Evaluation of Wool Export Market in Australia

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

1ECONOMIC ASSIGNMENT
Table of Contents
Introduction................................................................................................................................2
Brief summary of the article......................................................................................................2
Article evaluation using economic theories...............................................................................3
Recommendation........................................................................................................................5
Conclusion..................................................................................................................................6
References list............................................................................................................................7

2ECONOMIC ASSIGNMENT
Introduction
Agriculture in Australia is an important contributor of country’s economy with two
third of total agriculture product being exported all around the world. Agriculture accounts
for nearly 12% of nation’s GDP. Australia has sold 80% of total wheat, 90% of the wool
produced and 50% of barely to the international market (agric.wa.gov.au 2018). Australia is
the largest producers and exporters of Wool. The sheep farmers enjoy an advantageous
position because of rising demand of Wool from all around the world. The wool export of
Australia is increasing in line with wool production. The report centers on evaluation of a
news article regarding the dynamics of wool’s export market in Australia.
Brief summary of the article
The article points out that the demand of wool continues to stay strong benefitting
sheep farmers of Australia. The farmers enjoy a continuous cash flow for 20 years in the
financial year. The profitability of the sheep farmers has increased because of a high rate of
return from wool. The Rural Bank of Australian Wool Annual Review and a report published
by Australian Bureau of Agriculture and Resource Economics and Sciences reveals that high
prices of wool continues to set to a high level.
The favorable exchange rate is one factor contributing to high international demand
for Australian wool. The exchange rate is expected to remain at stable rate of US 74 cents for
the next five years (farmweekly.com.au 2018). The demand for exported wool thus exceeds
its supply. This ensures a good time for Australian farmers and helps to overcome the
damages caused by natural disaster such as drought. The technical innovation in the new
wool product such as fake fur, sports and active wear has significant contribution to export
expansion. The rural bank forecasts that in the sportswear market of China is expected to
double between 2015 and 2020. This will pull the demand far above the potential supply.