Economics for Sustainable World: AAP Project Report 2020

This report provides an in-depth analysis of Australian Agricultural Projects Limited (AAP), focusing on the economics of its olive oil production. It explores the general business environment, production costs (fixed and variable), and economies and diseconomies of scale. The report examines the macroeconomic environment's impact on AAP, including the current economic position of Australia and the company itself. It also discusses AAP's potential for growth, sustainability practices, and both negative and positive externalities within the agricultural industry. The report concludes with an overview of the increased demand in the commercial sector and provides relevant references.

[economics for sustainable World]
2020
Australian Agricultural
Projects Limited

Economics for sustainable world
Contents
Introduction...........................................................................................................................................2
Australian Agricultural Projects Limited...............................................................................................2
General Business Environment..........................................................................................................2
Production cost and scale......................................................................................................................3
Importance of cost.............................................................................................................................3
Fixed cost in agricultural industry.....................................................................................................4
Variable cost in agricultural industry.................................................................................................5
Economies and Diseconomies of scale..............................................................................................5
Macro business environment.................................................................................................................6
Importance of macroeconomic environment for business..................................................................6
Current position of the economy........................................................................................................7
Current position of the company........................................................................................................7
Potential growth and future for AAP export......................................................................................8
Sustainability practices in the business..................................................................................................9
Negative externality in the agriculture industry.................................................................................9
Positive externality in the agriculture industry..................................................................................9
Increased demand in the commercial sector................................................................................10
Conclusion...........................................................................................................................................10
References...........................................................................................................................................12
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Economics for sustainable world
Introduction
Olive plantation, production, and manufacturing of olive oil are one of the important
businesses of the agriculture industry in Australia. Some businesses in the country are
operated from their house and or some firms operate their own field of olives. Olive oil
production in the country is growing faster. This report aims to discuss the impact of
macroeconomic environment of the country over the production cost and sales of the
products manufactured in the industry. This report aims to examine the impact of external
factor including the government rules, political aspects, economy changes, social
development, and legal issues over the production and supply activities of a global operating
firm in Australia.
Australian Agricultural Projects Limited
Australian Agricultural Projects Limited (AAP) is a Victorian based company owning and
operating a large state of the art growing olive in the Boort region. It is an ASX listed
company operating the business activities from the established since 2004 now employees
around 500 employees in olive oil cultivation and production in agriculture industry along
with 3 project stations supplying the quality olive oil at international and domestic market
widely. Company was established in 2004, with high quality virgin olive oils, Australia is
growing olives plants since 1800 developed from self-funded penal settlement this business
was expanded in the firms operating the production and manufacturing of olive plants.
Australian Agricultural Projects limited is successfully operating the agricultural operations
in Australia (AACo, 2020). It is headquartering in the Victorian and listed in the Australian
Stock Exchange as successful operating and supplying the virgin olive oils ("Victoria Olive
Oil Project", 2020).
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Economics for sustainable world
General Business Environment
Australian Agricultural projects Limited (AAP) performs its business in the special field of
the olive oil plantation and distribution. Production of the olive oil seeds and transforming
them into oil and supply to the international level in the famous restaurant it is serving more
than 1,000,000 people across the world leading in the domestic and international market of
the food and beverage production("Victoria Olive Oil Project", 2020). IT is leading producer
in the Australia it has the largest customers relation across the world. Management of the
Australian Agricultural Projects Limited is focused to introduce art olive seeds production
and supply to attract the more customers from the market of domestic and international
scenario
Main aim of the AAP is to export and supply the quality produced Australian Olive oil table
at the global level. As dealing in the states of Queensland, Sydney, and Victoria, it has
household and commercial customers to sale its differentiated quality Olive oils, demand of
the quality oil seed and oil is high in the global market hence it tries to implement new art in
the production and plantation of the olive seeds. Role of the competitors in the industry of
agriculture is very important, olive seed placation and supply in market of the Australia is
very high, and it covers a large segment in the international export of oil supply market.
