Financial support and subsidies
Discuss about the Adjustment Assistance for Policy Reform.
According to ABRES September report 2017, Agriculture contribution to the country’s Gross domestic product was the largest for the year 2016 to 2017(Johnson, 2017).This assertion shows how integral the agricultural sector is to the growth of the Australian economy. The agriculture sector contributed 0.9 % of the 1.9 % economic growth rate (Johnson, 2017).The Australian agriculture industry has undergone positive and negative reforms which have consequently contributed to its decline and industry growth over the years. On a positive note, the Australian government has offered financial support, subsidies and adjustment assistance to the agricultural sector whose effect on the industry has been positive. In addition, the government is committed to research and development of agricultural based innovations which have contributed to the increased production and technological advances in the field.
Also, the Australian government has made trade agreements with Asian countries and the U.S to promote and create newer markets for its agricultural produce .However, tax benefits are more favorable to small farming businesses as opposed to large farming businesses. Taxation reprieves have been given to certain basic plants and equipment’s thus making the effect of the taxation relief small rather than large-scale. The recent food and safety initiative with the United States of America and, export control bill are aimed to protect the farmer’s interest at the international level while promoting international trade relations thereby creating a win situation. The Australian government has implemented current legislative instruments which are accommodative and responsive to the changing global and economic conditions thus creating a good business environment for investments, local and international, creating room for technological advancement through financing agricultural based research and making newer trade arrangements with fast growing economies such as China, India and other Asian countries.
All in all, the agricultural reforms made by the Australian government has made positive changes to the industry performance as contrasted with negative impacts.
Following the unveiling of the 2017 Competitiveness white paper on Agriculture, reforms are to take place in the agricultural sector. Particularly, the Australian government seeks to reconstruct its water resources through its 300 million dollar allocation towards the national water Infrastructure Fund .The funding is to develop research and aid in the construction of more water resources such as dams for the benefit of agricultural uses (Vidot, 2017).Additionally, funding allocation were made to boost fair trade and encourage competitiveness in agriculture based supply chains for better performance of the sector. Through this funding the ACCC is expected to initiate competitive programs and fair trade terms for the agricultural industry players to operate within thus leading to better outcomes in terms of revenue and healthy competition. Moreover, taxation benefits have been implemented into the agricultural sector through the white paper 2017, competitiveness report.
Research and development
Specifically, taxation reforms have been implemented in the farm management deposit schemes which will reduce the tax burden on agricultural produce hence more revenue for farmers and exporters (Vidot, 2017).Taxation reprieve was awarded to small farmers whose annual turnover constituted less than two million dollars. Additionally, small scale farmers will enjoy diminished tax refunds in the future(Marshall,2015).Majorly, the tax incentive covers small –scale farmers as opposed to large scale farmers thus raising the issue of equity in the tax burden of farmers in Australia .With lower taxation burden ,small farmers are able to save and boost their chances of expansion and growth. This tax relief was implemented in the year 2015.However, the tax relief was also limited in its application in the sense that it applied not only to specific plant s and equipment but also to small scale farming businesses thus limited impact in terms of collective industry reforms.
Additionally, the incorporation of the Biosecurity Act of 2015 has made various changes to the agricultural sector in Australia. The Biosecurity Act has undergone changes over the years. The Act is a current version of the previous Quarantine Act. Primarily, the new biosecurity Act provides a modern and balanced pest and disease protection for Australian agricultural produce and industry. Essentially, the Act provides a balanced view of protection without hurting the fair global trading arrangement in agricultural products. The new piece of legislation is accommodative of the 21st century challenges and seeks to provide a balanced approach of protectionist and liberalist views of trade (Department of Agriculture and Water Resources, n. d). Owing to the fact that the Australia is part of the European Union, makes any reforms of the Common Agricultural policy automatically applicable to the Australian agricultural sector.
In addition, the Australian dairy farming sector has encountered deregulation in the milk manufacture sector since the year 2000.Currently, Australian dairy farmers are independently sustainable (Department of foreign trade and Affairs, N .d).Recently, the Australian government has made important step towards reforming its water resources in promoting better agricultural practices(Pittar, N .d).The water reform was due to the need to deal with over allocation ,aging infrastructure for water delivery and environmental reasons. Currently, the white paper competitiveness report illustrated various budgetary allocation for revamping the Australian water resources under the minister in charge of agriculture for better performance .Recently, there was the introduction of the Export Control Bill in the year 2017, seeking to streamline the exportation sector of agricultural produce (Department of Agriculture and Water resources, n. d).
