Back to all opinion articles
16/09/2020
Despite drought and concerns around temporary shortages of some items in supermarkets, Australia continues to have one of the highest levels of food security in the world; we still produce much more food than we consume.
But some sectors such as forestry, fishing, food manufacturing and food and beverage services have been significantly impacted by the COVID-19 pandemic.
While Australian agriculture still relies on world commodity markets, we can leverage science and technology to help manage the effects of COVID-19 and unlock value-adding growth opportunities to support our economic recovery and resilience.
In 2019, CSIRO released analysis which found that interest in healthy and sustainable lifestyles could be worth $25 billion and make up around 10 per cent of the value of Australia’s food and agribusiness sector by 2030.
Our analysis and consultations with industry suggest that the opportunity across these markets is growing at around 3.6 per cent every year in real terms, faster than the industry average of 2.4 per cent a year. This complements the National Farmers’ Federation strategic target to reach $100 billion by 2030, with a growth rate of approximately four per cent a year expected in farm gate output.
The following figure shows the potential size of the various market segments in 2030. These were estimated before the COVID-19 pandemic, which has added considerable uncertainty to market growth forecasts – some of the market segments may now grow faster than we predicted, while others may grow more slowly. However, at this stage we still believe the 2030 estimates are realistic.
Pie chart showing a break down of the economic analysis and market sizing for Australian food and agribusiness. Image: CSIRO
In the short term, Australia’s innovation investment has understandably been focused on managing COVID-19, slowing the spread, and securing medical items and funding vaccine development and related science. However, Australia has a great opportunity in the medium-to-long term to increase our investment in science and technologies that transform the economy and boost our resilience to existing and emerging challenges.
These projections are made by Australia’s national science agency, CSIRO, in the Growth opportunities for Australian food and agribusiness report. This economic analysis builds on CSIRO’s 2017 Food and Agribusiness roadmap, and considers factors such as trends in consumer preferences, competitive advantages, potential competitors and substitutes, and broader macroeconomic forces such as population and income growth.
Future growth will require investment in science and digital technology to create the next wave of products and services that meet the needs of tomorrow's global customers. In our report we discuss the following growth opportunities, which are now more relevant than ever:
The fortified and functional foods growth opportunities across domestic consumption and export.
Although this is a mature industry, CSIRO’s analysis suggests its value will increase from $6.7 billion in 2018 to $9.7 billion in 2030 and that it could continue to experience moderate growth as consumer demand for natural and healthy foods increases (particularly during and post COVID-19) and if export demand from Asia continues.
Investing in innovative approaches to boost the nutritional value of foods can cater to this growing demand. One example is CSIRO’s partnership with Pharmamark Innovation to develop a sustainable source of omega-3 oils from marine microorganisms. The products will aim to boost the nutritional value of a range of food and beverages, beginning with the $89 billion global baby formula market.
The alternative protein growth opportunities across domestic consumption, export and environmental savings.
One of the global challenges we face is finding ways to develop more sustainable food, so we can feed 10 billion people with the resources of one planet. It is estimated that by 2050 the world's population will demand twice the amount of food we consume today. Developing a meat-alternative industry for consumers who want to reduce their meat consumption without reducing their protein intake will be one of the many ways to meet this challenge.
The market for alternative proteins is expected to grow at around five per cent a year, more than double the rate of 2.4 per cent for the whole food and agribusiness sector.
As well as domestic and export sales valued at $6.6 billion in 2030, we estimate alternative protein sources may be worth $5.4 billion in carbon emission and water savings. This is based on calculating the emissions and water saved by consuming alternatives to animal protein, and then calculating the value of those using market prices for carbon and water.
Strong demand for alternative proteins is expected to continue, with rising consumer preferences for sustainable and ethical foods and strong population and income growth in key export markets with large vegetarian markets such as India.
The report also coincided with our investment in v2food, one of Australia’s newest plant-based meat start-ups. v2food is an innovative partnership between CSIRO, Main Sequence Ventures and Jack Cowin's Competitive Foods Australia, and adds plant-based meat to the Australian agricultural story.
We also see significant environmental savings from sustainable packaging ($1.7 billion) and organic waste conversion ($600 million). While sustainable packaging and waste conversion are intermediary goods and processes, they are important to the development of new products that meet changing consumer needs while providing environmental savings.
