The road to reform: how a developed country can repurpose agricultural support
Many developed countries provide high levels of agricultural support to pursue a large and growing list of objectives. In recent decades Australia has pursued these objectives by repurposing inefficient forms of support into more efficient forms of support. Australia has emerged from the reforms with a vibrant and resilient agricultural sector, which may provide lessons for other developed countries considering their own roads to reform.
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Overview
Many developed countries provide high levels of agricultural support to pursue a large and growing list of objectives including stabilising farm incomes, strengthening food security and increasing environmental sustainability. Like many developed countries today, the Australian agricultural sector historically consisted of many small farms that received high levels of distortionary support. In recent decades Australia repurposed inefficient forms of support and emerged from the reforms with a vibrant and resilient agricultural sector with benefits for productivity, farm incomes, exports, food security and the environment. Australia’s reform experience may provide lessons for other developed countries considering their own roads to reform.
Key findings
- Like many developed countries today, the Australian agricultural sector historically consisted of many small farms that received high levels of distortionary support. Australia’s agricultural reform journey is therefore relevant to other developed countries today.
- Australian agencies and agricultural bodies sought to build a consensus that reform would benefit the broader economy including farmers as a whole, taxpayers and consumers.
- Australia’s agricultural reform program was multi-faceted, coherent and sequenced. While direct support to farmers was rapidly dismantled, it was replaced by other forms of support – especially research and innovation – and adverse effects were offset by adjustment packages that were time-limited.
- Australia now has the second lowest levels of producer support in the world at around 2% of farm gross receipts. This low support enables an efficient, resilient and internationally competitive farm sector with one of the lowest environmental impacts when compared globally.
- Australia’s experience shows that reforms are both feasible and beneficial. Along with other factors, policy reforms contributed to significant gains in agricultural productivity, farm incomes, diversification, exports, food security and the environment.