How are your investments positioned for the rise of the global middle class?

June 21, 2018 11:51 am

World population is projected to reach 9.8 billion in 2050*, which will continue the dramatic rise in demand for food and fibre currently being experienced. With this population growth comes a rapid expansion of the global middle class, currently 3.2 billion and expanding by 160 million a year#. The recent growth of the middle class has centred on Asia, with this region to provide 88% of the next billion entrants into the middle-class ^.

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So what does this mean for Australian agriculture?

An increase in a middle-class population will not guarantee a rise in demand for all agricultural bulk commodities. The world’s middle-class demand higher value protein, with China projected to decrease consumption of vegetables while consumptions of beef triple out to 2050^.

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Australia is well positioned to take advantage of these megatrends and for investors in Australian agriculture, the key is to identify how you can maximise this opportunity. A major opportunity is to be a premium supplier of high-quality product and leverage our competitive advantage. As a nation, we are unable to be the low-cost supplier and therefore need to focus on our value proposition and product differentiation.

Some domestic advantages include:

  • Exceptional land value (on a globally developed benchmark+)
  • Long-term capital growth
  • Clean reputation and outstanding biosecurity
  • Robust infrastructure, freight, storage and cold chains
  • Proximity to Asia-Pacific markets
  • Global leaders in agricultural technology and innovation
  • Negligible sovereign risk
  • Transparent legal and accounting systems ensure secure land tenure and property rights
  • Favourable tax regime, no inheritance tax on agricultural land
*UN DESA 2015, 9.8 billion in 2050 and 11.2 billion in 2100
# The Brookings Institution, 2016
^ ABARES 2018
=Land Commodities – Australian Agriculture, via Anson Advisors

Read more…Agriculture as an asset class