Jan Davis: Stats show Aussie farmers are losing out to global competitors

Several weeks have passed since the adrenalin rush of the visit here by Chinese President Xi Jinping and the agreement to sign a Chinese Australia Free Trade Agreement (CHAFTA).

I think I am right in saying that at the moment we have an agreement to sign an agreement rather than we have signed the agreement. I believe it is subject to translation finessing before being unveiled publicly.

Whatever, for Tasmanian agriculture both CHAFTA and the President’s visit sought to highlight the prospects of a much closer working and trading relationship with the Chinese – though I and others have stressed that “free trade” in terms of one level playing field it is not.

When Australian farmers need a sober, balanced, independent appraisal of how they are going, they turn to the Australian Farm Institute. The AFI is a truly independent research body that analyses policy and data about our industry and the global industry. It then gives regular reports in which it pulls no punches. It is ably led by executive director, Mick Keogh.

Recently, the AFI reported its latest assessment of our performance on world markets. It makes for sobering reading, particularly so when you consider the relative lack of government subsidy that we get compared with our main competitors. (On an international scale, New Zealand is more frugal – and then only marginally.)

What the AFI found was this. Global agricultural trade has been increasing at an average compound annual growth rate of approximately eight per cent over the last 15 years. In some regions – central and South Asia, ASEAN, Africa and the Middle East – the growth rate has been more than 12 per cent a year.

But over that same 15-year period, the gross value of Australia’s agricultural exports has been increasing at a much slower rate of between five and six per cent a year. This means that, in global agricultural trade terms, Australian agriculture is losing market share.

And we are losing market share in those same regions where the value of agricultural trade is growing most rapidly. To cut to the chase, it means that although our trade to these places is growing, other agricultural exporting countries are doing better than us. They include Brazil, other Latin American nations, the US, China and Indonesia. Oh yes, and New Zealand.

The AFI says one of the reasons for our relatively poor performance is that we specialise too much.

“… much of the growth in agricultural trade in Asian regions involves feed grains and oilseeds, both of which are used as feed for the intensive livestock (pork and poultry) and aquaculture sectors that are growing rapidly in this region in response to growing demand for protein in diets,” the AFI says,

“Australia has limits on the availability of land to expand cropping, and the grains sector has tended to specialise in producing higher quality milling grains.

“Australia’s variable climate and limited irrigation water also means that oilseed production is limited.”
We do better in the trade for canola, beef, wine, sheep meats, live cattle and cotton, particularly in Asia, but the AFI says the overall message is that we are losing ground.

“… there is no room for complacency in relation to Australia’s agricultural competitiveness, and certainly no reason to assume that Australia’s proximity to rapidly growing markets provides some advantage over other national agricultural exporters.

“The results also highlight that Australian agriculture needs to do more in order to shift up the value chain, so as to increase the unit value of agricultural exports and in that way compensate somewhat for the lack of potential to increase the volume of agricultural production available for export.”

Its view of wool was enlightening. Australia is responsible for a large slice of the value of global exports of wool, but the total value of world trade in wool is growing only slowly, “and in real terms has in all likelihood been shrinking”.

So, as farmers, we still have the job ahead of us in terms of our global competitiveness in the markets that are growing fast but which our competitors are servicing more cost effectively.

Finally, an apology.

Last week in this column, when referring to funding cuts to the ABC, I made some disparaging remarks about the trustworthiness of politicians. These comments were made to some extent tongue in cheek. Certainly, I did not mean to infer all politicians are by definition untrustworthy.

Perhaps not surprisingly, a few of them took exception, quite strong exception, to my comments.

So I will now borrow the words of Defence Minister David Johnston and regret an unnecessary “rhetorical flourish” and apologise for any offense my remarks caused.
TFGA chief executive Jan Davis