Economics for Business.

HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HI5003 Economics for Business Assessment Details and Submission Guidelines Trimester Trimester 2 2019 Unit Code HI5003 Unit Title Economics for Business Assessment Type Written report and presentation Assessment Title Group assignment Purpose of the assessment (with ULO Mapping) Students are required to work in groups to analyse an industry and its relevant issue then apply their knowledge in the unit to write a report and make a presentation (Learning Outcomes 1, 2, 3, 5). See Assignment Specifications for detailed requirements Weight 40% of the total assessments Total Marks 40 Word limit Not more than 2500 words Due Date 5pm Friday of Week 10 for Normal Mode classes, of Week 6 (for Block Mode 1 classes) & of Week 10 (for Block Mode 2 classes). Submission Guidelines • All work must be submitted on Blackboard by the due date along with a completed Assignment Cover Page. • The assignment must be in MS Word format, single spacing, 12-pt Arial

ECONOMICS FOR BUSINESS
Name of the Student
Name of the University
Course ID

Introduction
■ Agriculture plays an important role in Australia’s economic development
■ sheep and wheat continues to grow even in the 21st century
■ 6 percent of available land in Australia is suitable for producing pasture and
crops
■ 60 percent of the land is suitable for cattle grazing
■ Production depends on climatic condition
■ Vulnerable to extreme climatic condition
■ Drought defines a natural calamity (lack of rainfall)
■ Hot dry summer in Australia
■ Affects agricultural industry and the overall economy

Background of the industry
■ one vital sector of the Australian economy
■ Not only supplies food
■ Contribution to export
■ 14 percent of total goods and service export
■ GDP share 2.7 percent
■ Employment share 2.5 percent
■ climatic condition, water, soil and market
■ Cropping, horticulture and livestock Figure 1: Selected contribution of
agriculture

Background of the industry
■ Increasing trend in value
■ Increased by almost 34 percent in real terms.
■ Different drivers of output growth
■ For cropping volume growth increased
■ For livestock, real price increases
■ Variation within the industry
■ Different growth pattern for dairy sector
■ Pattern varies in horticulture and grain sectors.
Figure 2: Value of production in
agriculture, fisheries and forestry by
commodity during 2017-18s

Market structure of agriculture
■ Four main types of market
■ are perfect competition, monopoly, monopolistic competition and
oligopoly.
■ Agricultural market resembles to perfect competition
■ Have features similar to perfect competition
■ Perfectly competitive market
■ Large number of buyers
■ Large number of sellers
■ Homogenous product

Market structure of agriculture
■ Agricultural industry
■ Large number of firms
■ Supply basic necessity to large number of buyers
■ Very small market share to individual
■ Standardized or homogenous product
■ No scope for differentiation
■ Same price is charged

Recent drought in Australia
■ The hot climatic condition in summer in Australia
■ Eroded moisture from the soil
■ Recent drought occurred in 2018
■ The extreme heat however has made the weather condition worse
■ NSW, Northern Territory, South Australia, Western Australia
■ Sufficient rainfall in northern state
■ Failed to escape from overall dry state
■ Result of weak and less frequent frontal system

Recent drought in Australia
■ Experienced a recorded warm summer
■ Extreme heat in December and January
■ Intensified the impact of drought
■ No hope for improvement in climatic condition
■ Depletion of water storages
■ Severe decline in water storage
■ Disruption in agricultural production
■ Impacted both grassy agriculture and livestock
Figure 3: water storage in states
and territories of Australia

Impact of drought on
agricultural production
■ Interruption in production
■ Expected to decline by 23 percent
■ Below the 20 year average
■ winter crops is forecasted to be declined by around 65 percent
■ Shortage at national level
■ Slaughter of sheep and cattle has remained almost same
■ Increase in price of livestock
■ Number of cattle are likely to decline

Impact of drought on agricultural
production
■ Adverse impact of production
■ Overall value declined to $58 billion
■ Compared to $63 billion in 2016
■ 2% decline in overall production
■ Milk and wool have particularly been affected
■ Decline in average income of farmers
■ Increases the demand for substitute products such as fodder and
gains
■ Average income has declined to $93, 000 from $160,900 in 2017-18

Impact of drought on agricultural
production
Figure 4: Demand and supply analysis of
agricultural market

Impact on Australian
economy
■ Significant contributor to the economy
■ Poor performance affects overall economy
■ Export earnings to decline by around 4.5 percent
■ Contraction in export volume of beef, lamb, wool and cotton
■ Exported livestock will decrease by 11 percent
■ Significant increase in import of processed stock feed
■ Forced to import grain first time since 2007

Impact on Australian economy
■ Depreciation of Australian dollar
■ Lower export and higher import
■ Worsens trade balance
■ Lower the GDP of Australia by $12 billion
■ NSW and part of Queensland are drought declared
■ Could lower GDP by 0.5 percent to 0.75 percent
■ edge off Australia’s growth.

