Global Food and Agricultural Business

This document discusses the global food and agricultural business, focusing on land use patterns, externalities and impacts on other economic activities, the current institutional framework, and the potential and risks of ecosystem services markets. It provides valuable insights into the subject and is suitable for students studying related courses.

Running head: GLOBAL FOOD AND AGRICULTURAL BUSINESS
Global food and Agricultural business
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Abstract
The land use patterns in Victoria is classified according to the Australian Valuation Property
Classification Code (AVPCC). Within the VLUIS data, there are 9 primary categories of land
use. The area for conservation within the state is 33.52 % and it is primarily a public owned land.
The remaining part of the land is divided between primary production (55.47 %), sports
recreation and culture (0.18 %), community services (0.33 %), infrastructure (0.82 %), extractive
industry (0.14 %), industrial (0.14 %), commercial (0.11 %), and residential (4.56 %). The
Australian government has set the policies that equally apply to the rural and urban areas and the
public or private entities that are operating in the such regions. The individual and the agencies
must comply with the legislations and the directions. The role of the water corporate is to
implement as well as comply with the governmental policy. The governmental policies are the
procedural, operational and the strategic that are established by the departmental secretaries,
ministers and the Victorian Premier. Water Act 1989 is the major body of law that relates to
water in Victoria. The water act of 1989 promotes the efficient, equitable and orderly use of the
water resources; ensures that the water resources are properly conserved and managed properly
for the sustainable usage and it is sufficient quantity for the other Victorians; maximises the
involvement of the community and in implementing arrangements and making arrangement s
relating to the usage of the management and conservation of the water resources

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Contents
Introduction......................................................................................................................................3
Externalities and impacts on the other economic activities.............................................................6
Current institutional framework......................................................................................................7
The potential and risk for the ecosystem services markets in the region........................................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................12

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Introduction
Victoria is located in the South eastern region of Australia and it is the smallest mainland
state. This area will be used to further the various types of discussion on the land use. Land use
can be described as the collective term that includes the biophysical surface cover of the land,
activity, and ownership. Land use classification generally includes the activity on the usage of
land for industrial/residential purpose, environmental uses, agricultural uses. A consistent spatial
unit and classification system is used to create land use information which is called the Victorian
Land Use Information System (VLUIS). The VLUIS include the all the aspects of land use by
describing it through the cover type (cereal crop of water), property type (dairy farm or
warehouse), and ownership type (privately owned or publicly owned) (figure 1)
(Vro.agriculture.vic.gov.au 2019).

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Figure 1: Victorian Land Information System land tenure map [source:
Vro.agriculture.vic.gov.au 2019]
The Victorian Land Use Information System (VLUIS) is a typical land use system that
collates the information for the state of Victoria. The VLUIS provides the land cover (crop type),
and land use (cropping industry) and the land use (private land) for each of the parcel of land.
Land tenure- Half of the Victoria is an agricultural land (55 percent), and 33 percent is the state
of the public land that includes the water supply catchments, forests, State and National Parks,
and public land. Land use- the land use patterns in Victoria is classified according to the
Australian Valuation Property Classification Code (AVPCC). Within the VLUIS data, there are 9
primary categories of land use. The area for conservation within the state is 33.52 percent and it
is primarily a public owned land. The remaining part of the land is divided between primary

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production (55.47 percent), sports recreation and culture (0.18 percent), community services
(0.33 percent), infrastructure (0.82 percent), extractive industry (0.14 percent), industrial (0.14
percent), commercial (0.11 percent), and residential (4.56 percent) (figure 2). It is important to
mention that the primary production land has certain principle uses and it includes animal
production or aquaculture, forestry, and agriculture (Vro.agriculture.vic.gov.au 2019).
Figure 2: Victorian Land Information System land use map [source: Vro.agriculture.vic.gov.au
2019]
Land cover is differentiated into two major groups and the it is identified by the broad
scale imagery. The woody vegetation in the map includes the large trees like the softwood
plantations, hardwood, remnant vegetation, large trees as the native forests, and the percentage of

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the coverage is 42.22 percent. Victoria has the largest proportion, while the grassland/pastures
class designates the herbaceous ground cover and it present almost throughout the year. The
percentage totals around 31.15 percent of the entire Victoria state. The cereal that are grown in
the region include oats, barley, wheat as the dominant crop in Victoria
(Vro.agriculture.vic.gov.au 2019).
Externalities and impacts on the other economic activities
The rural areas of the Victoria accommodate a range of activities like the commercial
uses, residential uses and the farming activities. Furthermore, it consists of the state’s large
amount of natural resources like the water, minerals, native vegetation. The rural areas also
provide the vital resources for the timber production, tourism and recreation (planning.vic.gov.au
2019). It is important to mention that the agriculture provides the commodities like the fuel, fibre
feed and food that can bring both the negative and positive impacts on the environment like the
soil quality, water and the biodiversity. Farming practices that facilitate with the agro-
environmental public goods brings a wide range of changes of in the methods of production and
land usage that are promoted by the farmers themselves (Pannell and Roberts 2015). One of the
major issue that comes forth is the increase in salinity in the water quality part. In order to
control salinity, the dominant practice of the management is to restore the water balance by
planting trees that are perennial in nature. This will lead to increased amount of salt adaptability
by growing more salt tolerant species. While in certain cases the drainage is used and it is
associated with the issues of disposing off the drainage water. However, it is important to
mention that the process of planting perennial trees lead to the issues of negative externalities
like reducing the quantity of fresh water so that water can be replenished from the rivers. For the

