Reform In The Agriculture Industry Of Australia

Question: Describe about the Reform In The Agriculture Industry Of Australia. Answer: Introduction The importance of agriculture industry cannot be under-rated by any country as this is one industry which promises long run welfare and revenues for the rural sector and specifically enables to cater to the food security issues of any country. From almost 30 years, Australia is trying to deregulate the agricultural sector and decrease deformation of the support of the producer. The report describes how Australia has succeeded in developing this prime sector by introducing various reforms and economy wide policy settings. The main focus was upon ensuring removal of the inefficiencies caused by irregular distribution of resources in the agricultural sector. Presently the said segment is highly susceptible to the exchange rate fluctuations and adjustment pressures from every corner of the Australian economy. The cost with regards the export in this segment is too high coupled with cost pressures from the home country because of competitiveness in the supply of inputs such as workforce b oth skilled as well as unskilled. Due to the same the competition is getting hampered, thus the Australian Government should direct its reforms in encouraging innovation and robust growth in agricultural segment. Therefore the present framework mainly focuses upon productivity growth of the said segment by bringing in deregulation. Body The agricultural segment of Australia focuses upon export so much that 60 percent of the total farm value is exported. The economy of Australia has undergone various changes and transformations bought into by a number of reforms. The reforms in Australia took place at a time when the economy of the world was being integrated. The reform began way back in the 1970 when the Australian government decided to restrict the financial help it provided to the said sector via budgetary measures. In comparison to the other segments, the agricultural segment was given the least preference and assistance. The initial reforms which were introduced basically ensured replacement of the guaranteed prices with stabilised prices of wheat and dried vine fruits industries and concentrated more on extending modification support. The agricultural sector was made a part of the economy wide reform in the 1980 which incorporated the phased lessening of tariff and such other border protection steps which was pronounced in the year 1988. The said year also faced the withdrawal of the subsidy provided to the consumption of fertilizer. The main purpose of the introduction of the reforms was to increase dependency upon the market forces and to eradicate hindrances to the competent marketing of the agricultural products. The same happened with dismantling of some of the statutory marketing authorities (SMA). Since the 1990s the main focus of the reforms had been on the response of the market, management of risk and being self-dependent. The main concentration in the 1990 has been over the draught policy in Australia. A new National Draught Policy (NDP) was formed in the year 1992 (Gray et.al. 2014). The reform stressed upon preparing the farms and extends social support to the families of the farmers and their community as a whole instead of giving business support to them. The most striking result of the reform in the agricultural sector has been that of the inputs which are available at a very low price. The same includes imported equipment, fertilizers, labour as well as infrastructure services. Further the deregulation in the monetary segment enabled them to get a greater accessibility to innovation and better credit facilities as well. The reform with regards the flexibility of the input markets also helped this sector as it is very difficult for the farmers to further pass the cost to the consumers in case of an increase in the input materials cost. Broadacre Input Output By Average Farm And Industry 1977-78 To 2010-11 Source: Abares Data The result of the Agricultural reform introduced by the Government of Australia was that the farmers no more faced any problems to adjust themselves with the erratic conditions of the market. The recent Agricultures White Paper vision has been given a warm welcome by all the farmers as it is expected to bring in tax reforms and changes to the Farm Management Deposits (FMD). The reform in the financial sector gave the farmers a wider array of lending options so as to fund modernization. Deregulation opened the gates for newer banks along with the fact that the banks can provide loans at lesser interest rates (Minifie, 2016). Another major reform being introduced is the White paper. The White Paper states that from July 2016, the limit of the FMDs will be increased to $800000 which would help them to pay off their debts taken for the business and hence save on the interest expense. The farmers who have been hit due to draughts will also have accessibility to their FMDs without letting go off their tax concessions. The White Paper has a provision of $30 million set out for farm insurance advice and risk assessment grants (Vidot, 2015). However the said section of the White Paper is still at its nascent stage and needs further discussions. Reform in the water sector has proved to be a great contributory to the agriculture industry of Australia. Water is one of the main components and draughts suffered in the past has led to formulation of the reforms in the water sector as well. The Australian agricultural sector has gained from the growth of an open souk of trading in water and better irrigation facilities which has led to an improvement in the overall productivity of crops. The National Water Initiative (NWI) floated by the Australian Governments at all levels is a joint effort to the manner in which Australia manages , measures, plans for and trades water (austrade.gov.au., 2013). Therefore the reforms that were introduced in the past has enabled the farmers to gain but the intense competition in the global and domestic market will encourage them to innovate day in and day out. Conclusion Therefore it can be concluded by emphasizing on the fact that the Australian governments reforms mainly comprised of withdrawal of intrusion which was affecting the output and the input cost of the said segment. Thus the reforms spelt out by the authorities have a combined impact on the farm business operations at various stages of production from acquisition of the land to its preparation, on-farm operations to off-farm operations which includes marketing and distribution of agricultural produce as well. The flexibility if enhanced in the said segment will ensure productivity to improve and help meet the larger requirements of the community as a whole. References: austrade.gov.au., (2013), Australias Dynamic Water Industry Fostering Excellence in water management, Available at file:///C:/Users/E-ZONE/Downloads/Water-Innovation-Booklet.pdf (Accessed 30th November 2016) Gray, E.M., Oss-Emer, M Sheng, Y., (2014), Australian agricultural productivity growth- Past Reforms and future opportunities, Available at https://www.oecd.org/tad/events/Mr.%20Merrilees_Agricultural%20productivity%20growth%20reforms%20opportunities.pdf (Accessed 0th November 2016) Minifie, J., (2016), The reforms we need to help Australia avoid economic stagnation, Available at https://www.afr.com/opinion/the-reforms-we-need-to-help-australia-avoid-economic-stagnation-20160529-gp6fho (Accessed 30th November 2016) Vidot, A., (2015), Farmers welcome Agriculture White Papers vision for the future, Available at https://www.abc.net.au/news/2015-07-04/farmers-welcome-agriculture-white-paper/6595250?pfmredir=sm (Accessed 30th November 2016)