Australian agriculture contributes approximately 3 per cent of the country’s GDP and employs around 4 per cent of the total workforce directly. Even though the agricultural sector’s GDP is small, raw, and unprocessed, agricultural products contribute almost a quarter of the country’s total export earnings every year. The top 5 agricultural products in Australia include wheat, coarse grains (such as barley, oats, sorghum, maize, and triticale), rice, oilseeds (like canola, sunflowers, soybeans, and peanuts), gain legumes (such as lupins and chick peas). Other agricultural produce include sugarcane, cotton, fruits, grapes, tobacco, and vegetables whereas the prime livestock production includes sheep, beef, pork, poultry, and dairy products.
Agriculture companies in Australia contributes immensely to the country’s economy but interventions by foreign government policies in global agricultural trade impact Australian farmers negatively. Also, these trade-distorting practices can obstruct global food security and jeopardize the lives of farmers in developing countries.
In this blog, we have discussed the state of agricultural trade in Australia.
What does Australia Export in Agriculture?
Currently, Australia exports more agricultural products than imports. 65% of total Agricultural produce is sent overseas. “The value of agricultural exports is forecast to reach a record of over $72 billion in 2022-23, driven by crop exports”.
Australia primarily exports beef, wheat, meat (excluding beef), wool, alcoholic beverages, sugars, molasses, honey, dairy, vegetables, live animals, fruits, and nuts.
The largest importer of Australian products is China, followed by Japan, the United States, the Republic of Korea, Indonesia, India, New Zealand, Vietnam, Hong Kong, and Singapore.
Major Challenges of the Australian Agricultural Sector
Australia is one of the smallest and driest continents on the planet other than Antarctica. The country’s sparse population, strong intellectual knowledge, and stable economy help develop a reliable food source for other nations. This comes not only with opportunities but also substantial challenges.
- Water Challenge: Australian agriculture depends immensely on the utilisation of water and innovations that enhance its efficient use. Large algae bloom, excessive heat, and low water volumes in the river system are affecting the lives of fish in the lower Murray-Darling. Hence, it is essential to rethink the country’s approach to water management to ensure a nation of sustainable food production.
- Ageing Farmers and Diversity: The average age of an Australian farmer is 56, provided that the average age of farmers in Australia is 39 according to the Australian Bureau of Statistics. This age gap of 17-years represents a significantly ageing workforce. Besides, most farmers are men and have been farming for about 35 years. Years of drought and the associated stress related to farms, high debt and its impact on families have made youth less inclined to take on family farms. The younger generation of the country’s rural areas sees cities as potentially more prosperous and less stressful compared to their parents’ lives in the rural areas. Due to this shift, the risk of losing skills gained on family farms, unique knowledge and land management skills arise. To secure Australia’s agricultural industry, more efforts need to be made to encourage women to lead farming operations, ensuring mitigating the pay gap. This will help farmers pass on their family farms to their daughters instead of their sons, thereby maintaining a sustainable farming future.
- Innovation, Investment, and Government Expenditure: Australian farmers face export issues such as tariffs and other trade barriers. Despite that, they manage to compete, exporting 65% of the country’s food production, making Australian farmers rank among the most efficient agribusiness owners in the world. Experts suggest that the country’s agricultural sector needs a greater and more fearless government that would spend on innovation and other modern agricultural technology. This will not only help farmers locally but the produce can be exported to enhance food production globally. At the same time, it is essential to channel government expenditure on agriculture into the correct innovations that will support the affluence of Australia’s agricultural sector.
How is Australia Reforming Agricultural Trade Policy?
To enhance the country’s food security without impacting the livelihoods of Australian farmers, the government is taking up major agricultural trade policy reform.
- Domestic Initiatives: Since the 1970s, Australia has reduced its own tariffs and other trade-distorting protections significantly. The WTO states that Australia’s simple average applied tariff on agriculture is only 12%. Low tariffs and low subsidies not only promote competition but also increase productivity, allowing farmers to provide superior quality products globally. These progressive trade policy reforms have made Australia one of the most efficient agricultural producers in the world.
- Bilateral, Regional, and Plurilateral Initiatives: These agreements help enhance the access of Australian exporters to lucrative markets abroad. At the same time, negotiations on regional agreements like the ASEAN-Australia-New Zealand Free Trade Agreement and the Trans-Pacific Partnership help improve the access Australian exporters have to global markets.
- Global Initiatives: It is only through the WTO that the challenges of government subsidies are addressed globally; wherein, Australia is insistent on having a free, fair, market-oriented agricultural trading system. Teaming up with other Cairns Group members, the Australian government shares information and develops WTO negotiating positions that influence global agricultural trade reform. “The Australian permanent Mission to the WTO in Geneva has developed a calculator that allows countries to quickly and easily calculate the impact of proposed domestic support reforms”. This calculator helps negotiators and policymakers assess trade-distorting support measures and formulate reform models suitable for adoption.
For a deeper insight into Australia’s agricultural trade, browse through the KG2 Australia website or get in touch with us. Our largest independent farmer database will help you get a clear picture of the agricultural sector of the country and guide you if you are new to agribusiness.