Visions for Sustainable Agriculture – Economics

Article: Sustainable Agriculture

Date: February 2009

Author: Geoffrey Gourley
Green Star Accredited Professional
Sustainability Leader

The agriculture sector operates in a dynamic and complex environment.

Australia’s agriculture sector has a proud history, with a record of contributing significantly to the performance of the economy since European settlement.

It is one of the mainstays of rural and regional economies and provides direct and indirect employment to hundreds of thousands of people around the country.

Australia’s agriculture sector has been through significant adjustment over the years, marked by consolidation of farm enterprises.

Producers will need to continue to demonstrate capacity to reallocate resources to maximize benefits from emerging market opportunities while at the same time continue to achieve impressive productivity growth that would offset adverse movements in their terms of trade.

> My Economic Vision

1. Improved Agricultural Model

Australian farmers will remain internationally competitive and sustain their businesses and incomes largely through productivity growth.

Total factor productivity on Australian farms (essentially the value of output relative to the value of inputs used) will rise strongly for the grains and cropping industry.

Commercial interactions along the supply chain are central to competitiveness, as are the innovative capacity of technology, impact of skills and expertise and management of the natural resource base.

Direct government payments to agriculture (including market price support) will account for a large proportion of farm incomes

2. Improved International Trade Environment

Future growth in Australian agriculture is likely to depend more on export markets than on the comparatively small domestic market.

Prices received for agricultural outputs will increase due to the quality of our goods.

Australian farmers will see increase in global demand as well as multilateral and bilateral trade arrangements being put in place.

Australia’s agriculture sectors will benefit with reforms to world agricultural trade through consolidation and enforced through the current Development Rounds of WTO negotiations.

3. Improved Resource Management

There will be gains to the cropping sector from increased mechanisation, improved herbicides and pesticides, better rotations, higher yielding varieties, and better farm management and marketing strategies.

An increase in capacity of Australia’s infrastructure to handle future volume growth will include sustainable upgrades to transport, ports, telecommunications, energy and irrigation facilities.

National Water Initiatives to take forward a comprehensive range of water reforms, including

o Defining access rights and fostering water trade,

o Providing water for environmental outcomes,

o Clearer accounting for the sourcing and allocation of water and the establishment of a Water Commission to assess progress with the initiative and to administer programs to assist with its implementation.

4. Increased Investment in Innovation and R&D

Substantial investment in research and development — through both the private sector and organisations

Funding from grower levies are equally matched by government grants – uncapped which would see investment for research well over $200 million p/a

A key driver in improving farm performance is the provision and adoption of new technologies.

There will be systems in place to develop innovative new technologies and for the undertaking of research and development.

5. Up skilling for Management & Labour force

Substantial Investment in human capital to ensure a skilled pool of personnel in the future.

Farmers of the future will…

o Have better business planning and enhanced market awareness

o Use modern technology such as computers and global positioning systems and better agronomic management,

o Need to become increasingly skilled as business managers

o Will need appropriate modern business and technical skills, higher levels of formal education

> Other Visions

Growth in niche markets catering to tastes and preferences outside the mainstream will continue to provide important opportunities for some farmers and manufacturers.

o For example, ‘organically certified’ food grown and prepared under specified conditions currently represents a relatively small segment of the market but will be developed and grown in response to expanding consumer demand for ‘natural’ foods.

Reduction in barriers to trade (such as tariffs and import quotas), quarantine and technical barriers (such as labeling requirements), maintenance of global competitiveness and market image

The future agricultural sector will service existing markets and exploit new market opportunities.

It will be important that roads, railways and ports have efficient facilities that are well linked and that investments occur where the potential economic benefits to the community are greatest.

A more consistent national strategic agenda for agricultural research and development

More active involvement of research investors in collaboration with research providers developing programs

Greater coordination of research activities across industries, research organisations and issues.

Effective dissemination of research and development outcomes to facilitate adoption of innovations by industry is important in maintaining productivity.

Biotechnology will offer significant benefits for productivity improvements in agriculture and natural resource management.

Sustainable management of Resources will be the norm

There are 56 natural resource management regions across Australia,

o These are owned by regional communities and therefore have a greater chance of achieving good natural resource management outcomes than a ‘top down’ approach that attempts to impose external solutions.

Strategies will be available for managing the risks of climate change.

Work will be needed on developing appropriate planning and strategies for the future.

A partnership of industry, government and research specialists to come up with good outcomes for the agriculture sector and for the community at large will be a success.