Australian billionaire businessman Anthony Pratt says Australia’s agricultural sector is set to fill the export gap caused by plummeting mineral commodity prices.
In a speech to The Australian and Visy’s third Global Food Forum in Melbourne recently the paper, packaging and recycling magnate predicted the Australian economy would move from a “mining boom to a dining boom.’’
As well as China, Mr Pratt said Australian exporters should focus on India, which he called “the next great global opportunity“ for agricultural exports.
India’s agricultural sector only contributes 16 per cent of total GDP and 10 per cent of export earnings in the economy. As its productivity is declining, there is an increasing gap between its farmers and its affluent and educated middle-class workforce.
Mr Pratt said Australia’s food exports in the past three years have grown by 26 per cent – more than double the 12 per cent growth of the previous three years.
“And processed food exports, which provide even more added value, have grown by 33 per cent. This is almost five times the previous three years’ growth of only 7 per cent, Mr Pratt told the Forum.
“These statistics are extremely important, because on the current trajectory, food exports of $36 billion are converging on iron ore exports at $52bn.
“In addition, the food and beverage industry directly provides 553,000 jobs, versus only 30,000 jobs in iron ore mining. And the car industry is down to 40,000 jobs.”
A lower Australian dollar is expected to further boost the agricultural sector in the year ahead.
“Food is no passing fad — it’s here to stay,” Mr Pratt said. “And unlike iron ore which is a commodity and subject to wild price swings, food is increasingly not a commodity because it’s increasingly exported as processed.
“But in addition to that, Australian food has another important differentiation: Australia’s brand reputation for reliable safe food. The demand for safe, nutritious food will rise dramatically across Asia in coming years as purchasing power increases and supply chains elongate.”
$75 million acquisition
The Pratt family’s Visy Group is considering making its first investment in India in the coming months and the group will later this year host the inaugural Australia India Leadership Dialogue in Delhi, which will focus on agriculture and agricultural processing.
Separately, his US group Pratt Industries yesterday announced the $75 million acquisition of a Californian packaging company, which serves the fruit and vegetable sector.
Mr Pratt’s comments come as exports of services such as tourism and education have overtaken shipments of iron ore as Australia’s biggest income earner for the first time in several years.
The Reserve Bank is banking on services industries to lead Australia’s growth as it emerges from the resources boom and as Joe Hockey predicted this week that iron ore prices could hit $US35 a tonne.
Every opportunity for growth
Addressing the same Forum, Mr John Durkan, the managing director of supermarket giant Coles, agreed Australia’s agricultural sector could replace lost revenue from commodities if it focuses on the booming export market.
Mr Durkan told the Forum the nation’s food sector is “ripe” to take up the challenge of hauling in revenue previously reaped by the mining and resources sector.
“Certainly with the goods sector there is every opportunity for growth within this industry,” he said.
Mr Durkan said the success of the food sector was highly dependent on building a competitive and productive domestic economy that was well serviced by key infrastructure and innovation.
“It comes off the back of productivity improvement,” he said.
Mr Durkan said Australia had to build other sectors outside mining to strike new pools of exports and revenue.