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purpose of managing the water induced salinity, management of the shallow water table, and
improved irrigation management through the process of ground water pumping. It is important to
mention that in case of the dryland salinity, the economics at the farm level addresses the
problems pertaining to the adverse scenarios (Pannell and Roberts 2015). It is important to note
that the value of the externality that are generated at the farms is small, while the technical
difficulties that are associated with the reduction in the externality if exists is often high.
Therefore, there are situations in which the farm level costs pertaining to reducing the dryland
salinity is high and it also exceeds the external benefits. While, in these instances, there occurs
no market failure and it does not justify the market responses. The Agro-environmental policies
and the concerns in the Australia differs from the OECD countries. It is important to note that the
agriculture has been operating for a relatively short period of time and the and it is highly in
unsubsidised condition and it is highly export oriented. The benefits pertaining to the costs and
the benefits due to environmental interventions are highly heterogeneous. The State government
of Victoria and the Australian government participated in the in the Gipsylake taskforce, the
research was conducted with the help of the researchers and both the governments jointly
participated in the same. Thus, it can be said the other economic activities do get impacted due to
the unsubsidized nature of the agro-economic governance of the Australian government (Pannell
and Roberts 2015).
Current institutional framework
The Australian government has set the policies that equally apply to the rural and urban
areas and the public or private entities that are operating in the such regions. The individual and
the agencies must comply with the legislations and the directions. The role of the water corporate
is to implement as well as comply with the governmental policy. The governmental policies are

8GLOBAL FOOD AND AGRICULTURAL BUSINESS
the procedural, operational and the strategic that are established by the departmental secretaries,
ministers and the Victorian Premier (water.vic.gov.au 2019.). The minister for water is
responsible for the performance of the water corporation. Therefore, in order to ensure the
ministerial responsibilities are met, the minister regularly reviews the corporate’s compliance
with the Victorian Government Policy and with the provisions of the water Act of 1989. The key
regulator within this part are the ministers that are assisted by the Department of Environment.
Land, Water and Planning for proper administration of the water industry. It is important to note
that the regulation of the financial operation that are present in the water corporations are done
by the Treasurer. While the Department of Treasury and Finance is explicitly responsible for the
setting of the business cases, corporate plans, reviewing the annual plans, and financial report
guidelines. In actual practice, the Treasurer works along with the Minister of Water so as to
ensure that the water corporations are operating effectively for the interests of the public
(water.vic.gov.au 2019.).
Government legislation- Water Act 1989 is the major body of law that relates to water in
Victoria. The water act of 1989 promotes the efficient, equitable and orderly use of the water
resources; ensures that the water resources are properly conserved and managed properly for the
sustainable usage and it is sufficient quantity for the other Victorians; maximises the
involvement of the community and in implementing arrangements and making arrangement s
relating to the usage of the management and conservation of the water resources. The framework
of the Act includes: the management and allocation of water resources of the state; obligations,
rights and functions of the state water businesses (delwp.vic.gov.au 2019). The water
corporations must regard the objectives and the legislated principles of the Act pertaining to the
performance of their own functions. These include: the business objectives require the water

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corporations to act in a consistent way for the commercial practice; sustainable management
principles the incorporates the environmental concepts that are recognized internationally and the
main job is to manage the water resources for the purpose of sustainable use and that will benefit
the future and the present generations. Thus, balancing the sustainable management principles
and the obligations are the main objectives of the water corporations for each of the water
corporations and the board. The Act requires that the each of the water corporation board will be
reporting the Minister of Water through the Department of Environment. Land, Water and
Planning. In turn the minister will be reporting to the Parliament for enhancing the performance
of each of the water corporation (delwp.vic.gov.au 2019).
The potential and risk for the ecosystem services markets in the region
Potential for the ecosystem services market- PES or the payment for the ecosystem
services is an umbrella concept that brings forth the economic arrangement and the conservation
of the ecosystem services. The state government of Victoria is committed towards the promoting
the emergence of the PES service or the PES scheme. The Natural Choice: securing the value of
nature across the different society. The PES scheme provides the opportunity with the resource
management or specific land management actions that have the potential to raise the supply in a
particular service; there is a high demand for the services and the provision are financially viable
for the buyers are look promising; it becomes clear that whose actions have the larger capacity to
increase in the supply (Rieb et al.2017). The PES scheme provides a win win situation for both
the sellers and the buyers. From the perspective of a buyer, the PES is considered to be a positive
thing and it says that the ones that are associated with the alternative means will be securing the
desired service. For example, it is always less expensive to pay to the water utility for the
purpose of the improved catchment management than to the additional water treatment.

