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 ^.
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^.
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