Analyzing Australia's Agricultural Export Market: Key Economic Factors

This report analyzes the current state of Australia's agricultural sector, focusing on its export performance. It reviews newspaper articles highlighting the impact of unfavorable weather conditions on crop production and export volumes, particularly for wheat, barley, and canola. The report also examines the sector's contribution to Australia's national income and employment opportunities using macroeconomic concepts and data. Despite challenges like decreased crop production due to dry weather, the report notes increased export earnings from livestock, wine, and cotton. The analysis includes recommendations for government support, such as subsidies and tax reductions, to help farmers mitigate the effects of adverse weather and encourage export-oriented agricultural production. The report concludes by emphasizing the sector's significant contribution to the Australian economy while acknowledging the impact of environmental factors and suggesting policy interventions to support its growth.

Running head: ECONOMICS ASSIGNMENT
Economics assignment
Name of the university
Name of the student
Author Note

1
ECONOMICS ASSIGNMENT
Executive Summary:
This report has intended to analyze the present scenario of Australia’s agricultural sector for
exporting products in other countries. Hence, to provide some recommendations for the
Australian agricultural sector to develop further, the report has analyzed some newspaper
articles and also has discussed this situation in the light of macroeconomic concepts.

2
ECONOMICS ASSIGNMENT
Introduction:
Agricultural sector has contributed significant amount to a country’s national income
by producing and exporting primary products and by generating huge employment
opportunities, which in turn can lead the per capita income of the country to increase further.
Australian agricultural sector has also possessed a significant position from its economic
perspective. The country has gained comparative advantage on wheat, barley, cotton and
meat, which has been exported to other countries for earning higher amount of profit (Lyons
and Lawrence 2017). Hence, this report has intended to analyze the present growth of
Australian agricultural sector to understand its contribution on export market. The
policymakers of this concerned country along with farmers may show their interest on this
report as it can help them to understand about the present trend of agricultural sector based on
some newspaper articles. In addition to this, the report has going to provide some
recommendations related to this concerned sector to improve the export of agricultural
products.
Article Review:
According to the Sydney Morning Herald, Australia has experienced unfavorable
weather, for instance, dry winter and spring along with severe frosts, which have adversely
affected crop production of the country and consequently has forced to reduce the income of
farmers and amount of net export in 2018 (Gray 2018). It has been predicted that the
concerned country is going to produce wheat around 20 million tons, the lowest amount of
production during this decade. This dry weather has affected farmers all over the country
while this condition has become worsen for farmers of Queensland and New South Wales
due to higher temperature. Based on the report of The Australian Bureau of Agricultural and
Resource Economics and Sciences (ABARES), it can be stated that the gross value of entire
farm production is going to decrease by 7% in 2018 compare to the last year’s record, that is,

3
ECONOMICS ASSIGNMENT
from $ 63 billion of the last year to $ 59 in present fiscal year. However, for the winter crops
like wheat, barley and canola, the percentage of production has declined by 41%.
Consequently, this situation has adversely affected the export of this country. For instance,
exports of canola have decreased by 52% while export of barley and sugar are reduced by
41% and 13 %, respectively (Tradingeconomics.com.2018). However, exports of cotton and
wine have increased during this fiscal year. However, this lower level of crop production has
not influenced the total value of farm production and it may remain at the higher-level
compare to the average value production, worth $55 billion, over the last five years.
Figure 1: expected value of agricultural exports of Australia for the coming year
Source: (Gray 2018)
Based on figure 1, it can be stated that the country is going to export large amount of
beef and veal in recent year followed by wheat, wool, cotton and wine production. The
production of beef is going to increase in 2018 compare to the previous year while their
export prices may remain at a higher position, which in turn can show positive terms of trade
for this country. Export earning of Australia has increased by $ 23 billion for livestock while
for wine and cotton, this earning has increased by $ 2.64 billion and $ 2.1 billion, respectively
(Gray 2018). However, it is forecasted that Australia can receive export value above $48

4
ECONOMICS ASSIGNMENT
billion in the fiscal year of 2018. This value may increase due to excess production of dairy
products, cotton, wine, beef and wool.
Economical analysis:
This impact of this specified sector can be described briefly with the help of some
macroeconomical concepts, like national income and employment opportunities. Increasing
amount of export has influenced national income of Australia positively and this in turn can
develop the economical condition of this concerned country (Pauw, Thurlow and Ecker
2018). Moreover, the country can generate huge amount of employment opportunities within
this agricultural sectors, if it can experience positive trade condition.
Figure 3: Trend of raw material exports of Australia’s agricultural sector
Source: (Tradingeconomics.com.2018)
Based on figure 3, it can be stated that Australian export has increased significantly
since 2009 and has remained at a higher level. This in turn has helped total demand of
Australia to increase and consequently total production has also influenced positively
(Tradingeconomics.com.2018). Hence, the sector has helped the economic condition of this
country to develop further.

