Miller Magazine Issue: 123 March 2020

Australıa 84 MILLER / MARCH 2020 Australia is an island continent and the world's sixth-larg- est country. Lying between the Indian and Pacific oceans, the country is the only nation to govern an entire continent. Aus- tralia's population is roughly 23.6 million people. The popu- lation in Australia is focused in the southeast of the country. This region is the most economically stable, industrialized and ethnically diverse. 70 percent of the population lives in 27 per- cent of the land area, and 87 percent of the population lives in urban areas. Australia is a stable, democratic and culturally diverse nation with a highly skilled workforce and one of the strongest per- forming economies in the world. The Australian economy ex- perienced 26 years of uninterrupted economic growth. Hold- ing one of the highest growth rates of the developed world, the country is the world’s 13th largest economy. The country benefits from large-scale exports of agricultural products and a vigorous financial sector. For 2020 and 2021, the IMF foresees a GDP growth of 2.3% and 2.6%, as it expects household consumption to rebound following a continued strengthening in the country’s labor market. Australia’s agricultural industry is currently worth around 60 billion dollars to the Australian economy. Agriculture employs 2.5% of the workforce and contributes 2.5% to the GDP. However, the agricultural sector is one of the most important industries for exports: Australia is a vast agricultural country and one of the world's main exporters of wool, meat, wheat and cotton. Australia is one of the world's largest grain producers and exporters. Australian grain – wheat, barley, canola, oats and lupins are exported across the world for a variety of food and livestock feed purposes. Wheat is by far the largest crop, contributing approximately 57 percent of Australian grain ex- ports by value. Barley (10 percent), oilseeds (eight percent) and pulses (six percent) make up the majority of remaining production. With good seasonal conditions, Australia can produce a grain crop of up to 40 million tonnes. However, the productiv- ity, profitability and global competitiveness of Australian grain farms are affected by yields, production costs, commodity prices and fluctuations in the exchange rate. Although Australia is a relatively small producer of wheat, accounting for only 3% of world output due to its low domes- tic population base, Australia accounts for between 15-18% of total world exports making it a major participant in the ex- port market. The main wheat export markets are concentrated in Asia and the Middle East with Indonesia, Egypt, Iraq and Japan and in recent years the market to China has grown. However, Australia needs to continue to reform its export grain supply chains to remain competitive in an increasingly challenging global grain market. A report from the Australian Export Grains Innovation Centre (AEGIC) released in Novem- ber 2018, found that despite major investments to improve efficiency in Australian supply chains since 2014, costs to users have only slightly decreased or remained stable. AEGIC Chief Economist Professor Ross Kingwell said the costs of Australia’s supply chains and grain production were high in comparison to most competitors (except Canada, where costs were higher due to long transport distances). “Supply chain costs are consistently 30-35% of the total cost of grain production in Australia and this percentage is similar across competitor countries,” he said. “Even so, these competitors – such as Ukraine, Russia and Argentina – are benefiting from lower labor costs and increased economies of scale due to large production increases. “In Australia, overall supply chain costs have either fallen slightly or stayed steady. Prof Kingwell said action should be taken to ensure Australian grain stays competitive. “Australian grain needs to remain at- tractive to international buyers, therefore it needs to remain affordable and be fit for purpose with the characteristics re- quired or desired by end-users,” he said. “Australia’s grain industry will increasingly need to concentrate on exporting to premium-paying nearby markets and delivering high-quality wheat with characteristics not easily or cheaply replicated by