Agricultural equipment and farming equipment manufacturers are now expected to have an average value of more than $1 billion by 2020, according to a new report.
Key points:Agricultural equipment and farm equipment manufacturers, with an average of $1.6bnA major farm equipment and equipment manufacturer is expected to be worth $1bn over the next five yearsAgriculture industry in NSW is estimated to have a value of around $1 trillion in the 2020s, the report from the Australian Research Council (ARC) said.
The study is a joint effort by the Australian Bureau of Statistics (ABS) and the ARC.
It finds the agricultural equipment and agricultural equipment manufacturing industry is expected grow by a third in the next 10 years to $1,6bn.
The report finds agricultural equipment manufacturers and their associated equipment and services industries have an annualised value of $3.2 trillion.
It is projected the total agricultural equipment industry in Australia will grow by 7.5 per cent between 2020 and 2025, with the value of this sector increasing by $3bn in the process.
The agricultural equipment business, in particular, is forecast to grow by 8 per cent over the same period.
The ARC report is the first in the Australian agribusiness industry to take into account the sector’s value.
It was published at the end of April and is the latest in a series of studies commissioned by the industry to determine what it expects will be the most significant changes to the agricultural industry’s value structure over the coming decades.
It predicts an industry value of up to $8.4 trillion by 2025.
While the value may be relatively low for the sector, the study predicts this could grow to more than half a trillion dollars over the following decade.
“Agriculturally, we are not just looking at agriculture,” ARC chief executive and executive director of the Australian Agricultural Industry Institute, John Anderson, said.
“We are looking at agricultural services, agricultural infrastructure, agricultural marketing and agribaculture, which is a really significant value for a business that is based on producing agricultural products.”
It is also important to recognise that this is an emerging industry that will take several decades to be fully competitive, which will impact both consumers and businesses.
“The industry will have to adapt to new technologyThe study found there were three key trends expected to occur over the 2040s: the agricultural technology sector will grow rapidly to an average annualised growth rate of 12 per cent, while the agribaute equipment and agriculture equipment manufacturing sector will be around five per cent slower than it was in 2020.
In 2040, there will be an increase in the average annual growth rate from 7.4 per cent to 11 per cent and the agri-technology manufacturing sector’s average annual increase will be 4 per cent.”
The industry is looking to be very competitive in a lot of ways, and there will probably be some consolidation of the agrifood market,” Mr Anderson said.
But he warned it would not be easy.”
When you start looking at consolidation, you need to be aware of how much time you’re going to have before consolidation starts,” he said.
Mr Anderson said the report showed the agricultural tech sector was the biggest change for the industry.”
You’ll see that we see a significant consolidation, which means a lot more people will be in this business,” he noted.”
But there are also a number of opportunities that are still under-explored.
“In 2020, the industry’s share of the agricultural software market will increase from 10 per cent in 2020 to 17 per cent by 2025, while it will be more than 10 per per cent of the market by 2040.
Agri-tech and agricultural machinery manufacturing will also grow faster than the agro-industrial industry, at an average growth rate in 2040 of 7 per cent from 2020 to 2040 and 6 per cent for the agra-industrial sector from 2020.
Mr Cooper said this was important to the industry because it meant there would be a significant increase in supply chain management for the agricultural machinery industry.”[The] technology that we’ve seen in the last decade or so is a very powerful tool for agritech,” he explained.”
That tool is very powerful, and if you don’t have a well-developed supply chain, you can’t scale up.
“What we’ve also seen is that we’re seeing more of an investment in the ag-tech sector, and we’re starting to see that a lot sooner than we might have seen previously.”