Trade agreements and tax benefits
Primarily, if the piece of legislation is accented to, then the exportation of Australian agricultural produce will be governed by new set of requirements and regulations .The new legislation seeks to provider better and stronger support and protection to Australian farmers, producers and exporters for the better performance of the industry. The export control legislation is aimed at making the export conditions and environment more contemporary and responsive to the current global trading environment due to the dynamic nature of change of the global trading scene. In an effort to make Australian agricultural produce more competitive, the Australian government has invested in the production and marketing of its agricultural produce .Specifically, the Australian government has provided financial subsidies to Australian farmers so as to boost their production by subsidizing the cost of agricultural farm inputs (Gray, Emer & Sheng, 2014).
In addition, the Australian government enforced price supportive schemes for the tobacco and sugar industry owing to their delicate nature. To curb drought challenges for farmers, the government introduce a drought based policy reform program which is aimed at training and equipping farmers with the support and skills required to carry out their trade despite the harsh economic effects of drought. Additionally, the Australian farmers have access to loan schemes for eleven coming years as part of the government drought support program. Under this loan system, Australian farmers will get to enjoy financial assistance to sustain and expand their business thereby increasing their production levels, profit margins and sustaining employment opportunities (Vidot, 2017).However ,the level of government assistance has greatly reduced thus making the Australian agricultural industry the least subsidized in the global environment(Farmers.Org,2017).
According to the Organization for Economic Cooperation and Development, Australian PSE estimates are among the lowest in the world thus making the agricultural industry more efficient and self-sustainable as compared to those of other states. Primarily, the Australian government has invested into Agriculture based research and development. Particularly, the agricultural research and development corporation was established to develop and promote innovative farming techniques (Department of foreign affairs and trade, n .d).The government support for genetically modification and other technological advancement in the agricultural sector cannot be ignored. The Australian government is more committed to research thus its allocation of 180.5 million dollars as part of the competitive grant programs. Such programs are aimed at promoting innovative ways of productive, sustainable and competitive agricultural produce and technique (Department of Agriculture and Water Resources, N. d).
Biosecurity Act and water resources reform
This government commitment over the years has made the Australian agricultural produce be of high quality, cost effective in terms of production and more competitive at the global trading environment hence more export revenue for the Australian farming community, more government revenue through taxes and more employment opportunities in research and development activities. Through technological advancement, Australian produce have doubled in production which has left enough for exportation thus more revenue (White, 2017).Notably, Australian innovative capabilities are considered among the best globally thus making its produce more competitive (Langridge, 2014).Currently, the Australian center for robotics has made significant progress in the production of robots (Agbots) to be used as labor in the farming process (How Agricultural robots…2018).
Subsequently, the challenge of skilled labor in the agricultural industry in Australia is of significance consequence to the agricultural production levels .This is due to the fact that most of the farmers are the aging populations thus creating the skill and labor gap for the sector every too often. The innovation of robots is aimed at bridging this labor gap for the agricultural sectors so as to sustain the agriculture sector in Australia and globally. Robots are to substitute human labor which is likely to be eroded by the quickly aging farmers who comprise the largest percentage of skilled workers in the agricultural industry. This is a massive technological reform for the Australian and global agricultural sector .However, the use of technologically advanced techniques and equipment’s such as drones and other automated farming techniques has created a huge unemployment gap (SBS News, 2018).In as much as technology advances can increase the production and quality of agricultural produce, it risks the employment opportunities of some workers.
Consequently, some employers might chose to let go of their employees due to the technological benefits of this automated farming techniques thereby contribution to the unemployment levels in the countries and lowering the economic livelihood of laid off workers. There is need to balance the technological merits and human needs when it comes to job opportunities and implementation. Biogenetics and other advanced technological agricultural systems have emerged. Various agricultural sectors have encountered transformative technological developments .Namely, biological, material, seasonal forecasting and digital sciences have developed over time. This development has changed the agricultural sector through their costs and outcomes to the agricultural industry. The Australian government through CSIRO has made various notable discoveries which have increased the production of agricultural produce and made them more competitive thus the assertion that technological advances might be good for the development of the Australian agricultural sector (Government of Australia, N. d).
