Ag export markets shrinking

13 Nov, 2014 01:00 AM
We are losing overall market share despite more than doubling our farm exports

AUSTRALIA has rapidly lost its share of some of the world's biggest and fastest growing agricultural markets, according to a new report to be released today.

In our biggest farm export market, North Asia (China, Japan, South Korea and Hong Kong), we are least holding our own against the likes of Brazil and the United States.

But we have lost significant market share in major, rapidly expanding markets like the ASEAN bloc, Central and South Asia (which includes India and Pakistan) and Africa and the Middle East, according to the alarming review of the value of Australia's farm exports in the past 15 years by the Australian Farm Institute (AFI).

The value of North Asia's farm imports from outside the region have been rising by around seven per cent during the past 15 years, reaching $US220 billion in 2012, while the value of Australia's share has been increasing by 6 per cent.

In contrast, Brazil has been growing its market share by an average 17pc a year on the back of higher soybean and poultry exports, the AFI report said.

Our performance in the ASEAN region (which includes Indonesia, Malaysia and Thailand) was more disturbing. Our share of an annual farm import market now worth around $US60 billion and growing at an average 14pc a year has slumped from 25 per cent in 1999 to 10pc in 2012.

Australia was now playing second fiddle to Brazil and China in the ASEAN bloc and despite our proximity to Indonesia, we are losing overall market share despite more than doubling our farm exports to our near neighbour in the past 15 years.

The AFI relied heavily on trade data collected by the United Nations to produce the report which will be released this morning at the AFI's annual agriculture roundtable conference in Melbourne.

"Overall, Australia has lost market share in global agricultural markets and as a consequence, Australian farmers are failing to capture the full benefits of the rapid growth in demand for agricultural products by consumers in developing nations," AFI executive director Mick Keogh said.

"Instead, farmers in nations such as Brazil, the US, Argentina, Thailand, Indonesia and even China are capturing an increasing share of the value of international agricultural trade," he said.

"There are a number of reasons that Australian farmers are losing market share in these rapidly growing markets.

"First, much of the growth in demand for agricultural imports has been for feed grains, fodder and oilseeds. These products are needed to feed the rapidly growing intensive livestock sectors in nations like China. Unfortunately, Australia has not been a major exporter of these products.

"Second, Australian agriculture is limited by the nation's variable climate and soils, a lack of productivity growth over the past decade and relatively high costs, therefore farmers have not been able to profitably respond to the increased demand from these developing markets."

Mr Keogh said the report had highlighted several key challenges for Australian agriculture.

"The first is the need to resuscitate productivity growth in the sector," he said.

"Agricultural productivity growth has largely stalled since about the year 2000 and considerable efforts will be required to revive it, and to ensure the sector remains internationally competitive.

"A key factor to achieve this is increased investment in agricultural research and development.

"The second is international market access. There is clear evidence in the trade data analysed for this research that trade agreements (for example the Australia-Chile Free Trade Agreement) can quickly result in the rapid growth in the value of Australian agricultural exports.

“The recent progress that has been made by the Australian government in trade agreements with Japan and Korea will hopefully bring similar benefits, and achieving a trade agreement with China could trigger a huge boost in Australian agricultural exports.

“The third key challenge lies in positioning Australian farm exports as premium products that have inherently superior quality and which also incorporate high standards of food safety, biosecurity and environmental sustainability.”

Mr Keogh said there had been much discussion about the need to better develop "Brand Australia" as a vehicle to communicate this information to international and domestic consumers but little evidence so far that farm leaders and policy makers saw this as a priority and were prepared to act.

Vernon Graham

Vernon Graham

is the group editor of Fairfax Agricultural Media
Date: Newest first | Oldest first


Jock Munro
13/11/2014 3:43:27 AM

Why should anyone be surprised that Australian exports are in decline? Our urban elite politicians have done everything in their power to make it more difficult for agriculture-deregulation of grower marketing, imported food flooding the domestic market and unsustainable costs. There will be a day of reckoning.
13/11/2014 4:50:08 AM

This loss of market share coincides with our switch away from dedicated Australian Brand marketing (like the AWB Single Desk) as we split up to try and compete as tiny individuals against the mega rich giant multi national trading houses for market share. Flaming madness we are now only just starting to suffer from. Add to that the gutless stance of our Federal Governments in using FTA's to get around our proven exorbitantly high input and supply chain costs. These are all linked to burdening industry to carry the cost of the welfare component in our wage and environmental regulations.
13/11/2014 8:06:09 AM

The shows great success in our leaders as we move to compete with Zimbabwe for survival , we are dissipating food production , selling our assets to overseas governments . closing the artesian basin by mining . closing manufacturing . A great success is getting rid of our car industry . Our leaders must so proud there vision is coming to fruition . soon we will be a proud nation of jobless & starving people . as they say to help 3rd world countries you must be one of them !!!
13/11/2014 9:32:33 AM

It's got nothing to do with marketing efforts, but everything to do with the stronger for longer Aussie dollar thanks to the mining boom, the reduced irrigation supply due to Penny's water buy back and the two years of drought in the north.World record grain production and the resulting stockpile isn't helping either.
13/11/2014 10:30:20 AM

Reality always prevails over illusion at the end of the day.Agriculture is a profit and loss business governed by the balance sheet. Yet Australian agricultural policy is determined by crude political criteria that assume there is no cost to defying the market.The AFI study is correct in its conclusion.Every year that goes by Australian agriculture is relatively contracting.Like a thief in the night the natural potential of agriculture in this country is being stolen by politicians and government.
14/11/2014 7:43:45 PM

Howard made life harder with his worst FTA ever. Abbott and Robb are doing their best to top that and if they sign us up to the TPP that will completely leave us at the mercy of the worlds largest economy. Are they realy that dumb or can't they read. Either way they will take the mat right out from under us.


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