Agricultural Industry in Australia - Case Study Example

INDUSTRIАL АNАLYSIS Name Course title Date Agricultural industry overview Australia is categorized among the agriculture-based economies. It is among the major agricultural producers in the world with agricultural related sectors producing approximately 155 billion dollars annually that is equivalent to 12% of the total GDP. It has been estimated that farmers and graziers own about 135,998 farms that correspond to 61% of the Australian land. Farmers across the country practice irrigation as well as dry-land farming. Weather forecasters have predicted weather change that will result to reduced rainfall in the overall Australian land. This will pose water challenges to farming in additional to lowering the quality of agricultural produce (Curley and Dane 2011, 599). Moreover, Australia has three zones associated with agriculture that include Tasmania which is categorized as a high rainfall zone, the coastal zone that is mostly used for beef production and dairying farming as well as the pastoral zone that is used for pastoral activities. Australian agriculture involves a wide range of products such as dairy, horticulture, fisheries, livestock and viticulture as shown in table 1 and 2. It is a member of the Cairns Group formed by agricultural products exporting countries and that follows fair trade approaches. Agricultural sector received limited support and subsidiary from the government that only intervenes whenever there are severe challenges (Barrett and Maxwell 2005, 27). Furthermore, there has been bilateral relation between Australia and the Asian countries such as China, Japan, Hong Kong, India, and South Korea. These relations have boosted both import and export of agricultural products among the continents for better production and consumption of quality and diverse agricultural products (Curley and Dane 2011, 602). This paper seeks to analyse the agricultural industry as well as the on-going business relationship with Asian countries. Asian Market profile It is of significance to note that, there is no country in history that can afford to sustain rapid transition from poverty to sustained sufficiency, without increasing productivity in their agricultural sector. The biggest percentage of the Asian land remained untilled with limited agricultural activities taking place across the continent. This is majorly influenced by the unfavourable climatic conditions in additional to soil texture that is not good for farming (Foster and Leathers 1999, 13). Nevertheless, the area where agriculture is practiced does extensively well, mainly the places with alluvial soils such as river deltas and valleys. Irrigation is also practiced in these places to improve the productivity of the land as well as increase the quality of products harvested. Some of the crops planted in these places are sugar beets, rice and sugarcane and they require a lot of water for healthy growth. Therefore, irrigation is paramount for the production of these crops while some of other crops like legumes, cereals, and root crops can do well with ordinary precipitation (Evenson and Gollin 2006, 43). It is important to note that irrigation in Asia is mostly done through the traditional methods where trenches are dug and water is directed to pieces of land adjoining each other. In addition, water reservoirs are constructed on the upper side of the land so as to allow down streaming through the trenches (Timme 2009). The main disadvantages with this method are that there more water loss through evaporation as well as through seepage. More so, there is loss of soil nutrients, fertilizers, and pesticides through the continuous flow of water. However, some of the advanced countries like Japan and Taiwan irrigate their fields by use of water sprinklers and electric pumps (Lerman and Stanchin 2006, 222). This helps them to conserve water to run throughout the season allowing healthy food production and increased productivity. Furthermore, in Iran, Pakistan, and India there is increased consideration of pumping water from the sources using the underground irrigation methods helping reserve water considerably and improve drainage. The water is pumped using normal pumps and pipes are laid in the field to places where the crops are planted. Asian countries are embracing new technology in farming strategies to improve the productivity as well as try farming new crops (Faisal and Parveen 2004, 485). Furthermore, it is worth noting that the staple food for most Asians is rice. Therefore, approximately 90% of the world rice production comes from the Asian countries. Countries such as Pakistan, Bangladesh, Siberia, Afghanistan, and Sri Lanka Malaysia, Vietnam, and Central Asia are some of the major producers of the rice consumed in the world. In these countries, rice is allocated the biggest portion of the farming land than the other crops (Evenson and Gollin 2006, 57). Therefore, this makes Asian market the largest producer of rice globally. Moreover, grain crops are largely grown in Asian farms that includes wheat, soybeans, corn, barley, millet as well as sorghum. Wheat is also grown in large proportions in the Asian countries such as Afghanistan, the Middle