Soaring world food prices are highlighting the need for Australia to invest more in agricultural innovation and technology, says the head of diversified agribusiness Futuris Corporation Ltd.
Futuris chief executive Les Wozniczka said the current global concern about the world's inability to meet food demand was a "reality check" and was highlighting the neglect of investment in agriculture in Australia.
"Innovation in this industry is overdue," Mr Wozniczka said in Sydney at an American Chamber of Commerce in Australia event.
Mr Wozniczka said Australian companies need to look to companies in the United States to learn and develop new technologies and responses to market problems.
"So much of what we consider leading edge has emerged from the US.
"US companies promote and seek out innovation and technology."
Mr Wozniczka said genetically modified (GM) crops could be a solution to the global food shortage.
"The facts of life are that if you want to increase food production you either have to increase acreage in production or increase yield.
"Whilst there are a number of avenues to achieve the latter ... genetic modification appears to be having the most significant impact."
He said GM use has grown markedly in the US since 2000.
By adopting GM corn, yields have increased from an average of 137 bushels per acre to more than 150 bushels per acre today in the US, he said.
While acknowledging there were risks with GM crops, such as food contamination and evolution delivering GM tolerant bugs and disease, he said that the cost of not adopting GM technology could be greater.
Mr Wozniczka said food inflation was a positive thing for Australian farmers and for the environment.
"Real food prices had been declining for a number of years," he said.
"Not only had this been impacting on the profitability of farmers but it was also directing investment away from agriculture."
He said real gains now and in the future will assist in restoring the balance.
"Farmer's terms of trade are improving and need to - to recover the increase costs of diesel, fertiliser, chemical, land, water, interest rates and labour and to restore a profit margin sufficient to attract new investment."
He also said that higher food prices were a good thing for the environment.
"Land is simply too valuable.
"Land degradation that has resulted from poor farming practices will decline."
He said Australia has made up for land degradation simply by clearing forests and scrub - "embarrassingly to say".
"Yet we now see the need for land to be used for fossil fuel substitution, carbon capture in addition to traditional uses."
He said Australia was strategically placed globally and relative to Asia to contribute to the solution to this challenge.
"I see an exciting future for Futuris and other companies exposed to the agricultural sector."
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