Detailed Report: Australian Agriculture Industry Analysis and Issues

This report provides a detailed analysis of the Australian agriculture industry, highlighting its significant contribution to the country's GDP, key products like wheat, wool, and beef, and its role as a major employer and exporter. It explores the industry's market structure, which is characterized by monopolistic competition, and delves into the impact of the severe 2018-2019 drought, including reduced crop yields and export declines. The report also identifies other challenges, such as low soil fertility, water scarcity, and the absence of genetic modification. Furthermore, it examines the consequences of these issues, including low productivity, reduced revenue, and economic slowdown. Finally, the report offers policy suggestions to improve the industry, such as building water catchments, providing subsidies, encouraging worker participation, allocating more fertile land, and investing in research and development to enhance crop yields and address supply-side factors. The report concludes by emphasizing that implementing these policies would improve the overall health and productivity of the Australian agriculture sector.

Australian Agriculture
Industry

Details Of The Industry
 One of the largest industries in Australia
 Contributes 3% to the GDP of the country
 Key products are wheat, wool, beef and wine
 Other important products are molasses, honey, horticulture and viticulture products
 The industry contributes around $10 billion to the economy of the country
(Tradingeconomics.com 2019)

Details Of The Industry
 48.2% of land is allocated for agriculture purpose (Data.worldbank.org. 2019)
 6% land is fertile and suitable for crop production
 One of the largest employer of the country
 Employs 228,372 persons (Agriculture.gov.au. 2019)
 Australia is leading exporter of wheat, beef, wine and wool

Details Of The Industry
 Australia is the 5th largest exporter of wine in the world
 In Australia, the agriculture industry is among the top 3 industries in the world
 The agriculture industry from earns more than $40 billion from the export sector of the
country
 The agriculture industry is suffering from various issues and drought is one of the
prime reasons

Market Structure
 Many sellers and many buyers
 Heterogeneous products with no uniqueness
 All the products are different from each other even if they come under the same
category
 Sellers has low power over the market

Market Structure
 Firms can only influence the market of same products but not the entire industry
 Firms earn more profit than the firms in perfectly competitive market
 The demand curve of the industry is much flatter than the demand curve in monopoly
market
 The market structure of the industry is monopolistic competition

Drought 2018-2019 In Australia
 Most severe drought of the decade
 In the east coast region of Australia 49% of land become unsuitable for cultivation
 Wheat production fell by 23% (Time 2019)
 Export of wheat fell by 18%
 12% of total domestic demand for wheat has been imported

Drought 2018-2019 In Australia
 Water stored in dams reduced by 50%
 The production of winter crops fell
 The impact of drought is still persisting in the country
 The agricultural production of the country fell by 15%
 The share of agriculture industry in the GDP of Australia reduced

Other Issues Of The Industry
 Low soil fertility of the agricultural lands in Australian agriculture industry
 Water required for irrigation of agriculture fields are scarce
 Lowering availability of workers for agriculture industry
 No genetic modification of grains is permitted in Australia
 Threats of agriculture product diseases from the imports of animals and foods

Other Issues Of The Industry
 Depreciating domestic currency of Australia
 Political distrust among the farmers and they do not believe the parliamentarians
 Low export demand for agriculture products of Australia
 Persisting effect of drought hampering the industry

Impact Of Issues
 Low productivity of the agriculture industry
 Low revenue for the sellers
 Thus revenue of the industry is low and thus income of people associated with it is
low too
 Low aggregated demand of eh economy
 Slowing economic condition of the economy

Impact Of Issues
 Increased unemployment in the economy due to contraction of the industry
 Low aggregate demand occurred giving rise low price level and thereby low inflation
 Economic slowdown of Australia
 No new variety of product is developing in the agriculture industry of Australia

Policy Suggestions
 Building more water catchments in order to hold more water for irrigation
 Providing subsidies to farmers during the period of drought
 Encourage workers for joining the agriculture industry by providing industry exclusive
benefits
 Allocation more fertile lands to agriculture industry
 More investment in R&D for agriculture industry

Policy Suggestions
 Implementation of the policies would improve the agriculture industry
 The main problem that arises due to the agriculture industry issues has affected the
supply side factors
 The supply side factors are workers, land for cultivation and available amount of water
for irrigation
 Low yield of existing variety of crops

Policy Suggestions
 More water catchments means more water and that will mitigate the problem of
irrigation
 The productivity of the agriculture industry rises
 More the investment in R&D of crops more will new its development
 The yield of the crops will increases and growing period will decrease

Policy Suggestions
 Social and financial benefits to the workers of the agriculture industry provided by the
government in order to incentivize workers would encourage workers to join the
industry
 Allocation of more land to the agriculture industry will increase the total land of the
industry
 The production of the agriculture industry will further increase owing to increased land

References
 Agriculture.gov.au. (2019). [online] Available at:
http://www.agriculture.gov.au/abares/Documents/snapshotaustraliasagriculturalworkfo
rce20181213_v1.0.0.pdf.
 Data.worldbank.org. (2019). Agricultural land (% of land area) | Data. [online] Available
at: https://data.worldbank.org/indicator/AG.LND.AGRI.ZS?locations=AU.
 Time. (2019). https://time.com. [online] Available at:
https://time.com/longform/australia-drought-photos/
 Tradingeconomics.com (2019). Australia GDP From Agriculture | 2019 | Data | Chart |
Calendar | Forecast . [online] Available at: https://tradingeconomics.com/australia/gdp-
from-agriculture

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