A new level of transparency is now expected in the food supply chain for domestic and export food trade, removing blind spots, providing enhanced stock-flow information to all parties and assisting in the identification of produce at risk of degradation. Improved food system traceability will help to meet consumer demand for transparency in food production; enhance the ability of government departments and industry to identify, respond and prevent food safety issues; and create opportunities to optimise supply-chains and minimise food loss. Enhanced traceability will also validate sourcing claims and reduce food fraud in the form of product adulteration, substitution, diversion, misrepresentation and/or identify theft that could create safety risks to consumers and reputation risk to the Australian industry.
Since product quality, trust and security is critical to Australia’s reputation and competitive advantage in global markets, it is critical that we develop the digital technologies to mitigate these risks.
CSIRO recognises these challenges and the opportunity to capture high-growth global protein markets as well as boost our trusted agriculture and food exports through tools that verify ‘clean and green’ credentials. These opportunities are part of a new missions program aimed at addressing Australia’s major challenges which is being co-developed with industry, researchers and government.
Without investment in science and technology, Australia could miss out on these opportunities. If we can capitalise on these opportunities, the rewards could be even greater for our way of life, our economy and the environment.
Register Now
Katherine Wynn will be speaking alongside National Farmers' Federation Chief Executive Officer, Tony Mahar, at a CEDA livestream on Agribusiness' place in Australia's economic recovery on 24 September.
Read more
View the digital version of CSIRO's Growth opportunities for Australian food and agribusiness report. Explore the data and make comparisons across each of the opportunities here.
But some sectors such as forestry, fishing, food manufacturing and food and beverage services have been significantly impacted by the COVID-19 pandemic.
While Australian agriculture still relies on world commodity markets, we can leverage science and technology to help manage the effects of COVID-19 and unlock value-adding growth opportunities to support our economic recovery and resilience.
Identifying new sources of economic growth
This one-in-100 year crisis has accelerated the growing consumer demand for healthy and sustainable food products. This growth could make the food and agribusiness sector one of our largest: when you include food and beverage manufacturing, wholesaling, retailing and services, the sector currently contributes approximately $138 billion to the Australian economy, or about 7.6 per cent of GDP, which is similar to some of our other large sectors such as mining and construction.In 2019, CSIRO released analysis which found that interest in healthy and sustainable lifestyles could be worth $25 billion and make up around 10 per cent of the value of Australia’s food and agribusiness sector by 2030.
Our analysis and consultations with industry suggest that the opportunity across these markets is growing at around 3.6 per cent every year in real terms, faster than the industry average of 2.4 per cent a year. This complements the National Farmers’ Federation strategic target to reach $100 billion by 2030, with a growth rate of approximately four per cent a year expected in farm gate output.
The following figure shows the potential size of the various market segments in 2030. These were estimated before the COVID-19 pandemic, which has added considerable uncertainty to market growth forecasts – some of the market segments may now grow faster than we predicted, while others may grow more slowly. However, at this stage we still believe the 2030 estimates are realistic.
Pie chart showing a break down of the economic analysis and market sizing for Australian food and agribusiness. Image: CSIRO
In the short term, Australia’s innovation investment has understandably been focused on managing COVID-19, slowing the spread, and securing medical items and funding vaccine development and related science. However, Australia has a great opportunity in the medium-to-long term to increase our investment in science and technologies that transform the economy and boost our resilience to existing and emerging challenges.
These projections are made by Australia’s national science agency, CSIRO, in the Growth opportunities for Australian food and agribusiness report. This economic analysis builds on CSIRO’s 2017 Food and Agribusiness roadmap, and considers factors such as trends in consumer preferences, competitive advantages, potential competitors and substitutes, and broader macroeconomic forces such as population and income growth.
Changing consumer focus impacting new growth opportunities
As our recently launched COVID-19 recovery and resilience report shows, the pandemic is driving an increasing consumer focus on health and wellbeing products, as well as products that are ethically and sustainably sourced.Future growth will require investment in science and digital technology to create the next wave of products and services that meet the needs of tomorrow's global customers. In our report we discuss the following growth opportunities, which are now more relevant than ever:
- Health and wellbeing products - Key opportunities identified and sized by CSIRO, such as free-from and natural foods and fortified and functional products are likely to continue to be sources of industry growth.
- Sustainable solutions - Economic uncertainty is driving caution around expenditure, and while consumers seek foods that are ethically and sustainably sourced, such as alternative proteins, businesses also seek ways to improve resource efficiency and create a circular economy.
