Trade and climate change storm clouds have silver linings for ag

Trade and climate change present challenges and opportunities for agriculture in 2021

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Trade uncertainty and climate change will hang over the agriculture industry like two storm clouds this year, but both have significant silver linings.

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TRADE uncertainty and climate change will hang over the agriculture industry like two storm clouds this year, but both have silver linings if handled correctly.

China is expected to continue flexing its muscles in 2021, and National Farmers Federation chief executive Tony Mahar said as an export-orientated industry, agriculture would always be influenced by geo-politics.

"The obvious challenge is global uncertainty, whether that's in the United States or China, or anywhere else," Mr Mahar said.

Trade was clearly more unsettled than times gone by, Mr Mahar said, and as the dispute with China began to have a major impact, it's vital the damaged relationship was repaired.

The United States and the European Union have both recently signed trade deals with China.

If the US and EU were to gain a strong foothold in the Asian superpower while Australia continued to get the cold shoulder, there are fears the nation could be squeezed out of the Chinese market.

"We've had a really good relationship with China, and the US and EU are essentially playing catch-up," Mr Mahar said.

"But the point remains that it is a competitive global market, and everyone wants a slice of China.

"We want to keep our slice. Given the population size, the [Chinese] market should be big enough for everyone to be able to play."

Although the EU is a competitor in the Chinese market, it's also an opportunity for Australia to diversify its export market.

The United Kingdom and EU finalised their Brexit deal at the end of 2020, and it's hoped both parties will now turn their attention towards the free-trade agreements Australia is in the process of negotiating with them.

Mr Mahar said those FTAs should be prioritised and completed by the end of the year.

"It's an attractive market, but we do need to be realistic in terms of its status - it's not going to be the saviour to any Chinese market fluctuations," Mr Mahar said.

"It's a competitive space, any number of countries in that [European] region are big agricultural producers."

Mr Mahar is keen to wake the "sleeping giant" of Indonesia, which has the world's fourth largest population, after Australia signed an FTA with it at the start of last year.

"Other areas of ongoing potential are the older markets of Japan, Korea and Vietnam," he said.

"They are markets where Australian produce has a long and proud history, and is really well regarded.

"It would be remiss if we didn't try to consolidate and build on our position in those markets."

The world's second largest market, India, is in the midst of an agricultural policy reform that could open up the historically difficult market.

India's move to deregulate its ag sector, removing many staple foods from a list of essential commodities regulated by the state, has been met with protesting farmers across the country.

"It's a pretty fluid situation," Mr Mahar said.

"India has always been quite a challenge, but when you consider there are a billion people, there is a huge opportunity if you work through those challenges."

If the reforms stick, it could eventually pave the way for a more open trade deal with India. But that day could still be a long way off, so in the meantime, Mr Mahar said the ag sector was sowing the ground by talking directly to their Indian industry counterparts.

"If we can build relationships with India at an industry-to-industry level, that's a really valuable part we can play," he said.

"Obviously the trade agreements will be government-to-government, but there is real tangible benefit from farmers talking to farmers."

Climate change action will be a challenge, both at the grassroots and national level.

"On the ground, we need to look at how are farmers are dealing with climate change and what it means to their business," Mr Mahar said.

"At a national level, we have an aspiration for an economy-wide 2050 carbon neutral target, with some common sense caveats."

Mr Mahar said the challenge during the next year or two would be to map out the steps to get to the 2050 target, as an industry and an economy.

"We need to know what agriculture's pathway is in the economy-wide journey, so we have clear stepping stones," he said.

"It's a big job because each sector, be it beef, grain or pork, has a different carbon footprint.

"How to manage and reduce emissions will vary sector to sector, and that's the real challenge."

But if the policy settings are right, it's a win-win situation.

There are opportunities for farmers to "play their part" while gaining additional income streams by being rewarded for land and soil management, and carbon sequestration.

"Renewable energy is a potential opportunity for farmers," Mr Mahar said.

"It's not going to suit everyone, but for many farmers the opportunities in wind or solar - which are increasingly compatible with agricultural operations - can deliver returns to farms."

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