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Does productivity pose the next big threat to agriculture?



Rabobank's research report, Unlocking Productivity Growth, highlights the importance of productivity for agriculture at global, national and individual business levels.

With world population and global food demand forecast to skyrocket over the next 35 years, productivity growth has a critical role to play in meeting this increased demand. This involves increasing production, or yield, and improving management of existing food resources to minimise losses and optimise efficiencies along the supply chain.

At the national level productivity growth will be critical to ensure global competitiveness over the coming decades. Rising costs of production have eroded the competitive positions of both Australia and New Zealand in the world market and turned the spotlight to slowing productivity growth in the sector. Reviving this growth will require enabling policy environments and boosting R&D to generate competitive advantages relative to other food and agriculture exporters.

Countries such as the Netherlands have been very successful in driving productivity growth through innovation and value-added processing to create a powerful position as the world's 2nd largest agricultural exporter.

It is at the individual enterprise level however where the rubber really hits the road in terms of innovation. Unlocking productivity growth through new and improved technologies, management practices and business models.

The high-cost production environment has heightened the urgency of improving productivity growth to remain both competitive and profitable. Australian and New Zealand farmers and food producers need to be at the forefront of embracing innovation.

As the productivity challenges mount, so too does the urgency to respond. We believe that focusing on innovation at the global, national and individual enterprise levels will provide the key to unlocking necessary productivity growth in the decades to come. While each element of innovation certainly has value in itself, more often than not in practice a combination of new and improved technologies, management practices and business models is where some of the greatest uplift can be found.