- Provenance and traceability: COVID-19 has heightened Australia’s opportunity to leverage our reputation for safe, healthy and quality food, and capture value by demonstrating safety and authenticating links across the supply chain.
Health and wellbeing products
In health and wellness products, our report examines four high-growth opportunities:- fortified and functional foods, which contain added ingredients intended to aid health
- free-from and natural products, including gluten-free and certified organic
- vitamins and supplements
- personalised nutrition
Although this is a mature industry, CSIRO’s analysis suggests its value will increase from $6.7 billion in 2018 to $9.7 billion in 2030 and that it could continue to experience moderate growth as consumer demand for natural and healthy foods increases (particularly during and post COVID-19) and if export demand from Asia continues.
Investing in innovative approaches to boost the nutritional value of foods can cater to this growing demand. One example is CSIRO’s partnership with Pharmamark Innovation to develop a sustainable source of omega-3 oils from marine microorganisms. The products will aim to boost the nutritional value of a range of food and beverages, beginning with the $89 billion global baby formula market.
Sustainable solutions
In sustainable solutions, we identified three growth areas:- alternative, non-meat protein sources
- organic waste conversion, generating useful products from waste
- sustainable packaging, such as bioplastics and biodegradable packaging.
The alternative protein growth opportunities across domestic consumption, export and environmental savings.
One of the global challenges we face is finding ways to develop more sustainable food, so we can feed 10 billion people with the resources of one planet. It is estimated that by 2050 the world's population will demand twice the amount of food we consume today. Developing a meat-alternative industry for consumers who want to reduce their meat consumption without reducing their protein intake will be one of the many ways to meet this challenge.
The market for alternative proteins is expected to grow at around five per cent a year, more than double the rate of 2.4 per cent for the whole food and agribusiness sector.
As well as domestic and export sales valued at $6.6 billion in 2030, we estimate alternative protein sources may be worth $5.4 billion in carbon emission and water savings. This is based on calculating the emissions and water saved by consuming alternatives to animal protein, and then calculating the value of those using market prices for carbon and water.
Strong demand for alternative proteins is expected to continue, with rising consumer preferences for sustainable and ethical foods and strong population and income growth in key export markets with large vegetarian markets such as India.
The report also coincided with our investment in v2food, one of Australia’s newest plant-based meat start-ups. v2food is an innovative partnership between CSIRO, Main Sequence Ventures and Jack Cowin's Competitive Foods Australia, and adds plant-based meat to the Australian agricultural story.
We also see significant environmental savings from sustainable packaging ($1.7 billion) and organic waste conversion ($600 million). While sustainable packaging and waste conversion are intermediary goods and processes, they are important to the development of new products that meet changing consumer needs while providing environmental savings.
Food provenance and traceability
Food provenance and traceability will be a growing priority for industry and government in a post COVID-19 world.A new level of transparency is now expected in the food supply chain for domestic and export food trade, removing blind spots, providing enhanced stock-flow information to all parties and assisting in the identification of produce at risk of degradation. Improved food system traceability will help to meet consumer demand for transparency in food production; enhance the ability of government departments and industry to identify, respond and prevent food safety issues; and create opportunities to optimise supply-chains and minimise food loss. Enhanced traceability will also validate sourcing claims and reduce food fraud in the form of product adulteration, substitution, diversion, misrepresentation and/or identify theft that could create safety risks to consumers and reputation risk to the Australian industry.
Since product quality, trust and security is critical to Australia’s reputation and competitive advantage in global markets, it is critical that we develop the digital technologies to mitigate these risks.
CSIRO recognises these challenges and the opportunity to capture high-growth global protein markets as well as boost our trusted agriculture and food exports through tools that verify ‘clean and green’ credentials. These opportunities are part of a new missions program aimed at addressing Australia’s major challenges which is being co-developed with industry, researchers and government.
The future
While capturing growth and global market share is of course dependent on the supply and competitiveness of local industry, we see our report as a key step for Australian food and agribusiness to pursue and capture the value from these emerging opportunities.Without investment in science and technology, Australia could miss out on these opportunities. If we can capitalise on these opportunities, the rewards could be even greater for our way of life, our economy and the environment.
Register Now
Katherine Wynn will be speaking alongside National Farmers' Federation Chief Executive Officer, Tony Mahar, at a CEDA livestream on Agribusiness' place in Australia's economic recovery on 24 September.
Read more
View the digital version of CSIRO's Growth opportunities for Australian food and agribusiness report. Explore the data and make comparisons across each of the opportunities here.