Australia: Food and agribusiness survey: Demand side pull and supply side response

Food and agribusiness survey

Demand side pull

Shifts in demand and supply are having a profound effect on the global food and agribusiness industry.

Urbanisation, an expanding middle class and population growth in emerging markets are boosting overall demand for food and also changing dietary preferences.

As a growing number of people in China, India and other emerging economies increase their incomes and enter the middle classes, they are adopting higher calorie, proteinand dairy-rich Western-style diets. This is putting pressure on the food and agribusiness industry to grow more cereals and animal feeds such as soya. The fact that it takes up to 16 pounds of feed and as much as 800 gallons of water to produce one pound of beef illustrates how increasing demand for protein is transforming the industry.

Supply side response

Significant investment and innovation is required if the food and agribusiness industry is to meet this growing demand.

Increasing the amount of land under cultivation and improving yields from existing land by irrigation, increasing the use of fertilizers and pesticides and using improved seeds are the classic supply side responses in the food and agribusiness industry.

However, increasing investment in information management, logistics, processing and transportation infrastructure is also key to expanding the supply of food and other agri commodities from newly cultivated land and in enlarging the markets (including international markets) accessible to existing cultivated land.

The agribusiness sector is traditionally low margin and volatile, and, as a result, securing investment capital is not always straightforward. Equally, the food and agribusiness industry involves more risks than many others, particularly because it is susceptible to numerous variables and uncertainties such as extreme weather events and natural disasters, some of which may be linked to climate change. One only needs to think of the polar vortex that swept across the United States earlier this year and the difficulties that created for livestock farmers in the Midwest.

In emerging markets, social and economic changes – urbanisation and industrialisation – are causing more young people to move away from agricultural work and into white collar jobs, putting further pressure on the industry's supply side response.

Genetically modified organisms

The desire to increase yields (in particular in the face of extreme weather events) has stimulated debate around the use and production of genetically modified foods with GMOs (genetically modified organisms). Many respondents stressed that crops have to become more weather resistant and hardy and they expect that there will be a greater use of food incorporating GMOs in coming years. Consumer sentiment in this area appears to be changing, with more receptive attitudes developing in markets that were once quite opposed to GMOs.

There is a difference between how the developed world and the emerging markets approach GMOs. It is the developed world that needs to be convinced of the value of GMOs, primarily because many consumers in the developed world have the luxury of choosing between genetically enhanced foods and conventionally grown crops, whereas in the emerging markets the chief concern is about supply meeting ever increasing demand, so there is less antipathy towards GMOs and genetically enhanced foods.

Public opinion (particularly in the developed world) is still not sufficiently informed about the value of GMOs or how the use of genetically modified crops could in fact reduce the need to use chemicals to prevent disease or damage from pests.

The future for emerging markets

Some emerging markets – in particular Brazil and Russia and, in the longer term, Africa – are regarded primarily as sources of increased supply, with potential to reduce costs and increase production. Other countries – notably China, with its huge and still expanding middle-class population – are a source of increased demand for food and other agri products.

Average yields in Africa are well below global averages; a lifting up to global averages would significantly expand production in Africa. Clearly the region has potential on the supply side. But Africa also has significant longer-term prospects as a consumer market for the food and agribusiness industry, especially in countries (such as Nigeria) which are predicted to see a significant rise in the coming decades in overall population and the number of middleclass consumers.

India's future role in the industry is less certain. Despite forecasts showing that India's population will exceed China's in 10 to 15 years' time, India is unlikely to have the same impact on global food consumption as China. In part, this is because production will probably focus on satisfying domestic demand; and, at least to date, cultural factors have resulted in fewer changes in dietary preferences than in China.

Brazil and Russia are influential producers and exporters of agricultural products. Brazil is perhaps the key producer globally in the agribusiness sector. Russia is a significant player but has not realised its full potential; its role may be further affected given recent events involving Russia and the Ukraine.

In our 2012 survey, 91 per cent of respondents believed that the BRIC markets would have a 'very significant' impact on the agribusiness sector. In this survey, only 64 per cent believe these nations will have a 'very significant' impact. This is consistent with the view that the BRIC countries as a block are having a lesser impact on global growth.

A broader group of emerging markets are driving demand and supply in the agribusiness industry. Parts of Africa and South East Asia (for example countries such as Indonesia and Vietnam) are increasingly important.

There are particular risks in dealing in jurisdictions in the emerging markets, risks around the ability to enforce contracts and to resolve disputes, and in a heightened exposure to bribery and corruption. There are also significant difficulties related to infrastructure and logistics, areas which are underdeveloped in emerging markets.

Given the risks associated with operating in emerging economies and the narrow profit margins in the agribusiness industry, relatively few respondents were enthusiastic about investing large sums to develop their own infrastructure. Even when they were, respondents were concerned that such projects may be difficult to finance, although there are signs that this situation may be improving.

Regulation and subsidies

Regulation may not be an effective way to manage price volatility. (Among respondents, 55 per cent said this would not be desirable; 69 per cent said it would not be achievable.)

However, in certain areas, regulation is an important means of ensuring that markets operate efficiently. Regulation is, for example, important as a means of allowing access to water, underpinning land ownership and affording protection of indigenous peoples.

Respondents appeared wary of the global regulatory environment and resistant to additional regulation.

Food v fuel

There is a potential conflict between the production of food and biofuel. With governments and states looking to meet renewable energy targets and offering subsidies and funding to achieve this, it may be an attractive, profitable option to move into biofuel production.

However, most respondents believe that we should be able to increase food production across the globe and still meet renewable energy targets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.