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Agriculture Trend Between 1980 & 2000

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Agriculture is the one of the most important industries in the Australian economy. While Gross Domestic Product (GDP) share of agriculture has fallen slightly from 1980 to 2000, the total productivity has increased constantly (Australian Bureau of Statistics, 2008).This inverse trend between GDP growth and the proportion of agriculture is common in developed countries. In 2000, agricultural industry reached 4 per cent ($25 billion) of GDP and this proportion remains one of the highest in the Organisation for Economic Cooperation and Development (OECD) countries (Australian Government Productivity Commission, 2005).There are several reasons for this upward trend during this period, which are specifically, advanced technology, change in farm structure, the change in demands, and trade. Even though there has been negative impact on agriculture, those four areas have led to the high performance of agricultural productivity during this period.
Over the last thirty years, the use of technology in the agricultural industry in Australia has changed and improved dramatically. Layton states that one of the key elements to increase in supply is new and more efficient technology (2012, p67). The adoption of new technology is essential for farmers to maintain the level of profitability and to shift production possibility frontier out (Australian Bureau of Statistics, 2008). For instance, satellite technology has been installed when making decisions on land use and some larger farms have invested in more sophisticated machinery and equipment to produce crops more efficiently. Technology has been developed to improve the quality of herbicides, fertilisers and other chemicals to enhance farm lands. In addition, genetic modification (GM) technique makes farm products more resilient to diseases and harsh climate conditions. (Kingwell, R 2011). However, serious natural disasters, such as drought, still severely affect agricultural crops and to total agricultural productions. In 1982-83 and 1994-95, two severe droughts occurred. During this period, despite the use of high technology, the productivity levels dropped. This brought the total Australian GDP down and many famers lost their jobs as well (Australian Bureau of Statistics, 2008). These natural disasters are unavoidable in Australia but technology contributes to lessen the adverse effect from natural disaster as the latter drought in 1994-95 recovered quicker than the former one.
The change in farms’ structures also assists high productivity. During 1980-2000, the Federal government intended to protect smaller farm businesses as it was believed that it was crucial to maintain the total number of farms, but farm economics resulted in the opposite. Whereas the total number of farms has decreased one quarter and the area of land in agricultural production has also decreased by around 9 per cent, the average size of existing farms has increased from 2270 hectares to 3340 hectares (Australian Bureau of Statistics, 2008). Ten per cent of larger farms produce over 50 per cent of total output and 50 per cent of smaller farms account for 10 per cent (Australian Government Productivity Commission, 2005) .Even though this number varies across the range of crop industries, fewer and large farms have dominated the industry. They generate the largest amount of production more efficiently so the total output increased significantly. This seems to be positive outcome for the industry.
However, there are some concerns in terms of sustainability. Relatively old workforce is one of the most urgent issues as business cannot sustain without a young workforce (Quiggin, J, 2007). In 2000, more than 30,000 farmers were 65 years and older (National Farmer's Federation, 2012).However, older farmers have experience with more conventional business, environment and economic factors. Young generation is not as willing to work in the agricultural industry because of negative perception toward the industry, although they have ability with technology, flexible in terms of change and physically very able. (Sappey et al 2012) .Over the 20 year period, the cost of farm inputs have risen 1200%, while the cost of farm outputs have only risen 230% (Gray et al 2014). The small-sized farms are struggling with lower income. In this situation, the younger generation prefer to look for other career opportunities (Kingwell, R 2011). Another issue is many farmers have a lack of skills other than farming and basic education. The proportion of the agriculture workforce without post-school qualifications is relatively high compared to the workforce generally and other countries (National Farmer's Federation, 2012).This issue has been looked at in terms of the Government assistance. When the government subsidises the agricultural industry, it has created incentives and opportunities for the younger generation to be able to work and stay connected in the agricultural industry. Currently, many young people work as casual employees such as fruit pickers and do not see it as regular full time work. As a result, Australia will maintain a strong position in the international agricultural community.
The change in size of farms has helped to increase the total value of output as has the changes in demands. On a global level, the increase in population has meant more food production is required. Similarly, since 1980, the Australian agricultural industry has recognised the necessity for high food productions because of demand. Profits have also increased because they are selling to supermarket chains and huge fruit markets (Australian Government Productivity Commission, 2005). Many farms have advanced contracts with major retailers so they can keep reliable and stable demands. This means that they can have more opportunities for marketing of their produce to different buyers and this helps to have sustainable business (Australian Government Productivity Commission, 2005). Change in demand influences the profitability of products as well. While pigs, eggs and wools are slow or have a declining growth, poultry, grapes, cotton, nurseries and dairy have seen a high growth (Gray et al 2014) .Farms use vast areas of lands for these high profitable products. It was difficult for smaller farms to adjust their production depending on demand, but large farms can shift their focus on different products in industry easily. This shift will stop when the market creates new equilibrium and every business is making zero profit (Layton et al 2012, p173). In this process, some small-sized farms have left the industry as their costs outweigh their profits.
Although domestic demand has expanded agriculture productions, the room for domestic consumption is limited. Therefore, agricultural industry is more oriented to international demand. International trade plays an important role in the increase of total productivity. While the proportion of agriculture of total export has decreased since 1980, the importance of export for Australia’s agricultural industries is still significant, and around two-thirds of total agricultural production is exported either directly or indirectly (Australian Bureau of Statistics, 2008). One of the main reasons for the increase in export is that Australia’s tariff was reduced in 1970 and it has fallen from over 30 per cent to under 5 per cent by 2000 (Garnaut, R. 2002). Until the beginning of 1980, Australia had the highest tariff among OECD countries, but it became the average level of industry protection by 2000 (ibid). Export products have diversified during this period because technological development allowed the exporting of not only fresh produce, but also canned and other processed products at low costs, such as power milk and canned of juice. The recent largest contributors are wine at 15 per cent, beef and veal at 12 per cent and wheat at 10 per cent (Australian Government Productivity Commission, 2005).During this period, export destinations have changed as well. Japan used to be the largest export market, but the share has decreased due to decline of the wool prices and volumes and slow growth in Japanese economy. On the other hand, the United States, China and New Zealand have increased their share. In particular, due to the rise of China’s economy and its vast population, the Chinese market share has improved significantly. Now, Australia has oriented agricultural exports to Association of Southeast Asian Nations (ASEAN) and away from European markets. ASEAN’s share of Australian agricultural exports increased from 7 to 13 per cent (Australian Government Productivity Commission, 2005). Recent rapid economic growth in Asian countries has provided great export opportunity for Australia using location as an advantage.
In conclusion, even though there have been some challenging issues, such as natural disasters and the aging workforce, there has been a long term upward agricultural productivity during the1980-2000. Advanced technology, the structural change in farms, the change in demand, and strong relationship with neighbour countries have aided this. In the future, it seems this trend will continue and agricultural business can make a sustainable profit as long as the government retain its economic interest and support to protect the agricultural industry.

