Andrew Cameron & Jared Greenville
This two-part ABARES Insights series discusses the recent growth of Australian agriculture and how changes in the market and policy landscape over the last 50 years have shaped the sector, what factors matter now, and what trends will matter in the near-future.
How today’s agricultural sector produces food and fibre is different to the past, and more change should be expected in the future.
Part 1: Agriculture in Australia – understanding the recent success
Australian agriculture went from 3 years of drought to reaching new heights in 2020–21, and then went on to even greater things in 2021–22, setting new industry records with a gross value of production of $85 billion.
Understanding the drivers of such a momentous turnaround in fortunes is important for understanding where the industry could go from here.
- Policy reform over recent decades has increased agriculture’s exposure to market signals, resulting in a shifting commodity mix that is better able to take advantage of trends and changes in the domestic and international landscape.
- Investment in research and development has contributed to productivity growth and allowed the sector to produce much more than before when the conditions are right.
- Risk management for the inevitable bad years means that many farm businesses can more quickly recover from adversity. How today’s agricultural sector produces food and fibre is different to the past, and more change should be expected in the future.
Part 2: Where to next for Australian agriculture?
Australian agriculture is scaling new heights in value, with 2022-23 expected to continue the record run.
While intense rainfall in eastern Australia has caused flooding and crop and livestock losses for many producers, a strong result will still be supported by close to record production in other areas of the country.
This article looks at the megatrends and emerging pressures likely to influence future sector performance.
- Governments and industry should continue to focus on reducing the cost of potential risks by increasing the choices and flexibility the agricultural sector has in responding to them.
- With significant international and domestic market uncertainty, making the right investments now will be key in guiding future sector growth.