Growth in Australian Agricultural Sector for Export Market

This study focuses on the growth in the Australian agricultural sector for the export market. It discusses the role played by the Australian government and the commission in the growth of this nation’s agricultural sector. Economic concepts and theories used for presenting the issue are also explained. Furthermore, recommendations to the policymakers on the actions to be taken for this issue are also provided.

Running head: ECONOMICS FOR BUSINESS
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Table of contents
Introduction......................................................................................................................................2
Introduction of the issue and Australian government interest in it..................................................2
Economic concepts and theories used for presenting the issue.......................................................3
Recommendations to the policyholders about this issue.................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
The present study focuses on the growth in the Australian agricultural sector for the
export market. Historically, the agricultural sector plays a vital role in the growth of the
Australian economy. This sector contributes to near about 12% share of the GDP (Gross
Domestic Product) of this country (Arena 2016). This sector accounts for a quarter of this
nation’s output and also between 70% and 80% of the Australia’s exports. The agricultural
export market of Australia has become diverse in the recent decades with less dependence on the
traditional commodities and more dependence on the processed agricultural commodities. This
role played by the Australian government and the commission in growth of this nation’s
agricultural sector is also discussed in this report. This study is further analyzed with the help of
economic concepts and theories. Furthermore, recommendations to the policymakers on the
actions to be taken for this issue are also explained in this paper.
Introduction of the issue and Australian government interest in it
This nation exports about two-third of its total agricultural production yearly that
accounts for near about 15 per cent of the value of this country’s merchandise exports.
Moreover, agricultural exports generally face tariffs in this nation’s export markets that are
considerably higher than that imposed on the non-agricultural products (Evans and Honkapohja
2012). Australia’s agricultural trade is also affected by huge range of non-technical as well as
technical non-tariff measures (NTMs) including their government policy interventions and
regulations. However, the present issue is that the agriculture exports of this nation are losing its
market share. The Australian government as well as commission takes main interest in the
enhancing the growth of Australian agriculture for the export market (Taussig 2013). The

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policyholders of Australia take interest in increasing agricultural productivity since it contributes
to enhance nation’s welfare and long terms income. They adopt certain program for attaining the
target without distorting the export market. The policy makers of this nation actively work to
decrease distortions in global agricultural trade for providing Australian exporters better
accessibility in the export market. The agricultural trade policies adopted by the Australian
government is to motivate the nations to reduce trade distortions for creating better as well as
open functioning environment of trading (McLean 2012). The Australian government as well as
the commission establishes R&D (Research and Development) corporations for this agricultural
sector. However, the policymaker’s contribution to this R&D bodies facilitates them to research
about new methods of farming. This is turn improves adaption to climate change and total
agricultural productivity. Thus, the Australian government is focusing on the agriculture
productivity gains in order to enhance the export market.
Economic concepts and theories used for presenting the issue
Near about two third of the agricultural production of this nation is exported, although for
some products such as cotton, grains, wool exports mainly accounts for about 90% of the total
production (Fuglie et al. 2012). Australian agriculture has been highly dependent on the food
export, thereby 58% of the total goods is sold globally. These exports generate about 70% of the
total value of the agricultural sector. Agribusinesses and the Australian farmers are highly
dependent on the export markets for selling their total produce. This dependence on exports
needs continuous production and increase in value. Reforms in Australia’s agricultural sector
such as- tariff reduction, removal of subsidies and protection measures has led to growth in this
sector.

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Tariff indicates tax on the imports or exports among the sovereign states. The rising
export dependence of this nation indicates that the farmers are highly vulnerable to the markets
distorted by tariff as well as non- tariff barriers (Sloman, Norris and Garrett 2013). Barriers in
tariff also sternly limit the accessibility of market for the agricultural exporters of Australia
(Mankiw 2014). High costs of tariff often make the price of Australian products out of
international consumers reach. For this rise in barriers to these increased exports, the Australian
government makes trade agreements with their vital partners for gradually reducing tariff barriers
on this nation’s product exports. This trading agreements permits compromise between this
country’s trade targets of enhancing export of valued products without intruding on export
partners product security policies. In fact, weak Australian dollar also provides benefits to the
exporters in this market (Rios, McConnell. and Brue 2013). This in turn improves the business
conditions competing with imports and hence boosts affordability of these nations’ products for
overseas customers. Thus, all these measures help to enhance growth in agricultural sector of this
nation, leading to improvement in export market. Furthermore, imposition of less restriction on
foreign investment in agriculture also leads to growth in agricultural sector.

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Figure1: Farm products as share of exports
Source: (McLean 2012)
Figure 2: Value of agrifood products in Australia
Source: (Fuglie, Wang and Ball 2012)

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Figure 3: Agriculture products accounted for this nation exports
Source: (McLean 2012)
Recommendations to the policyholders about this issue
Since the Australian government plays important role in enhancing the growth of agricultural
sector, few recommendations are provided to the policymakers on the actions to be taken for
improving export market:
 The Australian trade representatives should negotiate considerable reduction of tariff for
the processors to reach the developing markets in order to increase growth in agricultural
sector for developing export market
 Policymakers must also focus on increasing research and development expenditure in
response to the issue affecting agriculture sector of this nation
 The policyholders should also develop integrated as well as intensified investment plan
for increasing resilience and total productivity of agriculture sector

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Conclusion
From the above study, it can be concluded that growth in agricultural sector of Australia
also leads to improvement in the export market. recent evidences reflects that the adoption of
trade policies by the Australian government leads to improvement in the export markets. Even
the opportunities for this nation’s farming should also be matched by commitments as well as
exports for facilitating trade and agriculture growth. In addition to this, the Australian
government has also supported their farmers to manage risk in this agriculture market, which in
turn helps to enhance productivity in agriculture. Hence, this increase in agriculture productivity
contributes to over $50 million in exports of goods in the year 2016-2017. Hence, it is evident
from recent facts that agriculture sector has been performing strongly over the past few decades.

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References
Arena, R., 2016. The economics of Alfred Marshall: revisiting Marshall's legacy. Springer.
Evans, G.W. and Honkapohja, S., 2012. Learning and expectations in macroeconomics.
Princeton University Press.
Fuglie, K.O., Wang, S.L. and Ball, V.E. eds., 2012. Productivity growth in agriculture: an
international perspective. CABI.
Mankiw, N.G., 2014. Principles of macroeconomics. Cengage Learning.
McLean, I.W., 2012. Why Australia prospered: The shifting sources of economic growth.
Princeton University Press.
Rios, M.C., McConnell, C.R. and Brue, S.L., 2013. Economics: Principles, problems, and
policies. McGraw-Hill.
Sloman, J., Norris, K. and Garrett, D., 2013. Principles of economics. Pearson Higher Education
AU.
Taussig, F.W., 2013. Principles of economics (Vol. 2). Cosimo, Inc..