East, Pakistan and Kazakhstan. The other crops are grown in most of the Asian countries practising farming (Sen 2000, 19). Irrigation has enabled most of these countries to effectively turn unproductive land into productive land, some becoming world leading exporters. In addition to crops, Asian countries produce tropical and non-tropical fruits such as mangoes, bananas, oranges, apples, papayas, citrus fruits, pineapples. Some special fruits for example mangosteen, litchi and durian are also grown. The fruits produced in most Asian countries are for domestic use only. However, countries like China, Philippines, Transcaucasia, and Taiwan produce bananas for export while Malaysia, Taiwan, and Philippines export canned pineapples (Liu and Savenije 2007, 892). More so, vegetables are produced in small quantities for local consumption purposes although Taiwan has successfully been able to can mushrooms and asparagus and become the leading exporter of these products. Livestock farming is also practised in Asia, though in a limited extent. However, the significant practice of Central Asian agriculture is animal husbandry, cattle, poultry and sheep are the main livestock. Turkmenistan, an Asian country, takes pride in racehorses breeding (Martin and Mitra 2001, 411). Table 5 below shows some of the crops grown in Asia. Business and organisational Strategies Therefore, with this diversity in the Asian agricultural market, trade between Asia and Australia has been successful. Given that almost 60% per cent of the world starving population resides in Asian countries, there is dire need for them to look for food supply from other continents to improve their food security. Therefore, Asia having trade relations with Australia helps it to improve the food supply in the continent. Some of the major food exports from Australia are wheat, horticultural products, fruits, vegetables, sugarcanes, poultry products and beef products as seen in table 1 and 2 (Domingo 2007, 725). Table 1 below shows some of the Australian agricultural products. Since Australia produces dairy products in large extent, it exports them to Asian markets that have limited dairy products hence creating strong relations in such business transactions. Some livestock breeds reared by Australian farmers are exported to Central Asian where livestock farming is practiced. Likewise, the two countries work hand in hand to improve the livestock breeds by cross breeding them for better productivity (Curley and Dane 2011, 608). Statistics show that in the year 2011, trade between Australia and East Asia had reached to a surplus of 55 billion dollars although it was a drop by 24.1 per cent from the previous year. Australia being a member of Cairns Group that constitutes other 18 members from different continents has been able to expand their markets for the agricultural products across the globe. This is a vital business strategy to have numerous markets to ensure that there is no export surplus in agricultural products. The group has the goal of export subsidies abolishment as well as trade-distorting policies that will result to enhanced market access for the agricultural goods. The group also introduced the agriculture agenda in the Uruguay Round and this led to establishment of Agreement on Agriculture. Likewise, it has been involved in the trade negotiations called Doha Round that pushes for agricultural protection using public policies. These strategies are helping boost agricultural products trade in the Asian countries. In addition, Australian has also enhanced trade relations with the Association of Southeast Asian Nations (ASEAN) countries for improved import-export trade for agricultural products (Curley and Dane 2011, 601). Australia has signed many Free Trade Agreements with Asian countries to aid marketing their agricultural products globally with limited restrictions. It has established close business relations with China, one of the fastest growing economies in the world, leading to creation of Sino-Australian relations (Barrett and Maxwell 2005, 37). These treaties have helped Australia to dispose their agricultural products in the Asian continent that has a high consumption power due to food shortages experienced. Organisations dealing with agricultural products have pushed for government provision of subsidies as well as setting trade policies that will help Australia to benefit maximally in their trade transactions. Furthermore, some business strategies are related to dealing with some problems affecting the agricultural practice and trade such as price control, biosecurity, technology integration, labour supply, infrastructure, and diseases affecting the sector (Timmer and Dawe 2007, 16). Issues and challenges On the other hand, there are challenges facing the agricultural industry in Australia. Some of the major issues and challenges facing the agriculture sector in Australia are lack of water security, droughts, weeds, low soil fertility, labour problems and global warming. The water security affects the growth and healthy development of the plants in the farms. Since most farmers cannot afford the irrigation systems to irrigate their farms throughout the year, they are faced with water shortages