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Furthermore, the PES scheme will also be a positive from the perspective of a seller if the
payment received covers the value of the returns that have foregone due to the result of the
implementation of the agreed intervention. For example, a farmer will be more than willing to
create ponds for the purpose of extra water storage, but only if that farmer is going to receive the
costs associated with the loss of the agricultural production (Jellinek et al. 2019).
Risks for ecosystem service market purchasers- the risk associated with the PES scheme
will be critical and it will be including the following: increasing the ecosystem services on one
region will led to the increase in the pressure on the other ecosystem services elsewhere. For
example, the payments for the one portion of the land will provide the income that are needed to
initiate the harmful activities on adjacent or an another land and it might get intensified due to
the reduced output coming from the area that are covered under the PES scheme (Alamgir, Pert
and Turton 2014). There might be a risk coming from the perception of being unfair. For
example, to increase the provision of the additional ecosystem services, funds that are available
through the PES scheme will be used on to another land so that the land resources will have the
potential to deliver an additional amount of resources. This could mean that the payments will be
made to the resource and the land managers that have not managed the resources or the land in
an environment sensitive manner for the accusation of unfairness (Cbd.int 2019).
Risks arising from the ecosystem service market for the providers- there can be additional
amount of risks emanating from the perverse incentives. For example, the resource or the land
managers that are paid to requester the carbon might plant non-native species that have faster
rate of carbon sequestration in comparison to the indigenous species. The broad and wide
swathes of the land having the non-native species or the vegetation will have a detrimental

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impact on the biodiversity and furthermore, it will contribute more towards fire risk, disease
transmission, acidification (Cbd.int 2019).
Conclusion
From the above discussion it can be concluded that the land use pattern of Victoria is
more inclined towards the agriculture. The agricultural services in the rural areas has increased
the rates of water depletion and increased amount of salinity during the summer season. The
increased amount of salinity has also increased the rates of the other economic activities. The
other economic activities are mainly affected due to the non-subsidized nature of the Australian
agricultural system. It is important to mention that the high amount of the salinity has affected
the soil of the agricultural field and due to the additional amount of funds are always spent to
reroute the river water for active agriculture. Thus, the ecosystem service in the region provides
the PES scheme. This scheme provides the opportunity with the resource management or specific
land management actions that have the potential to raise the supply in a particular service; there
is a high demand for the services and the provision are financially viable for the buyers are look
promising; it becomes clear that whose actions have the larger capacity to increase in the supply.

12GLOBAL FOOD AND AGRICULTURAL BUSINESS
Reference
Alamgir, M., Pert, P.L. and Turton, S.M., 2014. A review of ecosystem services research in
Australia reveals a gap in integrating climate change and impacts on ecosystem services.
International Journal of Biodiversity Science, Ecosystem Services & Management, 10(2),
pp.112-127.
Cbd.int, 2019. May 2013 Payments for Ecosystem Services: A Best Practice Guide. [online]
Cbd.int. Available at: https://www.cbd.int/financial/pes/unitedkingdom-bestpractice.pdf
[Accessed 16 Mar. 2019].
delwp.vic.gov.au, 2019. Governing the Victorian water industry. [online] delwp.vic.gov.au.
Available at: https://www2.delwp.vic.gov.au/__data/assets/pdf_file/0023/78026/Water-
governance-guide-D7.pdf [Accessed 16 Mar. 2019].
Jellinek, S., Wilson, K.A., Hagger, V., Mumaw, L., Cooke, B., Guerrero, A.M., Erickson, T.E.,
Zamin, T., Waryszak, P. and Standish, R.J., 2019. Integrating diverse social and ecological
motivations to achieve landscape restoration. Journal of Applied Ecology, 56(1), pp.246-252.
Pannell, D. and A. Roberts, 2015. “Public goods and externalities: agri-environmental policy
measures in Australia”, OECD Food, Agriculture and Fisheries Papers, No. 80, OECD
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planning.vic.gov.au, 2019. Applying the Rural Zones. [online] planning.vic.gov.au. Available at:
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Rural-Zones.doc [Accessed 16 Mar. 2019].

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Rieb, J.T., Chaplin-Kramer, R., Daily, G.C., Armsworth, P.R., Böhning-Gaese, K., Bonn, A.,
Cumming, G.S., Eigenbrod, F., Grimm, V., Jackson, B.M. and Marques, A., 2017. When, where,
and how nature matters for ecosystem services: challenges for the next generation of ecosystem
service models. BioScience, 67(9), pp.820-833.
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