Australian Vegetable Export in Asian Market: Economic Analysis

The paper discusses recent growth of Australian vegetable export in the Asian market in reference to published news article. It includes economic analysis, demand analysis, Australian Quarantine Protocol, recommendation and conclusion.

Running Head: ECONOMIC ASSIGNMENT
Economic Assignment
Name of the Student
Name of the University
Author note

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Table of Contents
Introduction................................................................................................................................2
Essence of the story....................................................................................................................2
Economic Analysis.....................................................................................................................3
Demand Analysis...................................................................................................................3
Australian Quarantine Protocol..............................................................................................4
Recommendation........................................................................................................................5
Conclusion..................................................................................................................................5
References..................................................................................................................................6

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Introduction
Australia is identified as a major producer and exporter of agricultural product. The
national agricultural sector has a growth rate of 23 percent in the financial year of 2016-17.
The value of country’s farm export has recorded a value of $48 billion. Within this, fisheries
export estimated to be $1.4 billion and forestry export valued around $3 billion
(aginnovators.org.au 2018). The top export of Australian agriculture include livestock
product such as lamb, beef, offal, goat meat and others and cereal grains. The major export
destinations are China, Japan, European Union, United States, India and Indonesia
(ruralbank.com.au 2018). The paper discusses recent growth of Australian vegetable export in
the Asian market in reference to published news article.
Essence of the story
Australian fruit export has grown rapidly in China’s market by almost five times in
the last five years. New opportunity of Australian vegetable export has opened into Asian
market. The growing economies of Asia such as China, Hong Kong, India and Japan have
triggered demand for fruit and vegetables of Australia. The Asian market along with export
market of Middle East and South Korea are the highly paying market for vegetables and fresh
fruits produced by local growers (weeklytimesnow.com.au 2018).
An increased demand for protein and meat has been generated from middle class
group of Asia. The stimulation in demand for vegetables and fresh fruits have brought
significant opportunity to Australian growers. When compared to early 1990s, per capita
consumption of vegetables has increased by 3.6 percent while that of consumption for food
has increased by 12.4 percent every year. The milk and meat consumption has increased by
0.8 percent and 1.5 percent respectively (agriculture.gov.au 2018). Producers of fresh fruit
and nut have benefitted from increased demand from Asian market. The vegetables growers

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however have not experienced same growth of export in Asian market. One factor for this
disparity is that the kind of vegetables produced in Australia does not match with taste and
preferences of Asian people. The biggest obstacle to Australian vegetable export is the
Quarantine Protocol of Australia (George and Gibson 2015). A strict protocol has been
maintained for importation of a number of fruits and vegetables such as table grapes, cherries,
almonds, Tasmanian apples, lettuce, citrus and recently included stone fruit. Australia has
vast production of potatoes and tomatoes. However, the export basket of Australian
vegetables include onions, asparagus, cassava and celery.
Schreurs & Sons, the biggest celery producers in Australia has reported that 15
percent of their production has channeled to Malaysia, Hong Kong, Japan, UAE and
Singapore. The challenge remains to increase production in line with the growing demand.
To meet the growing export demand, federation of national farmers has prepared a blueprint
to make agricultural sector an industry worth nearly $100 billion by 2030. The fourth largest
export group now is horticulture valued approximately $3 billion in 2016
(weeklytimesnow.com.au 2018). The future of agricultural sector depends on improved
access to export market and adaption of production to taste and preference of consumers.
Economic Analysis
Demand Analysis
Demand in economics is defined as the desire or willingness of consumer for a
particular good. There are different factors that influence demand. These factors include
price, income, taste and preferences, price of related products and others. Changes in any of
these factors except price causes a change in demand (Baumol and Blinder 2015). In Asia,
rise of middle class income group plays an important role in increasing demand for fruits and
vegetables. For people belonging to middle income class, a significant share of income is

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spent on fruits and vegetables. Demand therefore has a higher income elasticity for this
group. The middle class people of Asia has increased their demand meat and protein. The
increased demand from Asia has increased export demand of Australian fruit and vegetable
growers.
Figure 1: Effect of increased demand in export market
(Source: as created by Author)
An increase in income of people of Asia increases the demand for fruits and
vegetables. The increase in demand is reflected from the rightward shift of the demand curve
from DD to D1D1 (Mahanty 2014). The domestic demand in Asia has now increased from OQ1
to OQ2. Now given domestic supply, there will be supply shortage at the current market price.
This shortage in turn raises the export demand from Australia.
Australian Quarantine Protocol

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Australia generally enjoys a natural environment that is free from pests and diseases
of humans, plants and animals. This privilege of Australia has benefitted Australian growers
in the export market. The Quarantine protocol in Australia helps to maintain a healthy status
of human, plant and animals (agriculture.gov.au 2018). The effective implementation of
Quarantine protocol enhances welfare by protecting the community from diseases and pests.
The lack of quarantine protocol in Asia acts as the biggest hurdle to Australian vegetable
growers.
Recommendation
Agriculture in Australia plays an important role in stimulating Australian export. The
increased demand for Australian export provides Australian growers significant opportunity
to expand their production (Richardson, Richardson and Shepherd 2016). Farmers however
should focus on improving production to match the growing demand of the Asian market. For
this, the farmers should employ advanced technology to increase their production. The
quarantine protocol restricts use of many pesticides to maintain environment quality. The
protocol should be relaxed for some special cases.
The vegetable producers in Australia should produce vegetables that are aligned with
the taste and preference of Asian people. This will help to change the export composition of
Australia contributing to a sustained growth of agriculture.
Conclusion
The growing demand for fruit and vegetables from Asia has contributed to a growth
of export demand of Australia. The increased demand has mainly derived from the middle
income class of Asia. The fresh fruits growers of Australia have already benefitted from
increased export of fruits. The vegetable growers however need to change their production

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pattern to match the taste and preference in Asian market. The producers should now focus
on increasing production to match increased export demand.
References
Aginnovators.org.au. (2018). Australian agriculture booming, says Deputy PM. [online]
Available at: http://www.aginnovators.org.au/news/australias-booming-ag-sector-grows-23-
year [Accessed 17 Apr. 2018].
Agriculture.gov.au. (2018). Australian Quarantine a shared responsibility. [online] Available
at:http://www.agriculture.gov.au/SiteCollectionDocuments/aqis/about/corporate-docs/nairn/
nairn_report.pdf [Accessed 17 Apr. 2018].
Baumol, W.J. and Blinder, A.S., 2015. Microeconomics: Principles and policy. Cengage
Learning.
George, A.S. and Gibson, N., 2015. Plant life of Western Australia (No. Ed. 2). Rosenberg
Publishing Pty Ltd.
Mahanty, A.K., 2014. Intermediate microeconomics with applications. Academic Press.
Richardson, F.J., Richardson, R.G. and Shepherd, R.C.H., 2016. Weeds of the south-east: an
identification guide for Australia (No. Ed. 3). CSIRO.
Ruralbank.com.au. (2018). Australian Agricultural Trade Performance. [online] Available at:
https://www.ruralbank.com.au/assets/responsive/pdf/publications/trade-report-17.pdf
[Accessed 17 Apr. 2018].
Weeklytimesnow.com.au. (2018). Asia’s export promise. [online] Available at:
https://www.weeklytimesnow.com.au/agribusiness/horticulture/anz-report-australian-

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vegetable-exports-into-asia-to-grow/news-story/19a1a1d55d59375a07f5fdad553b330a
[Accessed 17 Apr. 2018].