that eventually affect the quality of products harvested. Therefore, it lowers the amount of exports Australia transacts with the Asian countries. Moreover, the drought is a great challenge to the pastoralists and the livestock farmers who find it hard to provide enough water and food to their animals (Myhr and Traavik 2002, 76). Likewise, this affects the quality of meet, the number of animals, the wool production as well as dairy products produced. The products are limited and of low quality and this affect the export trade as well as local trade since the supply is limited but demand is high. However, irrigation and provision of water has help solve part of these problems but there still needs more to be done (McCullough, Pingali and Stamoulis 2008, 67). Another challenge that affects the Australian agriculture sector is the currency price fluctuation in the international platform. This has affected the trade conducted between Asian countries and Australia since it affects the prices of products eventually causing losses. Moreover, this affects the global prices of agricultural products offered in the global market determining the consumption rate as shown in table 3 below (Falcon and Fowler 2002, 209). Besides, Timmer (7) states that global warming is another great challenge that lies ahead of the agricultural industry. It will affect the weather patterns in Australia that will affect the seasons observed in farming different crops. The effects and impacts of global warming is reduced productivity, low quality products and adverse weather patterns that are hard to predict as table 6 below shows. It has been predicted that in future food production will lower and will be hard to sustain the increasing world population as table 4 below shows. Finally, labour costs affect the production of the agricultural industry due to increased land rents, insufficient labour force, and urbanisation (Aggarwal 2003, 191). These factors reduce the productivity of land resources and makes agricultural activities hard to undertake. Hence, it will reduce relations between Australia and Asian countries. On conclusion to this, it can be noted that there have been influential and significant relations that have been established between Australia and Asian countries due to agricultural industry. Expansion of markets to dispose export and surplus production is a major benefit to all economies, creating improved and cohesive economies between parties. Learning and borrowing from each other’s practices in agriculture has helped growth and development amongst Australia and Asian countries for sustainable food security. Although there exists challenges in the agricultural sector, establishing strategies to solve them creates a good atmosphere to tackle food problem in the globe currently and in future. References List Aggarwal, P.K. 2003. “Impact of climate change on Indian agriculture”, Journal of Plant Biology. 30: 189-198. Barrett, C.B. and Maxwell, D.G. 2005. Food Aid After Fifty Years: Recasting its Role, New York: Routledge. Curley, M. and Dane, M. 2011. "Issues in Australian Foreign Policy, Australian Journal of Politics & History 57(4): 597–613 DOI: 10.1111/j.1467-8497.2011.01617.x Domingo, J.L. 2007. “Toxicity studies of genetically modified plants: A review of the published literature”, in Critical Reviews in Food Science and Nutrition (2007), 47 (8): 721-733 Evenson, R. and D. Gollin, 2006. Crop Variety Improvement and Its Effect on Productivity Wallingford, United Kingdom: CABI Publishing. Faisal, I.M. and Parveen, S. 2004. “Food security in the face of climate change, population growth and resource constraints: Implications for Bangladesh”, Environmental Management, 34: 487-498. Falcon, W.P. and Fowler, C. 2002. “Carving up the commons – emergence of a new international regime for germplasm development and transfer”, Food Policy, 27: 197- 222. Foster, P. and Leathers, H.D. 1999. The World Food Problem. 2nd ed., Boulder and London:Lynne Rienner Publishers. Lerman, Z. and Stanchin, I. 2006."Agrarian reforms in Turkmenistan" Policy Reform and Agriculture Development in Central Asia, Springer, New York, 222-223, ISBN 0-387-29779-0 Liu, J. and Savenije, H. G. 2007 “Food consumption patterns and their effect on water requirement in China”, Hydrology and Earth Systems Sciences, 12: 887-898. Martin, W. and D. Mitra. 2001. “Productivity Growth and Convergence in Agriculture and Manufacturing”. Economic Development and Cultural Change 49(2): 403–422 McCullough, E., Pingali, P. and K. Stamoulis 2008. The Transformation of Agri-food Systems: Globalization, Supply Chains and Smallholder Farmers. Rome: FAO. Myhr, A.I. and Traavik, T. 2002. “The precautionary principle: Scientific uncertainty and omitted research in the context of GMO use and release”, Journal of Agricultural and Environmental Ethics, 15:73-86. Sen, A. 2000. “A Decade of Human Development”. Journal of Human Development, 1(1): 17-23. Timmer, C.P. 2009. Reflections of Food Crises Past. Food Policy, 35(10):1-11. Dawe, D. and Timmer, C.P. 2007. “Managing food price instability in Asia: A macro food security perspective”, Asian Economic Journal, 21(1): 1-18. Appendices Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Read More