Industry Reforms in Agriculture Industry in Australia - PDF

Australia’s Agriculture reforms 1
ECONOMIC AND INTERNATIONAL TRADE
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Australia’s Agriculture reforms 2
INDUSTRY REFORMS IN AGRICULTURE INDUSTRY IN AUSTRALIA DURING
LAST 5 YEARS AND ITS IMPACT ON THE GROWTH
Introduction
Notably, the Australian agriculture industry is responsible for 2.3 percent of the country’s
gross domestic product. However, its declining relevance is due to the massive growth in the
manufacturing and service industry(Batt 2015).The agriculture sector in Australia is a major
employment sector for the rural population in the country thus its employment and revenue
importance to the country. According to ABRES statistics, the Australian agriculture sector made
a massive economic contribution towards the growth of the Australian gross domestic
Product .Notably, agriculture was responsible for the 1.9 % GDP growth levels. Agriculture is
estimated to have contributed sixty two billion US dollars in the year 2016-2017 thus the
assertion that the Australian agricultural sector is a major industry player. Australian has secured
a rather larger Chinese market for its products. The decline in performance in the sector can also
be attributed to climatic challenges and ageing skilled labor for the sector thereby prompting
various reforms in the sector. The reforms have brought about productivity, increased revenue
and production, competitiveness and innovation in the agricultural sector. However, there are
negative consequences of subsidies and harsh climatic conditions on the agricultural industry
performance.
Moreover, the Australian agriculture sector is being exposed to the consumer prices,
preferences for efficiency purposes (Advancing Agriculture…N .d).Under this initiative farmers

Australia’s Agriculture reforms 3
are exposed to the prices of the produce they deliver to the markets. This exposure to the prices
is aimed at enabling the farmers respond to the consumer preferences and in the process achieve
efficiency in the agricultural market of Australia. Following this dynamism, agricultural produce
of Australian farmers is being inclined to suit the specific consumer needs and preferences which
wasn’t possible prior to the exposure Noteworthy, Agriculture is partly responsible for reducing
the high unemployment rates in the country (Trading Economics 2017).In the year 2017,
agriculture was responsible for contributing 2.58 percent of the overall employment rate in the
country. The mere existence of an active agricultural sector in Australia has created massive
employment opportunities. These employment opportunities have improved the economic
livelihoods of most of the employed Australian population .The employment opportunities have
grown the Australian economy and increased its revenue through the skilled and unskilled labor
services provided in the agriculture sector.
(Trading economics 2017)
Further, Farmers are able to get a first-hand account of the price response to their
produce. In return, farmers are motivated to include specific customer likings so as to fetch better

Australia’s Agriculture reforms 4
prices thus boosting the productivity and efficiency levels of the agricultural industry in
Australia. Productivity growth levels and embracing of technology in farming is responsible for
the economic gains in agriculture in the year 2013(Kingswell 2013).In addition to productivity
growth rates, Western Australian farmers have adapted to wheat cropping which has proved
successful over the year. Wheat is among Australia’s top export product which is resilient in
nature thus sustaining farming enterprises. Also, the Australian agriculture sector is bound to
experience significant reductions in trade-distorting protectionism, inclusive of tariffs. In
addition, the agricultural sector is likely to be governed with newer free trade arrangements
(Vanderneut 2018).The current minister for Agriculture in Australia is committed to the
pursuance of newer free trade partnerships with newer markets. This change will expand the
market for the Australian agricultural produce hence better revenue for the country and
employment.
Noteworthy, various agriculture based partnerships are being pursued by the Australian
government on behalf of its farmers. Such potential agreements include the GCC, Pacific-
Alliance FTA which have the potential to increase the market for Australia’s agricultural
produce. In the event that the alliance s are agree upon, the Australian agricultural sector will be
exposed to cheaper tariffs on Cheese and beef in Japan. Usually protectionist barriers of trade has
made Australian farmers incur additional costs in terms of tariffs, customs which has eventually
cut into their profit margins. However, with the possibility of cheaper tariffs, farmers in Australia
are likely to expand their operations thereby leading to increases in their revenue .Usually, higher
tariffs discourage exportation of goods due to the additional costs.in addition to increased
revenue for farmers, there is the likelihood of increased production of exported agricultural
produce due to lower and affordable trade tariffs and customs. Owing to the consistent drought