AAP, dealing within and outside country business, face challenges from the national and
international competitors. These competitors are present in the Sydney, Brisbane and outside
in Canada. These competitors focus to provide the product of better quality and reasonable
price in the industry.
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Economics for sustainable world
Production cost and scale
Importance of cost
Cost revenue and profit, these are very important aspects of a business representing the
successful operation of a business. These factors affect each other in many ways. Increase in
the cost of the product impact the price increment and increased price sometimes affect the
market demand and consumer interest negatively, as many other substitutes are available in
the market in the sector of food and beverage industry (Cross & Ampt, 2016). Australia has
effective place in the olive seeds plantations and production of better quality at national and
international level (Stewart, 2020), hence many suppliers are available to fulfil the demand of
quality oil seed in the market. Increased cost and price influence the product demands and
profit earning from the product. Retiling and wholesaling industries are based on profit
making activities, cost management in a business include the expenditures important to
perform in the operations, wholesaling and production industry need to manage numerous
types of cost essential to be involved in the business like variable cost, accounting cost,
opportunity cost and fixed cost (Cross & Ampt, 2016).
Fixed cost in agricultural industry
Agriculture production related to livestock feedlots and production, plantations of oil seeds
and transforming them into edible oil activities have fixed costs expenditures related to the
effective living and growing up facilities to the plants. AAP handle the plantation, growing
and manufacturing activities related to the olive oil production. Fixed expenses in this
industry are related to the Plantation, cultivation, and cutting, quality production, and
effective packing with safety and transporting it to the different outlets for the wholesaling
market (Fortier & Viens, 2018). Cost of production, packing, machinery, land expenses,
employee salaries are some foxed cost essential to occur by the management to operate its
functions of business (t, 2020).
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Economics for sustainable world
AAP manage the quality product supply to the states of Victoria, Brisbane, and Sydney.
Transportation cost, rent cost, lease cost, insurance cost, repayment cost, and many other
costs related to the direct implement of the business. These costs never change with the profit
and loss but an organisation making profit or loss have to manage these costs in every
situation, as these are essential to include for the operations of a business. To manage the
fixed cost management in proper flow AAP manages to meet the demands of their Olive oil
production in the international and national market. It plans to introduce product
differentiation strategies like olive oil seeds art differentiation to attract the large segment of
international and national customers to earn the profitable return from the olive oil supply and
management (Fortier & Viens, 2018).
Variable cost in agricultural industry
Variable cost of business economics is related to the services provided by the business
operation these costs are related to the expenses changing in the proportion of the production
activities. Feed cost is the most variable cost in the agricultural business, with the proper
quality, food is essential, but it is based on the climate, health, and need of the particular
fertilisers. Other variable costs in the environment of an agricultural business are labour cost,
repairing and maintenance cost, transportation cost, storage cost, fuel cost and equipment
maintenance and service cost used in the production and cutting of the meat (Henchion,
McCarthy & Resconi, 2017). Managing the variable cost is very challenging for the
management, increase, or decrease in the variable cost affect the overall operations of a
business, agricultural industries need to continue their production even if it is facing a loss
due to their long-term profitability vision.
Economies and Diseconomies of scale
Economies of scale are related to the increase in the output of the production with the
deduction in the cost of production. Fixed costs in a business are constant and average costs
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are calculated after the deduction of the fixed cost, decreased cost reflects the increase in
return and economies of the scale. Internal economies of scale are related to the activities of
efficient production techniques. External economies of scale are related to the better
opportunities and supportive economic and business situations in the country. Diseconomies
of scale is measured when the increased output or sales affect cause the increased cost of
production or average cost (Henchion, McCarthy & Resconi, 2017).
Competitive advantages of the firm reflect that it is attaining the balanced economies scale
through the activities of the production. Dealing in the international market AAP faces price
fluctuation, cost variation and many other challenges affecting the cost of production and
profit making activities in the challenging market segment of olive oil production and supply.
