Two years after a report released by RIRDC showed that current funding in Australia’s transport infrastructure was inadequate, a new report released today by ABARES says that agricultural infrastructure is going to come under increased pressure as farm productivity grows.
The report, Infrastructure and Australia’s food industry: Preliminary economic assessment, identifies potential pressures on infrastructure in Australia in the future, based on predicted growth in the agricultural sector to meet growing world demand for food and fibre. It also discusses the roles both public and private investment can play in managing these pressures.
The preliminary economic assessment of Australia's food infrastructure focuses on the five commodities expected to lead the export charge into Asia: beef, sheepmeat, dairy, wheat and sugar.
It's the second in a series of reports looking at how Australia can be strategic in taking advantage of the Asia food boom. It points the way for further investigation into how much additional investment is required, and how much that could yield in increased exports.
The report finds that existing problems in areas such as road maintenance and infrastructure will only get worse as demand and production grow, unless investment is increased.
National Farmers Federation president Duncan Fraser welcomed the report as ‘important work’ on infrastructure, given its importance to the sector, and called for greater action from both public and private funding sources.
“The report focuses on the future constraints in Australia’s infrastructure system, given the expected growth in agricultural production. But critically, as existing research shows, constraints in the system are already impacting farmers now,” Mr Fraser said.
“One of the key roles of agricultural infrastructure – be it roads, rail or ports – is to help farmers get their produce to market. In many cases, farmers are already facing impediments in using the current infrastructure system, due to a lack of funding or maintenance, and ageing infrastructure. The release of this report comes as grain harvest gets underway across Australia, placing added pressure on our freight transport system.
“If our farmers are going to stay competitive on the global market, and are going to access the opportunities ahead given the rise of Asia, then we need to ensure that the infrastructure farmers rely on is up to scratch. As the ABARES report shows, infrastructure that allows food and fibre to be moved cost-effectively and efficiently to markets will be extremely important in making the most of opportunities presented by rapidly growing Asian markets.
“The report identifies a number of areas that need to be addressed: funding arrangements, road and rail pricing distortions, connectivity of the road network and with other transport modes, and planning and future investment.
“The report clearly shows the need for action on infrastructure: something the NFF has long called for. It is now up to the new Federal Government to deliver on their election commitments of a national infrastructure audit and better planning; and to prove that agriculture really is a pillar of the Australian economy through committing both their own funding and driving new public and private funding schemes.
“Ensuring the future success of the agricultural sector is not just about productivity gains on-farm: it’s about ensuring the entire supply chain is as efficient and as effective as possible. And this is not an area where action can wait until tomorrow; it needs to happen today,” Mr Fraser said.
ABARES's head of farm analysis, productivity and social sciences branch, Peter Gooday, suggests it's likely the private sector will have to share more of the costs in areas like road maintenance in the future.
That could be any number of people in the private sector looking to make a profit from investing in infrastructure, and there were a number of different ways that could be organised, he said.
"One of the things we'll be looking at in the next set of work (due at the ABARES outlook conference in March) will be what the incentives or disincentives are at the moment for the private sector to become involved in public private partnerships, to get more funding into infrastructure," he said.
"The issue really comes about in the next several decades. If we're wanting to take advantage of this opportunity of expanding markets in Asia, then we will need more investment in infrastructure so that the bottlenecks that are there and apparent at the moment don't become significant problems."