FOREIGN investment into the Western Australian agricultural industry will be severely affected by COVID-19, according to the Perth USAsia Centre.
While the first affects of COVID-19 on the sector were around supply chain interruptions, the industry has now moved into a stage where it's more about the COVID-related recession.
Perth USAsia Centre research director Jeffrey Wilson said on the investment side, in terms of where capital supply comes from, it's predominantly the old world, meaning the United States, United Kingdom and European Union.
"There is this other story of where the supply of capital to Australian agriculture comes from and normally it's from markets that have been absolutely ravaged," Dr Wilson said.
"On the investment side, countries have been really decimated by coronavirus and some of the forecasts there deplorable, we're seeing things like minus 10 per cent GDP in 2020 for places like the US.
"The ability for large investors from those markets to make bets on Australian agriculture in a declining market, when their stock markets and balance sheets have been absolutely obliterated, is going to be next to nothing for the next 12 to 24 months."
There are also concerns about Australia's trading partners, but they are expected to rebound far quicker than the nation's usual investment partners.
Dr Wilson said a lot of the focus was on the markets Australia was exporting to, which certainly have a downside and growth shouldn't be expected.
"The Asian market which we were trading with was growing extremely quickly and they're going to take a pretty significant hit this year, we should expect to see zero growth," he said.
"We have been used to that in Australian agricultural exports as they tend to go up because of demand for food from Asia's middle-class, by a good solid single digit per cents for the past 30 years.
"The expectation is that the rebound will be faster in Asian markets and that has a lot to do with the underlying demographic, these are useful populations with fast growing economies."
Dr Wilson said it was hard to forecast the specific economic impacts of COVID-19 on agriculture in WA.
"The IMS is now doing bi-monthly forecasts that whip around like a rollercoaster, so I don't think anyone can put their hand on their heart and say what the rest of 2020 is going to look like, let alone 2021 or 2022," he said.
"That is hard for industries such as agriculture where there is a long lead time between when you put infrastructure in and make investment decisions to what is then pulled from the market."
