ASX agriculture stocks up over 50pc in 2020, but ‘$100bn by 2030’ goal remains a WIP

ASX agriculture stocks are on average 56 per cent higher than they were 12 months ago – but the sector has some way to go to reach an ambitious goal set in 2017.

The National Farmers Federation (NFF) hopes Australia’s farm production can reach $100 billion by 2030.

If this goal came to fruition, it would represent a 70 per cent output growth within a 12-year period. The key catalyst projected is the adoption of so-called “agtech” solutions.

Is the sector on track?

At the moment it isn’t. Earlier this year the NFF estimated farm output would only reach $84 billion by 2030 at current growth rates.

Yesterday, Australian Parliament’s Agriculture and Water Resources Committee released its latest report into this target.

Rick Wilson, a WA parliamentarian who is also committee chair, said that target was ambitious but achievable – noting the sector’s track record.

“Australian farmers have consistently identified and embraced new technologies and techniques that can improve their businesses,” he said.

“This innovative mindset makes our producers well placed to benefit from the digital technologies that are rapidly becoming central to the process of farming.”

But Wilson also warned exports were more important than anything else.

“The quality of Australian produce is recognised globally, and to take advantage of this reputation we must continually look for opportunities to expand into new markets, as well as seek productivity improvements that allow our producers to remain ahead of the game in competitive international markets,” he said.

How to make it happen

13 recommendations were made to help the agriculture sector – and by extension, the ASX stocks in the trade.

One recommendation is a Productivity Commission inquiry to determine if export regulations were as efficient and effective as possible. The bottom line of most other recommendations was the government should take steps to encourage agtech take-up.

These included:

• Developing a framework for the use of agricultural data
• Starting an Innovation Adoption and extension program to promote the use of agtech solutions
• Encouraging take-up of employment in the sector by high school students as well as migrants

The committee also recommended that the Department of Agriculture should review regulations applying to the growing and processing of low-THC industrial hemp.

This would include the scheduling of industrial hemp products by the TGA and considering how barriers restricting producers from accessing the full value of hemp plants could be overcome.

The top ASX agriculture stocks

However, the sector has inevitably made some progress with the growth seen this year despite COVID-19.

The top stock, which has gained over 500 per cent in 12 months, is Wide Open Agriculture (ASX:WOA). The company has traditionally specialised in “regenerative farming” but in 2020 it has gone further and made forays into the plant-based meat sector this year.

Sitting on gains just over 100 per cent are meat grower and exporter Australian Agricultural Co (ASX:AAC) and hemp grower (and now hemp-based food maker) Australian Primary Hemp (ASX:APH)

Other performers among ASX agriculture stocks include agribusiness Elders (ASX:ELD) and fruit grower Costa Group (ASX:CGC).