Australia’s Agriculture reforms 5
spells in the country, the Australian government has implemented various drought based policy
changes.
Primarily, the drought programs are used to advance business and preparedness during
dry climatic changes (Kingswell 2013).Under drought reforms, farmers are accorded training,
social services, technological, tax incentives as a supportive and management measure .The
impact of the drought policy programs has been significant .It has equipped farmers with
survival techniques and technology to sustain their farming practices under harsh climatic
conditions. Through this training, farmers are well equipped to deal with the farming and
business setbacks during the drought season. Due to this programs ,farmer yields have improved
during the drought season as compared to prior to the implementation of the drought
programs .The economic livelihoods of farmers during the drought season has improved as
compared to previous drought seasons thus the assertion that the drought policy program has
helped grow the agriculture sector during the dry climatic seasons. In addition to offering support
during the drought seasons, Australian farmers are eligible for further government assistance as
part of the recovery process (Department of Agriculture and water resources 2017).Noteworthy,
the Biosecurity Act came into life in the year 2016(Thelander 2016).The Biosecurity Act seeks
to protect the Australian agriculture industry from being exposed to viral, bacterial and micro-
orgasmic infections through importation within its borders.
In as much as this act seeks to prevent the spread of international diseases on its
agriculture, it also seeks to protect the health of Australian population as people. Following
recent international outbreaks for diseases such as Zika and SARS, the biotechnology Act is
effected to protect the health of Australians, plant and animal population. The incorporation of
the Biosecurity legislation has provided flexibility and technological accommodative measures

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when it comes to the protection of health of plans and animals .It can be said that the Act is a
current quarantine protocol towards safeguarding the health of plants, animals from being
exposed to pests and diseases thereby maintain the good health of its agricultural produce by
quarantining suspected cases of pest infections. Further, the Australian government has invested
substantially in to the research and development ventures in the agricultural sector (Gray, Emer
& Sheng 2014).The government has accorded funding for the conduct of research in agriculture
in a bid to develop cost effective and environment friendly farming practices. The fact that the
research if government funded speaks volume as to the commitment of the Australian
government in advancing the agricultural sector. Remarkably, the Australian research and
development capacity is considered among the best performing in the world when it comes from
agriculture.
Particularly, on climatic based research, the Agriculture sector has made significant
progress on climatic impact, mitigation and adaptation which has greatly boosted the Australian
agricultural performance despite the ongoing global climatic challenges. Through research,
innovative farming techniques have been developed. Various technological advancements have
been made in the field of agriculture due to research efforts implemented by the Australian
government. Better farming practices which are cost effective and environmental friendly have
been developed to make farming produce better quality and resistant to pests and diseases which
is a major milestone in Agriculture. Also, the Australian government has been responsible for
providing subsidies to its agricultural sector (Australian Farmers, 2017).Primarily, subsidies are
an incentive for farmers. Despite the fact that the subsidies percentage has been reducing over
the years, the Australian government has provided subsidies to support the agriculture sector.
Noteworthy, as at 2014, Australian farmers were recipients of 3% subsidies. In the Australian

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context, the subsidies are in the form of seasonally managed variability programs (Australian
farmers N. d).The subsidy works as a credit facility rather than a gift which encourages farmers
to work hard to be able to repay the given subsidy. Australian farmers are among the least
subsidized farmers globally.
In addition, the Australian government has made steps to make the agriculture industry
more competitive globally. Particularly, the government has implemented the Food and Grocery
code of conduct which is aimed at protecting and boosting sales for its agricultural produce. In
the year 2015, there was a mandatory review on the horticulture code of conduct which is aimed
at making Australia’s horticulture produce more competitive at the global trading environment
(Commonwealth of Australia 2015). Arguably subsidies are responsible for the low global
produce prices (Clay 2013).Also subsidies are hailed for boosting innovation, adequate food
supply and surplus production for exportation. This two facts go to show the impact of subsidies
on the economy. The economic effects of subsidies can be positive and negative at the same time
.In addition to supporting research and development initiatives, the Australian government if
affording its farmers tax concessions and incentives (Boyce & McCuskey 2016).Relatively
lenient taxation regimes have provided reprieve for Australian farmers and increased their
revenue margins. Primarily, the Australian government tax reprieves come in the form of offsets,
concessions and deductions. The offsets are being implemented in the form of carbon farming
initiatives.
Regarding deductions, there are non-commercial business losses and farm management
deposits among others. Through average taxing, insurance recovery and double clipping,
Australian farmers are able to enjoy taxation concessions which is of utmost benefit to farmers.
Through these less stringent taxation system, the income of the Australian farmers has