Macro business environment
Macro business environment consist the factors present in the external environment of an
organisation. Macro-economic environment include role played by the external stakeholders
in a business, these stakeholders have direct or indirect impact over the business operations
and adversely affect the flawless operations of the business. Stable external macro-economic
conditions are favourable to operate the profitable return in the environment and unstable
factors affect the operations adversely. Microenvironments affect the internal climate of an
organisation (Ivars Brīvers & Jānis Sliece, 2015).
Macro business environment of Australia affects the operations of AAP in the following
manner and importance of Macro business environment stability is presented as-
Importance of macroeconomic environment for business
Understanding the nature of the Macroeconomic environment present in the country is
essential for the operators operating the business at national or international level. Deep
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Economics for sustainable world
analysis of the macroeconomic environment helps to understand the functioning of the
business operation in the challenging and competitive environment. Macroeconomic
environment of a country include various aspects like, inflation, employment, gross domestic
product (GDP), spending, and monetary and fiscal policy affecting the business cycle of the
operation firm (Ivars Brīvers & Jānis Sliece, 2015). These factors affect the decision making
and production management activities of the business. AAP is a leading olive oil producing
and supplying organisation, and Australia has challenging market for the food and
agricultural industry. Economic stability allows the firms to plan their activities freely and
challenging economic situation reflects challenges regularly involved in the production
process of firms. Australia has vast market for the wholesaling activities of the agricultural
products, and regular demand of the quality olive oil seeds and oils in the market allows the
firms to invest and perform their olive oil production activities actively in the market.
Retuning the values back to the external macro environment of the Australia, present
condition of the Australian Agricultural Company Limited is to deal challenges to maintain
the leading position within and outside of the country market (Luckemeyer, Miller, Kerth &
Adhikari, 2016).
Current position of the economy
Australian economy is the world’s 13th largest global economy, rapidly attaining the
developed global stable economic position in the market. Australian economy is developed
and stable, with A$1.89 trillion GDP, and high-income economy. Agriculture contribute 33%
in the Australian GDP and around 60% of the agriculture products are exported regular, thus
reflects the regular growing opportunities for the business development in the agriculture
sector (Luckemeyer, Miller, Kerth & Adhikari, 2016). Australia has political and economic
calm relations with the international trade organisation and controls the export and import
activities of trading. Agriculture sector of Australia is second most important sector
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developing rapidly, opening the door of employment and development for many employees,
and raising the level if living, supporting the healthy living and equal opportunities for the
aboriginals’ community, Australian economy is facing the rapid growth in the economic
stability at international level. economics stability has grown from last few years, abundant
supply of rich natural resources provide economic stability to the service, industrial,
technological and agricultural development of the organisation (Mann, Thornton, Crawford &
Ball, 2018).
Current position of the company
Australian Agricultural Projects Limited is leading organization also acquired Victorian Olive
Oil Project Limited (VOOPL) providing several brands of olive oils brands in lowest cost and
high quality. Operating from the 2004 it has enjoyed monopolistic market as well and
presently it has a brand image of trust in the commercial and household customers. The art of
Australian olive oil production includes the introduction of verities of olive seeds of different
quality with highly safe packaging, suitable for the longer storage and various recipes to cook
the delicious and mouth-watering recipes by the professional chefs made its online platform
attractive. Dealing the most populated states of the Australia, it has unique features in the
marketing and brand positioning strategies in the challenging market (Monjardino, MacLeod,
McKellar & Prestwidge, 2015).
