An Overview of Australian Agriculture

Australia is a significant world producer of many agricultural products, including wheat, wool and beef. Major commercial crops include broadacre grains, oilseeds and legumes to more intensive crops such as rice, sugar, cotton, grapes, bananas, and potatoes. Major livestock products include beef, wool and dairy products, and sheep, pig and poultry meats. In 2001-02 total farm production was $39.3 billion and exports were $30 billion.

Relative to its size in the Australian economy, agriculture provides a disproportionately large share of Australia's exports: 21 per cent of merchandise exports compared to 3 per cent of GDP.





Agriculture is one of the largest employers in Australia, providing over 380,000 jobs in 2001-02. Agriculture also represents a significant input into many other industries, particularly the food processing industry, which had a turnover of $56.6 billion and a value added of $14.7 billion in 2000-01. It is generally acknowledged that Australia has a strong comparative advantage in the production of agricultural products. This is a result of our size, geography, use of technology and workforce skills. Consequently, agriculture is one of the most productive and internationally competitive sectors of the Australian economy. Australian agricultural productivity increased by 3.3 per cent per year between 1988 and 2000, well above the national average of 1.2 per cent and the second highest in the market sector (after communications).

Market opportunities
Export markets take the bulk of Australian wheat, beef, cotton, sugar and wool production. Domestic markets are as important or more important than export markets for mutton, dairy products, coarse grains, pulses and horticultural crops.

Around 70 per cent of Australian farm production is exported. Strong potential opportunities for food exports are emerging in the Asian region. The growth in Asian economies, rising standards of living and changes in dietary preferences create demand for more food and for a wider variety. Processed food exports reached $10 billion in 1999-2000 (this is in addition to the farm exports noted above).

Weather
Climate is a significant influence on Australian farm production. The current drought is expected to cut the value of farm production from the record $39.3bn in 2001-02 to $30.5bn in 2002-03. The effect on some commodities is very large, with the value of rice production falling by over 70 percent and cotton falling by 60 percent.

Economic climate
Australian farm industries operate in an open economy with little or no domestic price support or protection, so the incomes of farmers are closely linked to movements in international prices and exchange rates. Australia generally has little influence on market prices, the principal exception being wool.

Cycles in commodity prices have a significant influence on the economic conditions in Australia. The largest fluctuations have been in the agricultural sector commodity prices, and the underlying trend over the past 20 years has been downwards. This combined with rising input costs has resulted in pressures for producers to become more efficient (as noted above, Australian farmers are amongst the most productive in the world).

Farm industries have also adapted by producing products that are more attractive to consumers and their changing needs. They are becoming more closely involved in the downstream processing of agricultural products and establishing more effective links between producers and consumers.

Farm structure and workforce
The dominant farm structure in Australia remains the family farm. The government calculates that 85per cent of broadacre farms and 95 per cent of dairy farms used more than 48 weeks a year of family and/or partner labour. Women are making an increasingly important contribution to the farm business.

The number of farms has declined by 20 per cent since the 1950s to currently stand at 146,400 with 769 million hectares being farmed (60 per cent of Australia's landmass).

 

The agricultural sector directly accounts for 4 per cent of Australia's workforce, or 380,000 people. This workforce has undergone tremendous change as a decline in farmers' terms of trade has forced greater output from fewer inputs. This has been possible through the introduction of significant advances in technology, with large capital investment and an increasingly skilled (but smaller) labour force. The cereal grains, sheep, cattle and pigs sectors remain dominant areas of production. These farms have undergone major structural change as farms have amalgamated to utilise new technology such as large machinery and to take advantage of significant economies of scale.

The labour force has grown in the more labour intensive industries such as horticulture, where production has increased significantly.

In spite of the difficulties that farmers face, the future of Australian farming is bright. Demand is being stimulated by the growing world population and its food requirements, the growth in the Asian economies and the dismantling of restrictive world trade barriers. Australia is geographically, technologically and agriculturally well placed to capture these opportunities.

Information provided by:
National Farmers Federation Canberra
Phone: +61 2 6273 3855 Fax: +61 2 6273 2331
www.nff.org.au