Impact on Australian economy
Figure 5: Impact of drought on overall
economy

Government Policy
■ 2018-19 drought in Australia
■ Adversely affect agriculture and overall economy
■ Drought reform policies
■ A long term reform policy
■ Proper risk management
■ Convey appropriate information
■ Research and development is needed
■ Ensure a stable income and reduce vulnerability

Conclusion
■ Agriculture: Important sector
■ Contribute to GDP, employment and export earning
■ Expansion over the past 20 years
■ Perfectly competitive market structure
■ Recent drought in 2018-19
■ Water shortage
■ Decline in agricultural production
■ Decline in export

References
■ Anderson, W.K., Stephens, D. and Siddique, K.H., 2016. Dryland agriculture in Australia:
experiences and innovations. In Innovations in Dryland Agriculture (pp. 299-319). Springer, Cham.
■ Baumol, W.J. and Blinder, A.S., 2015. Microeconomics: Principles and policy. Nelson Education.
■ Bedo, S. 2019. It’s the worst drought in 400 years. Here’s why. [online] NewsComAu. Available at:
https://www.news.com.au/technology/environment/climate-change/cost-of-hay-to-feed-animals-
sending-farmers-broke/news-story/013ef510afc617d4d329722fc2f3ad8a [Accessed 16 Sep. 2019].
■ Conyers, M., van der Rijt, V., Oates, A., Poile, G., Kirkegaard, J. and Kirkby, C., 2019. The strategic
use of minimum tillage within conservation agriculture in southern New South Wales, Australia. Soil
and Tillage Research, 193, pp.17-26.
■ Cowell, F., 2018. Microeconomics: principles and analysis. Oxford University Press.
■ Doyle, K. 2019. State of the drought: Dams are empty and NSW is drowning in dust. [online] ABC
News. Available at: https://www.abc.net.au/news/2019-03-12/state-of-the-drought-is-not-good/
10876716 [Accessed 15 Sep. 2019].
■ Estrela, T. and Sancho, T.A., 2016. Drought management policies in Spain and the European Union:
from traditional emergency actions to Drought Management Plans. Water Policy, 18(S2), pp.153-
176.

References
■ Farooq, M. and Siddique, K.H. eds., 2014. Conservation agriculture. Springer.
■ Goodwin, N., Harris, J.M., Nelson, J.A., Roach, B. and Torras, M., 2015. Macroeconomics in context.
Routledge.
■ Hine, R.C., Ingersent, K.A. and Rayner, A.J. eds., 2016. The reform of the common agricultural policy.
Springer.
■ Jasper, C. and Sullivan, K. (2019). Drought drags down Australia's agricultural exports, production.
[online] ABC News. Available at: https://www.abc.net.au/news/2019-06-18/abares-commodity-
outlook-drought-drags-down-exports/11219206 [Accessed 16 Sep. 2019].
■ Reuters.com 2019. Farming impact of Australia's worst drought in living memory. [online] Available
at: https://www.reuters.com/article/us-australia-drought-impact-graphic/farming-impact-of-australias-
worst-drought-in-living-memory-idUSKBN1KR060 [Accessed 16 Sep. 2019].
■ Sarker, A., Bornman, J. and Marinova, D., 2019. A framework for integrating agriculture in urban
sustainability in Australia. Urban Science, 3(2), pp.1-16.
■ Sullivan, K. 2019. Billions wiped from Australian farm production as drought digs in. [online] ABC
Rural. Available at: https://www.abc.net.au/news/rural/2019-03-05/value-of-australian-farm-
production-drops-abares-figures/10867294 [Accessed 16 Sep. 2019].
■ Tanago, I.G., Urquijo, J., Blauhut, V., Villarroya, F. and De Stefano, L., 2016. Learning from experience:
a systematic review of assessments of vulnerability to drought. Natural Hazards, 80(2), pp.951-973.

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