Growth in Australia's agriculture industry will depend on more new international free trade agreements and more farmers using new technology to increase productivity, says an industry report from Bankwest.
Australia's agricultural sector is particularly set to benefit from a growing middle class in Asia as consumers demand premium-quality produce.
The Bankwest Future of Business: Focus on Agriculture report says brokering free trade agreements (FTAs) with larger countries that import Australian agriculture products can unlock more buyers.
"Recent FTAs with China, Korea and Japan have unlocked new revenue streams for parts of Australia's agriculture sector," Bankwest's general manager of business banking WA, Richard Bator, said.
"Promisingly, FTAs are already being negotiated with Indonesia, the European Union and the UK."
The Bankwest report said that new FTAs are needed to help Australia compete against lower-cost grain producers in the Black Sea region and Brazil.
Mr Bator also said agricultural technology - drones, soil mapping software and driverless tractors - will greatly influence the agriculture sector's future.
"These advances will allow small to medium-sized farms to perform farming operations with lower risk," he said.
The Bankwest report said the agriculture sector will attract more corporate investment as the sector provides diversification against traditional asset classes.
However, similar situations in Canada and the US had shown that family businesses will still be relevant.
Ninety-nine per cent of Australian agricultural businesses are family-owned and occupy 88 per cent of farming land, according to the report.
The Bankwest report said there are increasing opportunities in organic farming in Australia as domestic and foreign consumers seek more organic produce, especially in dairy products, fruit and vegetables, and non-alcoholic beverages.
The organic farming sector's revenue has grown by 7.4 per cent in the last five years.
Bankwest said farmers continue to be challenged by fluctuating commodity prices, potential interest rate hikes, and slowing economic growth in their markets.
But the biggest challenge is still getting enough rain for crops, and pastures for livestock.
