Prepare for farm boom: McGauchie
But the Nufarm chairman and GrainCorp director believes the opportunity to feed China's booming middle class might already be lost.
Speaking to the American Chamber of Commerce on Wednesday, Mr McGauchie - a former Telstra chairman - said demand for food in Asia was expected to double by 2050. Investment in the sector was urgently needed to meet this rise in demand.
"Australia is on the doorstep of what promises to be the greatest leap forward, in terms of prosperity, since the Industrial Revolution," he said. "We are at risk of missing that once-in-a-century opportunity due to a chronic lack of skills, people, capital, infrastructure and policies."
Mr McGauchie's comments come at a sensitive time for an industry divided over the impact of foreign investment in the sector after US grain company Archer Daniels Midland's $3 billion takeover of GrainCorp, which is facing opposition from some lobby groups in NSW.
Mr McGauchie would not comment on the takeover, but said the sector had long been dominated by foreign buyers.
"I think Australian investors will wake up one day and find that a lot of the opportunities passed them by because they didn't recognise them soon enough," he said.
Economists surveyed by BusinessDay last week said they believed the mining investment boom was now at its peak and that businesses would invest less in the new financial year than they did in 2012-13. The survey results contrast with a Treasury forecast that implies the peak is still ahead.
Mr McGauchie said the country could more than double the real value of agriculture exports by 2050, taking it from $35 billion to $73 billion with investment in "productivity, infrastructure, innovation and market access".
"As historic as the resources boom has been, it will level out," he said. "Right now, we should focus our attention on the opportunities that will follow the creation of Asia's mega-middle class."
Frequently Asked Questions about this Article…
Yes — Donald McGauchie, Nufarm chairman and GrainCorp director, told the American Chamber of Commerce that Australia could enjoy an agriculture boom that carries the economy into the next century. For everyday investors this suggests opportunities in farm-related businesses, agricultural exports and supporting industries if investment is made in productivity, infrastructure, innovation and market access.
McGauchie said demand for food in Asia is expected to double by 2050, and Australia risks missing that opportunity due to a chronic lack of skills, people, capital, infrastructure and policies. He argues urgent investment is needed to scale production and meet growing Asian demand.
The article reports McGauchie's view that Australia could more than double the real value of agricultural exports from about $35 billion to $73 billion by 2050 with investment focused on productivity, infrastructure, innovation and market access.
McGauchie warned that the opportunity to feed China’s booming middle class might already be lost, even though Asia-wide food demand is forecast to rise sharply. His point highlights the risk Australian investors and policymakers could miss out without timely investments.
The article notes the sector has long been dominated by foreign buyers and mentions Archer Daniels Midland’s $3 billion takeover of GrainCorp, which has faced opposition from some lobby groups in NSW. McGauchie would not comment on the takeover but warned Australian investors may miss opportunities if they don’t act sooner.
Economists surveyed by BusinessDay suggested the mining investment boom may have peaked and businesses will invest less in the coming year, while Treasury forecasts imply the peak is still ahead. McGauchie said that as the resources boom levels out, attention should shift to the long-term opportunities created by Asia’s growing middle class — particularly in agriculture.
McGauchie recommends investment in productivity, infrastructure, innovation and market access. He believes focusing on these areas could significantly boost the real value of Australia’s agricultural exports by 2050.
The takeaway is that a long-term agriculture opportunity may be emerging as mining investment levels off. Everyday investors should watch for companies and assets tied to agricultural productivity, export infrastructure and innovation — while keeping an eye on policy, skills shortages and foreign investment dynamics highlighted in the article.
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