Australian Agriculture Sector: Growth, Economic Theories & Impact

This report examines the growth and economic impact of the Australian agriculture sector. It highlights the sector's significant contribution to export earnings and employment, alongside its role in meeting domestic food demand. The report stresses the importance of productivity growth and the implementation of advanced technology in overcoming challenges within the sector. It also addresses the lack of public awareness regarding the sector's broader economic importance, recommending increased government support and public awareness campaigns to ensure its continued prosperity and contribution to the Australian economy. The analysis incorporates microeconomic concepts of supply and demand, illustrating how productivity growth can influence food prices and meet increasing demand.

Running Head: GROWTH IN AUSTRALIAN AGRICULTURE SECTOR
Growth in Australian Agriculture Sector
Name of the Student
Name of the University
Author note

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Table of Contents
1. Introduction..................................................................................................................................2
2. Essence of the chosen article.......................................................................................................2
3. Economic theories and concept...................................................................................................3
Productivity growth in Agriculture..............................................................................................3
Increasing demand for food and growth of food.........................................................................5
4. Recommendation.........................................................................................................................6
5. Conclusion...................................................................................................................................6
6. References....................................................................................................................................7

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1. Introduction
Australia produces various agricultural products. The major agricultural product in
Australia include wheat, beef and wool. The main commercial crops produced in Australia are
oilseeds, grains, legumes, and crops like sugar, rice, grapes, potatoes and bananas. The sector has
made significant contribution in export. Agriculture in Australia provides employment to large
number of people. The large agricultural sector gives the nation a comparative advantage in the
international market. Australian agriculture constitute rapid growth because of its ability to adapt
technological innovation. Since green revolution, the production of crops increased by more than
double (australianimmigrationbook.com.au. 2017). The efficient agriculture industry in Australia
keep the farmers globally competitive.
2. Essence of the chosen article
The chosen article stresses on the fact that natives in Australia have become unaware of
the sources of food and fibre. The economic contribution of farm’s sector cannot be ignored.
Agriculture is an essential component in daily meals. Agriculture has significant contribution in
economic property of Australia. The sector alone provide nearly 1.6 million jobs in Australia. In
the supply chain of agriculture numerous there are numerous employment opportunities. The
valuation of primary sector in Australian economy is increasing beyond its expectation. The
approximate value of this sector in 2016 records increase of 2.4 percent.
The sector has marked an outstanding performance in the farm production by 27.6% over
the years. In the last quarter of 2016, agriculture has accounted 10 times of its average
contribution to the Australian economy. Half of the country’s growth is contributed by this
sector. The sector helps to maintain a standard growth rate for the economy. Depending on

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agricultural Australia is successful in maintain a positive-growth rate. The speculative growth of
Australian agriculture accelerates the economic growth rate. The positive effect of Australian
agriculture is reflected in the region Tasmania. In 2015-16, Tasmania recorded 3 percent value of
Australian agriculture, occupying only 1 percent of nation’s land (themercury.com.au 2017).
Despite significant growth and economic contribution of agriculture, there is a general
misconception among people regarding this vital sector. It is generally assume that agriculture
benefits only people directly related to this sector. The sector provides job supports to sectors
including retail, logistics, food service, finance and more. To increase awareness of people
regarding the crucial sector, National Agricultural Day is celebrated in Australia. The production
growth of Australian agriculture draws support from people for this sector. The increasing
productivity of in agriculture attributed from implementation of advanced technology. The
innovative nature of Australian farmers helps to overcome challenges faced in production,
geographic location and resource constraint (theconversation.com 2017). Application of
innovative technology and efficient farm production plays an important role to fight the
difficulties arising in the sector and ensure farming to remain as important as it is in the future.
3. Economic theories and concept
Productivity growth in Agriculture
Productivity growth measures output per unit of input. Given fixed amount of input if
output increases then a productivity growth is realized. Demand and supply are mostly discussed
microeconomic concepts. Both demand and supply has direct relation with price. With an
increase in price supply, increases and a price decline cause a decrease in supply (Maré, Hyslop
and Fabling 2017). However, there are factors other than prices that causes a change in supply
captured by a shift in the supply curve.

