Economic Reforms in the Australian Agricultural Sector - Samples

Question: Discuss about the Economic Reforms in the Australian Agricultural Sector. Answer: Due to effective government reforms and policy terms, Australian agricultural sector has become the biggest contributor towards GDP growth in 2017. According to the report published by the Australian Bureau of Agriculture and Resource Economics and Sciences (ABARES), the entire value of the Australian agriculture industry will set to break another record in 2017-18, registering a whopping figure at $ 63.8 billion. According to the prediction of ABARES, the overall outlook of the farm production in the country will be eased up in the upcoming three years. However, the gross value of the industry will be reduced to $ 59.6 billion in 2020-21 (Vidot, 2017). In the selected article, Vidot (2017) admitted that the solid growth in the last three years cannot be taken over at least for the next five years. In the meanwhile, the production outlook for the Australian farm sector is not a worry for the next five years. Evidently, a slowing economic condition in China, directionless US policies, and geo-political tensions within the Eurozone nations have created some leading headwinds on the global trade horizon. Currently, the entire value of the firm export in Australia has set to reach a record high of $ 48.7 billion. Conversely, unpredictable global signs can hinder the growth of the Australian agriculture sector (Connolly and Gustafsson, 2013). In terms of global perspective, plentiful of supply of wheat has been expected to contribute towards the low price of the agricultural commodity. As per the report of ABARES, the production of barley and wheat will get a massive push due the exceptional agricultural season forcing the production up by 20 percent in 2016-17 to $33.9 billion (Vidot, 2017). On the other hand, the economic reforms introduced by the Australian Government can be identified as other primary factors supporting the growth of agricultural production in the economy. For example, the Australian government provides subsidies and educational trainings to the farmers in order to increase production in the nation (Foster, 2015). Agricultural subsidies are provided to the farmers in terms of direct payment and tax reliefs to promote production in the market that will help the agricultural industry to contribute a higher proportion in the GDP of the nation (Sheng, Jackson and Gooday, 2015). However, it is important to note that the agricultural subsidies provided by the Australian Government are comparatively lower than any other country (Dastagiri, 2013). On the other hand, in the year 2015-16, the agricultural sector of Australia contributed around 2.2 percent of the total GDP of the nation that is expected to increase in the upcoming financial years. A figure has been presented herein below to understand the contribution of different sectors in the total GDP of Australia: It can be seen from the statistical data of Australian Bureau of Statistics that the agricultural production in Australia has continuously increased in the recent years. Currently, the statistics of Australias GDP from agriculture industry have been represented in the underlying figure. Since the last quarter of 2016, the GDP from firm sector has increased at a substantial rate. In the last three quarters, the contribution of the agricultural sector was evident, to say the least. Precisely, in the first two quarter in 2017, the Australian agricultural industry has contributed AU$ 10980 million and AU$ 10369 million respectively (Abs.gov.au, 2017). Since 2014, the figures of GDP from the firm sector in Australia have been the highest in 2017. Furthermore, in the next financial year, the productions, as well as the export of wheat and barley, have been expected to fall due to the overall supply of these agricultural commodities around the globe. Hence, it has been a major challenge for the Australian Government to maintain the current growth of the agricultural industry. On the other hand, global rebound in the dairy market has been another positive sign for the Australian counterparts. By considering the existing scenario of the farming sector in Australia, the role of agricultural reforms, and government subsidiaries and policies has been outstanding for the growth of the industry over the last three years. At the same point of time, the rapid growth in the agricultural industry was driven by improved export and global demand of the agricultural commodities (Nadezda, Dusan and Stefania, 2017). However, the recent global condition and market competition have produced substantial challenges for the industry (Swinnen, 2016). In order to meet the targeted figures, the Australian Government need to introduce educational and training schemes for the farmers to make them teach how to use better technology to seek competitive advantage in the market. On the other hand, the State Government needs to take care of the middlemens share of profit in order to maintain stability in the price of the agricultural commodities (Headey, Alauddin and Rao, 2015). Additionally, it has been expected that the Australian government will stick to their decision of not providing any sort of subsidies on agricultural exports. However, subsidies can be provided for increasing production for the domestic customers to meet the current and growing demand of the Australian economy (Vidot, 2017). Subsidies in the form of technological knowledge and support can be provided to the farmers. Alternatively, low interest rate loans can be provided with loan repayment wavers in case of draught to safeguard and improve the current production c apabilities of the Australian agricultural sector. By considering the above analysis, it can be seen that the economic reforms made by the Australian Government has been the primary reason for the significant rise in the production level of the Agricultural sector. Additionally, the Government of Australia supports the farmers through low credit rate policy and technological advancement policies to meet the production targets of the agricultural industry. Furthermore, the government rolled back the subsidy policy for agricultural exports to increase the availability of agricultural commodities in the domestic market. Hence, it can be seen from the study that the Australian Government has made necessary economic reforms to maintain stability in the agricultural sector and seek highest level of growth in the last three years. References Abs.gov.au. (2017).Agriculture - Australian Bureau of Statistics. [online] Available at: https://www.abs.gov.au/Agriculture [Accessed Aug. 2017]. Connolly, E. and Gustafsson, L. (2013). Australian Productivity Growth: Trends and Determinants.Australian Economic Review, 46(4), pp.473-482. Dastagiri, M. (2013). Global Agricultural Policies: Reforms and Future Agriculture.Agriculture, Forestry and Fisheries, 2(1), p.11. Foster, J. (2015). The Australian Multi-Factor Productivity Growth Illusion.Australian Economic Review, 48(1), pp.33-42. Headey, D., Alauddin, M. and Rao, D. (2015). Explaining agricultural productivity growth: an international perspective.Agricultural Economics, 41(1), pp.1-14. Nadezda, J., Dusan, M. and Stefania, M. (2017). Risk factors in the agriculture sector.Agricultural Economics (Zem?d?lsk ekonomika), 63(No. 6), pp.247-258. Ruthven, P. (2017). Australias Growth Industries : Media Centre. [online] Ibisworld.com.au. Available at: https://www.ibisworld.com.au/media/2016/08/10/australias-growth-industries/ [Accessed Aug. 2017]. Sheng, Y., Jackson, T. and Gooday, P. (2015). Resource reallocation and its contribution to productivity growth in Australian broadacre agriculture.Australian Journal of Agricultural and Resource Economics, 61(1), pp.56-75. Swinnen, J. (2016). Reforms, globalization, and endogenous agricultural structures. Agricultural Economics, 40, pp.719-732. Vidot, A. (2017).ABARES Outlook: Value of Australia's agriculture sector to peak after three years of strong growth. [online] ABC Rural. Available at: https://www.abc.net.au/news/rural/2017-03-07/abares-wrap-2017/8328922 [Accessed Aug. 2017].