Export Control Bill and production of agricultural produce
In addition to advanced technological inventions ,there is increased protection of small-scale farmer rights when it comes to innovation and contractual relations (Wiseman,2016).In the year 2016,a mandatory “terms of use” arrangement was developed for all contracts entered into by small farmer businesses regarding digital agricultural practices and other technological and standard contracts .These increased contractual clause adequately protects the innovative rights and privileges of small farm based businesses while dealing with consumers and other large farming businesses. Also, the expansion of the market for Australian agricultural produce has changed significantly over the years thus giving it a comparative advantage over other markets. Currently, most Australian agricultural products are exported to the Asian region and China. The dominance of the Chinese economy as an upcoming economic powerhouse than the American economy has not escaped unnoticed.
Also, the expansion of the market for agricultural products made in Australia has changed its agriculture sector performance. It has increased the demand for Australian agricultural produce thus leading to increased production and exportation volume (Ferguson, 2018). Equally, productivity levels in the agricultural produce has required a nudge over the years. Productivity of produce helps in making the produce more competitive but also increases the profit margins for farmers thus the need for constant reforms in the productivity .The Australian agricultural produce enjoys productivity growth rates which keep making their agricultural produce more desirable to the global market thus more sales. Australia’s history with low productivity levels are gone due to the incorporation of innovative and technological ways and tools of farming (Langridge, 2014).In addition, the currently signed food safety recognition arrangement between the United States of America and the Australian companies made the exportation of Australian agricultural produce more easier than before.(Export.Gov,2017).
Under this agreement, both states recognize the food safety standards of the other country which saves time for inspection and makes the exportation process more efficient and time saving hence a milestone in international trade of Australian agricultural produce. Recently, the Western Australian government permitted its farmer population to take part in the carbon farming as part of the Emissions reduction initiative by the Commonwealth (Fowler, Stanley & Landgrafft, 2018). Price giving initiatives as a way of curbing carbon emission is more of a modern approach to land use and farming. This carbon free farming mindset is changing the farming techniques of farmers. The common wealth Emission reduction Fund is a very good incentive to encourage environment –friendly farming practices whose emphasis cannot go unnoticed in the current world. The introduction of financial incentives as a way to motivate low carbon emittance practices in farming is revolutionizing the agricultural practices and techniques in Australia and globally for better environmental outcomes.
Drought-based policy reform and loan schemes
Also, the Australian dairy market has experienced adjustment assistance (Harris, N. d).The adjustment process composed of buying out previous dairy farmers and land allocated to other agricultural purposes. Through this land adjustments, some farmer’s production level increased due to the additional resources. Notably, the dairy adjustment process was implemented in the year 2000.
Conclusion
Undoubtedly, the Australian government has made substantial industry reforms over the years. Also, the fact that the Australian agriculture industry was one of the major reasons for the gross domestic product growth of the country, makes the sector important to the economy and its population. Mostly, the reforms have had positive impacts on the performance of the Australian agricultural sector. However, the Australian agricultural sector still suffers from unequal tax reliefs between the large and small farming businesses. The Australian government financial support in terms of drought policy, subsidies and adjustment packages has had positive effects on the economy. In addition to subsidies, the Australian government has invested in research and development initiatives so as to make farming techniques and products efficient, safe, productive and competitive. Despite Australian farmers being among the least subsidized in the world, their agricultural industry is considered among the top most productive, competitive and efficient. The currently updated legislation on exports and food security is more responsive to the current global trading challenges protects the interest of the Australian farmer population while promoting international trade. Overall, the Australian government has made their agricultural produce industry more effective, efficient, productive and competitive which is sustaining and growing its agricultural sectors.
References
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Export.Gov. (2017).Australia-Agricultural sector. [Online].Available at https://www.export.gov/article?id=Australia-agricultural-sector[Accessed 17 May 2018]
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Fowler, C., Stanley, M and Landgratt, T. (2018, April 19).Multi-billion potential for Western Australia’s carbon farming industry. .ABC News. [Online].Available at https://www.abc.net.au/news/rural/2018-04-20/carbon-farming-approval-for-western-australian-pastoralists/9672784[Accessed 17 May 2018]
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Wiseman .L. (2016, November 25).Changes to contract laws could give small farming businesses more control of data and innovation. [Online].The Conversation. Available at https://theconversation.com/changes-to-contract-laws-could-give-small-farming-businesses-more-control-of-data-and-innovation-69275[Accessed 17 May 2018]
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