AUSTRALIA has rapidly lost its share of some of the world's biggest and fastest growing agricultural markets, according to a new report to be released today.
In our biggest farm export market, North Asia (China, Japan, South Korea and Hong Kong), we are least holding our own against the likes of Brazil and the United States.
But we have lost significant market share in major, rapidly expanding markets like the ASEAN bloc, Central and South Asia (which includes India and Pakistan) and Africa and the Middle East, according to the alarming review of the value of Australia's farm exports in the past 15 years by the Australian Farm Institute (AFI).
The value of North Asia's farm imports from outside the region have been rising by around seven per cent during the past 15 years, reaching $US220 billion in 2012, while the value of Australia's share has been increasing by 6 per cent.
In contrast, Brazil has been growing its market share by an average 17pc a year on the back of higher soybean and poultry exports, the AFI report said.
Our performance in the ASEAN region (which includes Indonesia, Malaysia and Thailand) was more disturbing. Our share of an annual farm import market now worth around $US60 billion and growing at an average 14pc a year has slumped from 25 per cent in 1999 to 10pc in 2012.
Australia was now playing second fiddle to Brazil and China in the ASEAN bloc and despite our proximity to Indonesia, we are losing overall market share despite more than doubling our farm exports to our near neighbour in the past 15 years.
The AFI relied heavily on trade data collected by the United Nations to produce the report which will be released this morning at the AFI's annual agriculture roundtable conference in Melbourne.
"Overall, Australia has lost market share in global agricultural markets and as a consequence, Australian farmers are failing to capture the full benefits of the rapid growth in demand for agricultural products by consumers in developing nations," AFI executive director Mick Keogh said.
"Instead, farmers in nations such as Brazil, the US, Argentina, Thailand, Indonesia and even China are capturing an increasing share of the value of international agricultural trade," he said.
"There are a number of reasons that Australian farmers are losing market share in these rapidly growing markets.
"First, much of the growth in demand for agricultural imports has been for feed grains, fodder and oilseeds. These products are needed to feed the rapidly growing intensive livestock sectors in nations like China. Unfortunately, Australia has not been a major exporter of these products.
"Second, Australian agriculture is limited by the nation's variable climate and soils, a lack of productivity growth over the past decade and relatively high costs, therefore farmers have not been able to profitably respond to the increased demand from these developing markets."
Mr Keogh said the report had highlighted several key challenges for Australian agriculture.
"The first is the need to resuscitate productivity growth in the sector," he said.
"Agricultural productivity growth has largely stalled since about the year 2000 and considerable efforts will be required to revive it, and to ensure the sector remains internationally competitive.
"A key factor to achieve this is increased investment in agricultural research and development.
"The second is international market access. There is clear evidence in the trade data analysed for this research that trade agreements (for example the Australia-Chile Free Trade Agreement) can quickly result in the rapid growth in the value of Australian agricultural exports.
“The recent progress that has been made by the Australian government in trade agreements with Japan and Korea will hopefully bring similar benefits, and achieving a trade agreement with China could trigger a huge boost in Australian agricultural exports.
“The third key challenge lies in positioning Australian farm exports as premium products that have inherently superior quality and which also incorporate high standards of food safety, biosecurity and environmental sustainability.”
Mr Keogh said there had been much discussion about the need to better develop "Brand Australia" as a vehicle to communicate this information to international and domestic consumers but little evidence so far that farm leaders and policy makers saw this as a priority and were prepared to act.