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increased .Typically, higher taxation rates discourage investment due to the fact that farmers will
have less disposable income. However, through this tax cuts, deductions and concessions,
farmers are able to bear less tax burdens thus more savings and investment into the agricultural
sector. Recently, the flower importation sector of Australia has been affected by new terms. It is
mandatory that all imported cut flowers entering the Australian markets are pest free. In addition,
it is required that the cur flower importation packages be issued with a plant protection
organization certificate. This move is aimed at protecting the Australian flower industry from
disease outbreaks. The Australian government is stipulating measures for the importation of cut
flowers so a measure of protecting its cut flower farmers from disease outbreaks that might be
imported.
This recent move by the government is a measure of protecting the Australian flower
industry. This initiative has been responsible for the prevention of foreign diseases to the
Australian cut flower sector due to the mandatory requirements prior to their importation. The
fact that this mandatory certification is being implemented, it has promoted the health of the
Australian flower industry. Horticultural farmers dealing in flower cuts have been spared extra
expenditures in treating foreign flower diseases thus they are able to save and invest further in
their trade. Not only has the certification requirement reduced the spread of foreign diseases but
it has also brought order and discipline in the flower importation sector which is important for
the efficiency of the horticultural industry. The Australian agricultural contribution to the
country is revenue from exportation. Essentially, agricultural produce exports constitutes ¼ of
the country’s exportation index(Nations encyclopedia N. d).Exportation of agricultural produce
increased the exportation volume of Australian products thus leading to an increase in

Australia’s Agriculture reforms 9
exportation earnings .In the process, employment opportunities are created for the population at
processing zones and at the farming level.
Consequently, employment and exportation are very key factors that grow the economy
of any country and Australian agricultural sector is no exception. Employment opportunities are
expanding alongside export revenue.
The Food safety recognition Agreement between the United States of America and the
Australian government is a current phenomenon. The agreement was entered into in the year
2017 as a conclusive show of recognized food and safety measures between the two countries
(Export.Gov 2017).This piece of agreement has made the exportation of Australian agricultural
produce subject to lesser scrutiny thus encouraging more exportation volume of agricultural
produce to the United States of America. The continuous maintenance and expansion of
Australian agricultural markets by the department of water and resources among other agencies,
has managed to sustain and open new markets for the Australian agricultural
produce(Department of Agriculture and Water Resources N .d).Since the year 2015,water
resource policies are under the ambit of the minister for Agriculture .This water resource reform
policy has shifted control over water resources to respective states thus making it possible for the
states to apply specific and unique legislation for better performance of the resources. The water
reform policies have overcome over allocation and implemented modern delivery techniques for
the Australian water resources (Pittar N .d).
Overall, the Australian agricultural sector is deregulated thereby exposing its farmers to
global challenges (Koegh 2017).Following the incorporation of the National competition policy,
the Australian agriculture sector has been exposed to competitive pressures which have led to
increase in the competitiveness of Australian agricultural produce.

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Generally, the Australian agricultural sector has experienced reforms. Some of the
reforms have negatively impacted on the industry performance while others haven’t. Positively,
productivity ,safety innovation, and competitiveness of the Australian agricultural produces has
been achieved .However ,low product prices due to an over-subsidized sector ,harsh climatic
conditions such as drought have curtailed the growth of the Australian agricultural sector .Also
competition from rival industries such as manufacturing have threatened the sustainability of the
agricultural sector. All in all, the agriculture based reforms has made more positive changes to
the sector as opposed to negative changes.

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