is an increasingly valuable investment, and that makes it worth investing in more than just the land. Anything that makes your farm more efficient and productive will maximize your returns, both now and in a future where those returns seem set to grow substantially.

NAB Group Economics’ 2016 report shows the outlook for all Australian exports to Asia, and predicted a bright future for food exports despite a slowdown in economic growth in the region. That’s good news for Australian agriculture provided we can rise to the challenges of this growing market. The key? We have to remain competitive, and that means investing in efficiency and production security.

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