A new ABARES report investigates the slowdown in productivity which has impacted Australian broadacre agriculture over the past two decades.
ABARES Executive Director Dr Jared Greenville said climate variability, particularly drought, was having an important impact. “We have seen that changes in Australia’s climate have dragged down productivity growth, and when we experience severe drought productivity growth significantly drops away,” Dr Greenville said.
“Other factors are also at play, including rising input costs, fluctuating commodity prices, fewer new transformative technological developments, slowing economic dynamism, and limited opportunities for productivity enhancing policy intervention.”
Dr Greenville explained that when productivity stopped growing, it was increasingly difficult for farmers to compete in international markets where prices are often low or volatile and competition is high.
“It means that the price buffer which farmers can accept for their outputs while remaining profitable is increasing at a slower rate than before,” Dr Greenville said.
He said it was important to note also that agriculture was part of a wider long-term productivity slowdown occurring across the Australian economy.
“While other industries look for answers, agriculture can lead the way out of this national challenge,” Dr Greenville said. “We are not out of options. Many things can be done to drive productivity growth.
“When we remove the effect of climate variability, we still observe productivity growth as farmers continue to adopt existing technologies and practices and from the investments made in our R&D system.
“Continued investment in R&D and practices to help agriculture thrive in a changing climate, along with uptake of new technologies by farms will be key.
“Productivity also thrives in free and open markets, so government should ensure that farms are able to consolidate or change without unnecessary barriers.
“Industry and government will need to think creatively to identify new sources of productivity growth so that Australia continues to be a competitive leader in farming.”
The ABARES Insights report Australia’s farm productivity slowdown – why it matters, and what it means for policy makers can be downloaded here.