Reference
Australian Bureau of Statistics, 2008, "A HUNDRED YEARS OF AGRICULTURE", Australian Bureau of Statistics, Viewed 15 September 2014,.
Australian Government Productivity Commission, 2005 "Trends in Australian Agriculture Productivity Commission Research Paper", Australian Government Productivity Commission, Canberra, Australia, viewed 12 September 2014,.
Cribb, J, 1992"Australian Agriculture" 3rd edition, National Farmers Federation, Victoria, Australia
Garnaut, R. 2002, ‘Australia: A Case Study of Unilateral Trade Liberalization’ Massachusetts Institute of Technology. .
Gray, E, Oss-Emer, M & Sheng, Y, 2014 "Australian agricultural productivity growth past reforms and future opportunities Research Report 14.2" the Australian Bureau of Agricultural and Resource Economics and Sciences, viewed 12 September 2014 .
Kingwell, R 2011, "Managing complexity in modern farming, Australian Journal Of Agricultural & Resource Economics", 55, 1, pp. 12-34, Australia/New Zealand Reference Centre, EBSCOhost, viewed 15 September 2014.
Layton, A, Robinson, T, Tucker, B, 2012,"Economics for Today", 4th edition, Cengage Learning, Victoria, Australia
National Farmers' Federation "Farm Fact 2012" National Farmers' Federation Ltd, viewed 12 September 2014,
Quiggin, J, 2007,"Drought, Climate Change and Food Prices in Australia" Australian Research Council Federation Fellow School of Economics and School of Political Science and International Studies University of Queensland, viewed 12 September 2014,.
Sappey, R, Hicks, J, Basu, P, Keogh, D, & Gupta, R 2012, "Succession Planning in Australian Farming, Australasian Accounting Business & Finance Journal", 6, 4, pp. 94-109, Business Source Complete, EBSCOhost, viewed 15 September 2014.

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