5
ECONOMICS ASSIGNMENT
Figure 4: Share of Australia’s agricultural sector to the country’s GDP
Source: (Tradingeconomics.com.2018)
Figure 4 has represented the contribution of agricultural sector to the country’s
national income. From this figure, it can be stated that the sector has contributed noticeable
amount in 2017 (Tradingeconomics.com.2018). However, due to dry weather the amount of
export has decreased at the beginning of 2018 for which the amount contribution ha also
decreased by small amount.
Figure 5: trend of Australian employment involved in the agricultural sector
Source: (data.worldbank.org 2018)
The magnitude of employment in agricultural sector of Australia has decreased
drastically since 2010 (data.worldbank.org 2018). This can be observed from figure 5, where

6
ECONOMICS ASSIGNMENT
it has represented the percentage of employment in Australian agricultural sector, since 2006.
This decreasing number of employment has occurred due to structural changes in
occupational pattern, where people have preferred secondary or tertiary sectors compare to
the primary one, where the amount of income is comparatively low (Alvarez‐Cuadrado, Van
Long and Poschke 2017). Therefore, the amount of contribution to the country’s national
income has also decreased.
Recommendation:
As the weather can influence agricultural production of this country by large extend,
the government can provide subsidies to their farmers during unfavorable weather condition
to protect their self-interest. In addition to this, through monetary policy, the government can
reduce tax on farmers and on agricultural items during this condition for encouraging farmers
to produce other agricultural products that can also be exported.
Moreover, the government, through its affective trade policy can encourage the
production of exporting crops by reducing various restrictions, for instance, the Australian
government can make a free-trade agreement with other countries, where those agricultural
products are imported by large amount. This agreement can increase the demand for those
agricultural products and consequently, the price of those agricultural products may increase
in future.
Conclusion:
Hence, after discussing the some specific condition of Australian agricultural sector,
some conclusions can be drawn. It can be stated that the specified sector has huge
contribution to the country’s national income. However, the production of some exporting
goods, like wheat, has decreased by noticeably due to some unfavorable weather condition.
On the other side, the country has produced sufficient amount of livestock for which the total
value of export has remained at higher position.

7
ECONOMICS ASSIGNMENT
References:
Alvarez‐Cuadrado, F., Van Long, N. and Poschke, M., 2017. Capital–labor substitution,
structural change, and growth. Theoretical Economics, 12(3), pp.1229-1266.
Data.worldbank.org. 2018. Employment in agriculture (% of total employment) (modeled
ILO estimate) | Data. [online] Available at:
https://data.worldbank.org/indicator/SL.AGR.EMPL.ZS?
end=2017&locations=AU&start=2006 [Accessed 14 Apr. 2018].
Gray, D. 2018. Australian farm production tipped to near $60 billion in 2017-18.
[online] The Sydney Morning Herald. Available at:
https://www.smh.com.au/business/australian-farm-production-tipped-to-near-60-
billion-in-201718-20170620-gwuuez.html [Accessed 14 Apr. 2018]. – one of the main
article
Gray, D. 2018. Dry conditions, then frosts hit farm production and exports. [online] The
Sydney Morning Herald. Available at:
https://www.smh.com.au/business/the-economy/dry-conditions-then-frosts-hit-farm-
production-and-exports-20171212-p4yxms.html [Accessed 14 Apr. 2018]. – one of the
main article
Lyons, K. and Lawrence, G., 2017. Institutionalisation and resistance: organic agriculture in
Australia and New Zealand. In Food, Nature and Society (pp. 81-100). Routledge.
Pauw, K., Thurlow, J. and Ecker, O., 2018. Micro-econometric and Micro-Macro Linked
Models: Modeling Agricultural Growth and Nutrition Linkages: Lessons from Tanzania and
Malawi. In Development Policies and Policy Processes in Africa (pp. 97-115). Springer,
Cham.

8
ECONOMICS ASSIGNMENT
Tradingeconomics.com. 2018. Australia Exports | 1971-2018 | Data | Chart | Calendar |
Forecast | News. [online] Available at: https://tradingeconomics.com/australia/exports
[Accessed 14 Apr. 2018].
Tradingeconomics.com. 2018. Australia GDP From Agriculture | 1974-2018 | Data | Chart |
Calendar. [online] Available at: https://tradingeconomics.com/australia/gdp-from-agriculture
[Accessed 14 Apr. 2018].