Agricultural Export Markets Of Australia †MyAssignmenthelp.com

Question: Discuss about the Agricultural Export Markets Of Australia. Answer: Introduction In Australia agriculture is regarded as one of the important sectors of the economy. Australian farmers contribute 60 percent total farm production in world. Based on inputs from the agricultural sector different industries have grown up. This indicates significant forward linkage of the industry. Agriculture contributes to 2.3 percent of nations GDP through direct production and export values ((Langridge, Cordell and D'Occhio 2014).. Apart from meeting domestic demand for food the sector supports export market and earns nearly AUD$41 billion every year. Therefore, the nation always focuses on the growth of agricultural sector. Recently, policy initiated to promote and boos export of agro products. Summary of the article story The top three export markets of Australia are China, United States and Japan. The products that China imports from Australia include wheat, butter and wool. China has eliminated the tariff barriers to freely import and sell Australian beef and dairy products in Chinas market. The Free Trade Agreement between Australia and United States strengthen the trade relation between the two nations (Fleming and Coulter 2017). US import a significant portion of dairy products, avocados, cotton and beef. Japan manly imports oilseeds and grains from Australia. In the Australian export market these three nations account 21%, 11.3% and 9.4% respectively. In view of slightly declining trend of Australian agricultural export Prime Minister Turnbull announces that the government will develop a Unified national brand in order to help Australia to main its competitive position in globally extended trade markets of China, US and Japan. The government committed to develop a much stronger national brand under its foreign trade policy (theaustralian.com.au 2017). There are growing demands for goods made in Australia. To retain its position an improved branding is required as suggested by Trade, Tourism and Investment minister. Australia is positioned within the top 10 exporters of agricultural product in the world. The food and fresh products produced in Australia are considered as clean and green in the international market (theconversation.com 2017). This raises demand for Australian agriculture. The fisheries and agriculture export and Australia generate $47 billion worth of revenues. Objective of the policymakers is to make it easier for buyer all over the world to purchase agro products of Australia and other related products. The nation therefore gives weight for marketing of Australian agricultural exports. Therefore, the government think of using a strong and easily identifiable symbol so that it becomes easier to indentify Aussie product. When export expands then this will create demand for local labour and creates employment opportunities. Economic evaluation of the story Demand and Supply are two important determinant of price in the market. Demand represents buyers willingness and purchasing decision. The supply condition shows decision on the part of sellers. These two forces work together to determine price and stabilize it. When any two factors fail to match with other then its direct influence is on the price of the commodity (Thomas, Lubinda and Angula 2015). With increase in world population, the global demand for food is also rising. There are many countries that are unable to meet the need of national food demand. These countries therefore depend on import from other countries. Australia is a major food producer in world and already exported its agro products to various nations (worldatlas.com 2017). Apart from its existing export demand additional demand coming from emerging economies as well. Increases in demand with given supply generates an upward pressure on price. In the market described above dd and ss stands for demand and supply curve respectively. An increase in demand due to factor other than price leads to a rightward shifts of the existing demand curve (Mahanty 2014). The new demand curve is d1d1. The new equilibrium price in the market is P1 and in response to high price, a larger quantity is now supplied in the market. The high price makes export more lucrative for Australian farmers. Policy of branding Australian export provides support to expand export in the sector and gives farmers opportunity for a high income. There is another side of the story. The increased export of agricultural products may create a shortage of supply in the domestic market. The agricultural production becomes limited because of restricted supply of land. If the farmers fail to increase the production in line with the demand then this situation further raises price in the domestic market (Karia 2015). The possible situation is described below Figure 2: Supply shortage and high price in domestic market (Source: as created by Author) Figure 2 shows how a reduction in supply causes a price increase in demand. The supply shortage in market shifts the initial supply curve to the left from ss to s1s1. The resulted price increase is shown by an increase in price from P to P1 Recommendation The article describes the recent policy of export promotion taken by Australian government. The demand for Australian agricultural export is growing day by day. This raises price of exported products. In order to match world demand Australia should take steps to raise productivity. Since, the supply of land is limited increasing productivity is the only way of meeting rising demand. Employment of advanced technology is one way of increasing productivity. Apart from export promotion government should also focuses on domestic market as well. The high price of food in domestic market makes it difficult for people to afford it. In times when supply shortage created a price hike then government should either subsidized farmers to provide food at a reasonable price or should set a ceiling price. Conclusion The paper makes aneconomic evaluation of Australian agricultural sector. In Australia, agriculture is one of the crucial sectors of the economy. The sector has made significant contribution in gross domestic product, employment and trade. With an attempt to maintain Australian competitiveness in the export market the government recently initiates strategy of introducing a string brand symbol for every export product. As agriculture is one of the important contributors of export market the policy has obvious implication on agriculture. There are chances of an increasing price in the domestic market. The government should focuses on productivity growth of agriculture and pricing strategy to maintain stability in agriculture. References Chambers, G. and Chambers, G. (2017).Big push for new national brand. [online] Theaustralian.com.au. Available at: https://www.theaustralian.com.au/national-affairs/foreign-affairs/minister-flags-plan-to-sell-brand-australia/news-story/3f0c8c3cb487857eb6fc0d79d6c5029bhttps://www.theaustralian.com.au/national-affairs/foreign-affairs/minister-flags-plan-to-sell-brand-australia/news-story/3f0c8c3cb487857eb6fc0d79d6c5029b [Accessed 30 Nov. 2017]. Chepkemoi, J. (2017).Top Agricultural Export Markets Of Australia. [online] WorldAtlas. Available at: https://www.worldatlas.com/articles/top-agricultural-export-markets-of-australia.html [Accessed 30 Nov. 2017]. Fleming, E. and Coulter, H., 2017.Agricultural Export Marketing in the South Pacific: the future role of marketing authorities. Canberra, ACT: National Centre for Development Studies, Research School of Pacific Studies, The Australian National University.. Karia, A.A., 2015. Intermediate microeconomics. Langridge, P., Cordell, D.J. and D'Occhio, M., 2014. Agriculture in Australia: growing more than our farming future. Mahanty, A.K., 2014.Intermediatemicroeconomics with applications. Academic Press. The Conversation. (2017).Australia's 'five strong pillar economy': agriculture. [online] Available at: https://theconversation.com/australias-five-strong-pillar-economy-agriculture-40388 [Accessed 30 Nov. 2017]. Thomas, B., Lubinda, M. and Angula, M., 2015. Principles of microeconomics.