IN THE PIPELINE

Strategic market and trade outlook for Australian agriculture

Background

Australian farms and agribusinesses are now more directly exposed to global agricultural markets than at any time over the last 60 years. This exposure is occurring at a time when global agricultural markets are experiencing increasing levels of price volatility and trade uncertainty.

At the farm level, increased exposure to global markets has arisen as a consequence of implementing agricultural market deregulation since the 1990s. This has included the deregulation of the wool, wheat, dairy and sugar markets, the dismantling of state-based marketing arrangements in many of the horticulture and vegetable sub-sectors, and the removal of some import tariffs and quarantine restrictions. These changes have resulted in the rapid growth of food imports into Australia and significant shifts to the process of exporting Australian agricultural products.

At the agribusiness level, the last decade has been a period of considerable rationalisation, as a range of different factors have driven consolidation and multinational companies have either taken over Australian agribusinesses, or established a presence in the Australian market.

To capitalise on the global marketplace for agricultural products and for industry players to obtain a clearer understanding of the competitiveness of Australian farms and agribusinesses, it is critical that strategic market information is made available. Farmers and agribusinesses are also regularly making decisions which have long-term implications (10–15 years). Having access to relevant information about likely long-term changes in agricultural markets – including supply, demand and trade predictions – is essential to the success of those decisions.

Figure 1

Figure 1:    Australian food and agricultural sectors with net-trade above A$1 billion.
Sources:     ABARES, AFI analysis.

Research plan

Australia has a number of large food and agricultural sectors with net export-import trade values above one billion dollars (see Figure 1). The Australian Farm Institute (AFI) is planning to conduct a comprehensive review of strategic market information for Australia’s major agriculture sectors, including global supply, demand and trade dynamics. Ultimately, this information will be developed into a series of accessible online databases. The aim of AFI’s online portal will be to deliver information to Australian farmers and agribusinesses on trade arrangements (including formal and technical trade barriers) and short and long term outlooks for market accessibility.

There are many data and trade information agencies operating at both the government and private level and this project aims to build on existing data and trade information platforms such as the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), the United States Department of Agriculture (USDA), and the Food and Agriculture Organization of the United Nations (FAO).

Currently ABARES provides data and trade information on both the Australian and global agricultural marketplace. However the ABARES information is quite fragmented and without an abundance of resources, ABARES has not been able to deliver a consolidated online database which provides a range of services such as updates on trade statistics, trade arrangements and market accessibility.

The USDA leverages a global platform of attachés in the major agricultural regions to record a wealth of trade statistics, trade projections and information on trade arrangements. The data and information provided is however primarily relevant to farms and agribusinesses in the United States. Also, USDA data and information is generally fragmented and it is difficult for general users of USDA online portals to select the most relevant of a number of different service points.

Similarly to the USDA, the FAO provides a wealth of data and trade information which can only be accessed via multiple online service points. Some of the FAO data is also subject to time lags of up to three years, as the FAO relies on government statistical department releases to update their online databases.

Initially, AFI will review the trade data and information currently available with a variety of domestic and international agencies, with the intention of identifying the shortcomings and usefulness of these data sources. The online portal ultimately developed by the AFI will summarise relevant information from the range of existing agencies, with the addition of specialised trade analysis. The AFI online database will be a one stop service portal for Australia’s major agricultural products.

Images:  Robert Couse-Baker, USDA

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