Australian Farm Institute, Can agriculture grow if food processing dies? Farm Policy Journal, Vol. 11, No. 2, Winter Quarter 2014, Surry Hills, Australia
ISSN 1449–2210 (Print)
ISSN 1449–8812 (Web)
Potard, G (2014), The Declining Competitiveness of Australian Food Processing, in Farm Policy Journal: Vol. 11, No. 2, Winter 2014, pp. 1-13.
The fact that the Australian agribusiness sector exports far more raw commodities and food products than it imports often tends to hide the fact that Australia’s food processing sector is losing competitiveness. Evidence of this loss is provided in this article, which looks at Australia’s recent balance of trade (exports minus imports) for different processed food items. The traditional explanation is that labour costs and exchange rates are the main contributing factors, but they alone do not seem sufficient to explain the recent sharp decline in the net trade balance for Australian processed foods.
Freebairn, J (2014), Drivers of Industry Success and Decline, in Farm Policy Journal: Vol. 11, No. 2, Winter 2014, pp. 15-21.
Australia’s relative endowment of inputs required to produce goods and services, namely natural resources, labour, capital and technology, influence the industries and production methods which are high income earning with potential for growth. Industries and production methods with a relatively high dependence on natural resources and available high technology dominate exports and future growth. By comparison, labour intensive industries and production methods, and those where Australia lags world best practice technology, feature in the imports, and they have low growth prospects. There is a large non-traded sector, and here Australia’s relative endowment of the different inputs favours the growth of capital and technology intensive production methods, and with a focus on better satisfying evolving buyer demands. These comparative advantage principles apply equally to the structure and operation of the agricultural sector.
Watson, A (2014), Will the Demise of the Australian Food-Processing Sector have a Negative Impact on Australian Agriculture?, in Farm Policy Journal: Vol. 11, No. 2, Winter 2014, pp. 23-31.
Food processing is often in the news in Australia for a variety of reasons. The extent of food processing, and conduct of processors, for both local consumption and export has been contentious in recent years. On the local market, major issues have been the amount of foreign ownership and the justification for government assistance in cases where farmers are dependent on food processing to bring their produce to market. For exported agricultural commodities, the main issues for discussion have been the pros and cons of exporting a higher proportion of commodities in processed form. The underlying economics of further processing or value adding is discussed in some detail in this paper. The main conclusions are that these questions are empirical and need to be tackled on a case-by-case basis. A key component of the analysis is the way the risks confronting the Australian agricultural sector (climatic, marketing and financial) are best handled. The answers are different for different commodities, regions and market structures. There is a role for government in some aspects of food processing but not others. A subsidiary conclusion of the paper is that farmers are not always the beneficiaries of expanded food processing. Dairying, meat, stone fruits and wine are used as case studies in this paper. Part of the debate over Australia’s food processing sector follows from contemplation of the implications of economic growth and increased incomes in Asia. Will Asian demand for Australian agricultural output favour increased exports in processed or unprocessed form? It turns out that this is also best thought of as an empirical question. Changes in market opportunities and agricultural technology have also revived interest in agricultural development in northern Australia. This is another issue where the respective roles of governments and the private sector have to be seriously considered, for processed and unprocessed agricultural products alike.
FPJ1102 - Annison, G (2014), Food Security and the Role of Australia’s Manufacturing Sector, in Farm Policy Journal: Vol. 11, No. 2, Winter 2014, pp. 33-39.
Food security, or the provision of enough food to meet the needs of the population, has been identified as a major challenge over the next three decades as predictions now indicate the world’s population will exceed 9 billion by 2050. Australia’s contribution to global food security will be limited in terms of the volume of food produced but can be critically important through helping to ensure supply meets demand. Even minor shortfalls can result in volatile swings in food prices, threatening vulnerable populations. Australia can also play a part through advocating policy settings which favour market mechanisms to ensure supply keeps up with demand, and directly supporting increased food production through capability building in agricultural and food sciences in developing countries. In Australia, food security will be assured through having a globally competitive domestic food manufacturing sector focused on gaining scale through a strong export focus. This will be achieved by leveraging Australia’s reputation and the comparative advantage of having a well regulated, modern, safe and sustainable food production system.
McKinna, D (2014), Food Bowl to Asia: The Policy Context, in Farm Policy Journal: Vol. 11, No. 2, Winter 2014, pp. 41-49.
The Asian food market is being touted as the ‘dining boom’ that will make agrifood producers the new wealth creators. However, the hysteria surrounding the scale of the Asian food boom needs to be tempered by the reality of our lack of global competitiveness. With an industry strangled on all sides by political red tape and bureaucracy, massive labour overheads and ageing plant and equipment, this apparent opportunity may well be a mirage in the Simpson Desert. Not quite the lean, green, growing machine, for which recent media hype would have us believe, Asian markets are champing at the bit. However, it’s not all doom and gloom and pulling the right policy levers could deliver a simple and straightforward action plan that can have Australia eating our share of the Asian (moon)cake.
O’Brien, T, Potard, G (2014), An Interview with Terry O’Brien, in Farm Policy Journal: Vol. 11, No. 2, Winter 2014, pp. 51-52.