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Advancement of technology is one factor that causes an increase in supply. The
Agricultural sector in Australia is now recognized as an innovative and efficient industry of the
nation. Using limited input, the nation can produce a large amount of output (Sheng et al. 2015).
The smooth flow of supply helps to keep prices at an affordable level.
Figure 1: Productive growth and increased supply
(Source: As created by Author)
The above figure explains how the productivity growth raises supply and keep the food
prices at a low level. The increase in supply is indicated from a rightward shift of the supply
curve from SS to S1S1 (Varian 2014). This brings the prices down from P* to P1.

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Increasing demand for food and growth of food
In addition to supply another force affecting agricultural market is the force of demand.
Demand changes in response to several factors. Food is fundamental need for human survival
and this makes agriculture as the primary sector of the economy. With increasing population, the
demand for food is growing rapidly (futuredirections.org.au 2017). Australia is one of the major
suppliers of food in world. A significant share of food demand in most of the Asian countries are
met by Australia (Chandler 2014). Besides, the export demand increased domestic demand puts
heavy pressure on the agricultural demand.
Figure 2: Increase in demand and impact on price
(Source: As created of Author)
As shown in figure 2, the pressure on demand creates an upward pressure on price. To
control the price supply must be increased and this is possible only through increasing
productivity growth.

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4. Recommendation
Agriculture is a vital sector in Australia. In addition to fulfilling domestic food demand
Australia exports the surplus in different nation across the world. Despite of being an important
sector, Agriculture receives lowest amount of subsidy. The government should assist Agriculture
in forms of subsidy to help farmers and bears the cost for improving productivity and inputs.
People in Australia often gets unware of the importance of this sector. The sector not only
meet food demand of the nation but also benefits people outside the primary sector. Therefore,
government should increase awareness among people regarding the economic importance of
agriculture.
5. Conclusion
The report considers the growth of agriculture in Australia. Australia has a strong
agricultural sector. This sector not only supplies food to people in the nation but also has a
significant contribution in export earnings. The sector is responsible for employing numerous
people in its supply chain management and other related industries. However, people often get
disconnected from economic importance of the sector. Hence, awareness should be increased.
Also, government assistance is minimal for agriculture. Government should help the sector to
flourish more and contribute to nation’s prosperity.
6. References
Australianimmigrationbook.com.au. (2017). An Overview of Australian Agriculture | The
Australian Immigration Book. [online] Available at:
http://www.australianimmigrationbook.com.au/business/overview-australian-agriculture
[Accessed 5 Dec. 2017].

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Chandler, L., 2014. Australian agriculture’s role in meeting increased Asian demand. Ethics,
efficiency and food security: Feeding the 9 billion, well, pp.32-41.
Future Directions International. (2017). Consumption Patterns and Food Demand in Australia to
2050 - Future Directions International. [online] Available at:
http://www.futuredirections.org.au/publication/consumption-patterns-and-food-demand-in-
australia-to-2050/ [Accessed 5 Dec. 2017].
Maré, D.C., Hyslop, D.R. and Fabling, R., 2017. Firm productivity growth and skill. New
Zealand Economic Papers, 51(3), pp.302-326.
Sheng, Y., Zhao, S., Nossal, K. and Zhang, D., 2015. Productivity and farm size in Australian
agriculture: reinvestigating the returns to scale. Australian Journal of Agricultural and Resource
Economics, 59(1), pp.16-38.
The Conversation. (2017). Agriculture in Australia: growing more than our farming future.
[online] Available at: https://theconversation.com/agriculture-in-australia-growing-more-than-
our-farming-future-22843 [Accessed 5 Dec. 2017].
Themercury.com.au. (2017). Missing the essential ingredient. [online] Available at:
http://www.themercury.com.au/news/opinion/talking-point-missing-the-essential-ingredient/
news-story/3869366f5bea84da7a35689d6766cff7 [Accessed 5 Dec. 2017].
Varian, H.R., 2014. Intermediate Microeconomics: A Modern Approach: Ninth International
Student Edition. WW Norton & Company.