Australian economy thrives under raw deal: Insights

15 December 2020

An ABARES Insights article released today explores whether Australia is missing out on domestic value creation opportunities because of the focus on trade in raw and minimally processed agricultural products.

‘Analysis of value creation in Australia through agricultural exports: Playing to advantages’ analyses returns from agricultural exports and compares value-creation pathways, such as adding attributes to products or downstream processing.

ABARES’ head of forecasting and trade Dr Jared Greenville explained value creation is about creating jobs and income for Australians prior to a product being exported.

“The public debate often asks whether Australia is missing out on value creation due to the focus on raw agricultural exports,” Dr Greenville said.

“But for Australia, trade in raw commodities and a small set of minimally processed products have provided the largest and most important valuecreation opportunities for Australian agriculture – a feature that is likely to continue in coming decades.

“Raw agricultural production activities are also evolving to be more consumer facing, with on-farm production practices changing to meet consumer demands.

“These include the addition of attributes to raw products, such as traceability and organic production.

“So, while these changes may generally increase the cost of production, they also generate returns for the economy, creating income and jobs just like activities such as domestic processing.

“Further steps to meet consumer demands with changes to on-farm production, such as planting new varieties that make for more specialised products, can also create additional export value.

“Past reliance on raw commodities and a small set of minimally processed products does not mean that this is the only value-creation path for the sector.

“Other opportunities may exist but a competitive and open economy is essential to ensure resources are effectively allocated to their highest value use where private enterprises can determine what to produce and where to sell.”

Analysis of value creation in Australia through agricultural exports: Playing to advantages is available on the ABARES website.

Last reviewed: 15 December 2020
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