Potential growth and future for AAP export
Australia has Olive oil seed export one of its major supporting businesses and one of
economy supportive business because it has raked the most efficient olive exporter in the year
2016. In the recent years, market for the olive demand has increased and has opened door to
the olive production and supply entities. Increased demand for Australian special art olive
seeds and in the developing countries like china and Indonesia has increased the production
demand and developed countries like the United States and Japan raising their demand for the
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Economics for sustainable world
quality olive oil seeds and oils. AAP has effective control over the fertilisation and
developing climate hence it produce large quantity of high quality seeds with differentiated
quantity (Sakhartov, 2017). This product differentiation allows the AAP to deal the
challenging competitive olive oil market effectively. Slowdown in the economy of the China
and increases Olive market in the domestic market of the developed countries has impacted
the market conditions for the quality seeds and AAP has to deal the challenges in the global
export market with dealing the macroeconomic environment of the country (Monjardino,
MacLeod, McKellar & Prestwidge, 2015).
Sustainability practices in the business
Negative externality in the agriculture industry
Olive seeds production olive oil transformation in the Australian market has become a
complex business, new methods introduced by the organisation affecting the natural climate
of the country in adverse manner. Grazing, Breeding and livestock management activities
performed in the olive seed production influence the natural environment directly (Thornton,
Jeffery & Crawford, 2012). Use of chemical based pesticides and fertilisers for the field
plantation and cutting down the trees and many more activities related to the climate change
in negative manner affect the living of people. Australian climate have critical challenges
every year and negative impacts of other operations in the environment affect the sustainable
development of the nature and environment (Sakhartov, 2017).
Positive externality in the agriculture industry
Organisation of the AAP is committed hold the leading position in the industry with
sustainable development of the climate and environment of the country. It continuously
striving to perform best activities suitable for the environment of the country and planing the
activities in sustainable manner since 2004. Introduction of the sustainable guiding principles
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Economics for sustainable world
opening the transparency of the activities performed in the olive seeds production. Dealing
the domestic and international export of olive seeds it has expended the production unit in
2007 with expansion of Victorian Olive Oil Project Limited (VOOPL), it understands the
impact of its operations over the environment and community (Tricker, 2011). Hence, it uses
the guidelines to manage the production of the olive oil seeds and supply of the produced oil
of high quality with the activities support to the sustainable development activities targeting
the development of society and community of the country. Sustainable development in the
country and increases market demand for the high quality olive oil has result the complex
nature of the business activities in the organisation. The management of the organization, to
meet the sustainably developed organisational climate for the business and community, uses
following strategies
 Distribution and reaching sources at local and international level
 Strong dealership strategies
 Diversified workforce
Increased demand in the commercial sector
Developing market demand from the commercial sector for the quality olive oil has result the
increment in the economic and production activities of the Australian Agricultural Projects
Limited (Tricker, 2011). It has major control over the domestic and international market,
operating wholesaling activities of the quality oil seeds it has opened door to the employment
and development of the community by opening the way of e-trade and e-commerce with the
technological development of the organisation present the products differentiation strategies
of the organisation. olive oil selling with in high quality at lowest price attract the customers
from the household and commercial sectors.
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Conclusion
This report based on the analysis of economic environment of the Australia suitable for the
agricultural industry concludes that developed economic stable environment and increasing
GDP rate of the country provide positive environment for the industries. Economic stable
environment provide favourable return to the cost of production in the domestic and
international environment. Agricultural industries of Australia have large contribution
towards economic stability and development. Government of the international trade rules in
Australia has effective control over the overseas transections in the trade, legal control of the
political and social factors of the government to manage the sustainable production of the
agricultural activities guide the industries to manage their actions.
Department of agriculture have direct control over the natural resources, Australian
Agricultural Projects Limited (AAP) enjoying the leading olive seeds and oil producing and
position in the country. It has effective management of operation of seed plantation and oil
production to influence the positive over the community, society, and environment. Providing
the employment opportunities to the unemployed, giving back best to the nature by
preserving the resources and many steps are taken by the management helping the Australian
Agricultural Projects Limited (AAP) to attain the target of sustainable development in the
industry. These also attain the successful return to the business economics and environment.
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