Australia and Brazil the ‘G2’ of Future Agribusiness

I have been asked to expand on the concept of Australia and Brazil as ‘G2’ Partners in Global Agriculture that I presented in 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 panellists 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 both Brazilian agriculture and the opportunities being presented in the opening up of Australia’s north agricultural for ‘greenfields agriculture’.

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 endeavour is not ‘happenstance’ ie some sort of lucky occurrence or  ‘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 in a G2 Australia and Brazil 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 major world biggest competitors – is subject to variability caused by rapid market demand changes (think China variable demand and pricing for iron ore or coal) and the oversupply being created 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 world’s 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 world’s 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.

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 country 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 staples in many markets and in most of those markets basics are subsidized to ensure citizens can be fed routinely.

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.

Australia and Brazil are two of the world’s largest food producers in the world and two of the very few countries that produce food for export. This is a small club with its two members having an important role to play in the world.

In addition, less than four countries in the world can generate a new level of production in greenfield arable areas to meet both essential and well as increasing discretionary premium food demand from new markets in Asia. Two of those countries today are Brazil and Australia and only our two countries are based in the tropics – another important commonality – where 70% of the worlds future population will reside!

Finally, neither Australia or Brazil subsidise food for consumers. Meaning we both know how to operate efficiently and in free markets and that surplus food that we produce can be made available for export without compromise.

What does this mean?

In 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 requirements
  • 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 agricultural experience does Brazil bring to Australia?

  • Brazil has already had its ‘south to north’ experience. Brazilian farmers know how to open up and operate in a hostile, stressed greenfield agricultural environments. They are therefore ideal, unique 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 and technology savvy business operators.
  • Brazil is world leaders in agriculture for biofuels for transport and power requirements.

What does Australia bring to Brazil?

  • Australia’s north offers a new Mato Grosso region opportunity to Brazilian farmers. Australia’s north represents more than half our land area, is mostly underdeveloped but has almost all of our consistent water availability.
  • Australian agriculture has no further room to move and cannot increase agricultural production for export in any more significant ways if it does not open up the north. Brazilians are the only partners experienced and knowledgeable enough to tackle this challenge and it provides Brazilians farmers the opportunity to have production source and income diversity.
  • Australia’s offers Brazil close proximity and easy (and easier) logistic and cultural access to the Indo-Pacific markets.
  • Australia’s has key FTA’s with markets of interest to Brazil in the Indo-Pacific.
  • Australia has an excellent reputation and brand 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 fuel strategic 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 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 world direct competitors in each other’s agricultural export markets.

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

My proposition is that ‘yes we can’. We have everything required in common to make us ideal partners and more than agricultural competitors. Its ‘co-petition’ as a minimum but more than that we could consider joining together to form a global partnership that contributes to the future of premium food and food security requirements going forward.

But in order to move towards a global leadership role requires 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, Nanotechnologies, smartphones/equipment/machinery. This is the future and this is where both countries need to be. And we can and should both be the best at it.

So back to my opening statement.

Australia and Brazil – and only Australia and Brazil – because of our inherent characteristics and capability now have an opportunity to join together and form an alliance to provide the global leadership in agriculture our future world requires.

Originally posted at: https://www.linkedin.com/pulse/australia-brazil-explaining-concept-future-partners-barty-gaicd/