The farm sector's market diversification drive needs to address not just which countries we trade with, but also what we sell.
Specifically, Australia must get serious about exporting more value-added agricultural products, says Assistant Trade Minister, Tim Ayres.
He told this week's national Outlook 2023 conference agriculture's reliance on any one market or any one product made the nation far too vulnerable to global supply chain shocks and trade tensions, and it was undermining significant skills growth opportunities in regional areas.
Senator Ayres said not only did China dominate as the destination for 80 per cent of Australia's total goods exports in the five years to 2020, but primary commodity-type goods accounted for 80pc of the nation's exports in 2020.
That concentration of reliance on commodities was eight times greater than average among Australia's peer trade partners and rivals overseas, according to research by the Business Council of Australia.
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"We need to pursue product diversity and move Australian products higher up the global value chain to lift national prosperity," he said.
In the wake of China's freeze on numerous product imports, ranging from barley and coal, to cotton, beef wine, and lobster, it was widely accepted greater market diversity was critical for the security of the national economy, but product diversity and export complexity were key challenges, too.
Frustratingly, Australian manufacturing activity was actually declining, not doing more to add value to our exports.
Complacency
"It's time for an end to complacency," Senator Ayres said.
"Does anyone seriously believe we can prosper and guarantee our security in the region, or the world, if our industrial base and our economic complexity stay the same or decline?"
He said the increasing shift of good jobs and opportunities from regional areas had left a generation of Australians feeling abandoned and vulnerable to the politics of exclusion and grievance.
Market and product diversification, and industry policy, are interwoven with security policy
- TIm Ayres, Assistant Trade Minister.
There were also security implications from the decline in export complexity and industrial diversity.
"I mean security in its broader sense - our capacity to solve national challenges, for resilience, and to contribute our capacity as an equal partner in our global region," he said.
"Market and product diversification, and industry policy, are interwoven with security policy."
He pointed to agtech, higher value agriculture inputs and processed food and fibre products as obvious opportunities, as were deploying our mining engineering capability around the world, or converting Australia's high value mineral resources into higher value processes and products, including lithium batteries.
Reconstruction fund
The government's proposed $15 billion National Reconstruction Fund could play a big role in fostering export diversity, if it had parliament's support, which at present it does not.
The fund, which would invest in technology and manufacturing initiatives to aid their expansion, subsequently reaping financial dividends from those investments, includes plans for $500 million for value-adding in the farm, forestry and fisheries sectors.
Federal Agriculture Minister, Murray Watt, also championed the reconstruction fund's potential value to agriculture and regional Australia when he addressed the Outlook conference, and at last month's evokeAg technology event in Adelaide.
Although the NRF is not backed by the Coalition opposition parties or the Greens, the Labor Government is describing it as the biggest peace-time industry policy in Australia's history.
Senator Ayres said Australia needed to promote sovereign capability and broaden our economic complexity, doing more to reverse the off-shoring of industrial, processing and technology capacity.
Meanwhile, he told Outlook 2023, farmers' green credentials were a real asset when it came to export opportunities and current trade negotiations, particularly with Europe.
Ag subsidy cost
However, Australia continued to be "sold short" by inequitable agricultural trade policies among our market partners, particularly distortionary government subsidy support for overseas primary producers.
OECD estimates suggested support to agricultural producers totalled $US817 billion annually.
Farm subsidies displaced production and undermined global emissions reduction by subsidising high emission habits and low productivity production.
Ironically, they were also corrosive for global food security, despite often encouraging domestic farm production.
"And a World Bank report found only 35 cents in the dollar of domestic support actually ends up going to farmers," Senator Ayres said.
Australia's past leadership roles in agriculture trade liberalisation were more important than ever.
The new government wanted to refresh the Cairns Group agenda to focus on more trade reform at a time many countries had responded to the COVID pandemic by implementing more restrictive and self-focused trade barriers and domestic support policies.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
