Australian Farm Institute Finds Ag Prospects Better Than Expected

Strategic Insights -

A recent report by the Australian Farm Institute (AFI) has found that the Australian agriculture sector is likely to navigate the global tariff environment with fewer challenges than initially feared. The report's findings suggest that agribusiness exports will rise and investment in the farm sector will also increase, despite the potential for tariffs and trade disruptions.

Key Takeaways:

  • The AFI's comparative modelling research suggests that investment in Australian agriculture will rise by 1.2% due to a 10% blanket tariff on global imports into the US.
  • Agribusiness exports are expected to increase, with prices rising by 0.4% and export volumes lifting slightly.
  • The Australian dollar is expected to be lower than usual, making exports more competitive and encouraging investment in the farm sector.
  • The AFI recommends the establishment of a trade disruption loan facility to help farmers and businesses deal with cash flow shortfalls and re-position themselves in response to trade setbacks.
  • The report also suggests that the farm policy think tank should invest in digital traceability systems, modernised logistics networks, and market intelligence dashboards to build farm sector capability and reduce exposure to market volatility.

Statistics:

  • Agribusiness exports are likely to rise, accounting for over 70% of Australia's ag production value.
  • The US is Australia's second-largest farm export market by value, worth over $7 billion in 2023-24.
  • Almost 70 nations will cop higher tariff rates, including long-time US allies such as New Zealand (15pc) and Canada (35pc).
  • Australia's farm export volumes and prices are expected to lift slightly, with agricultural productivity also expected to increase.
  • The dollar is expected to be about 7.1% lower, enhancing farm export competitiveness and encouraging investment in the farm sector.
  • Farm sector investment is expected to peak in 2028, but agriculture will likely handle the tariff pandemonium better than the wider Australian economy.

Sources:

  • Australian Farm Institute (2023). Navigating the New World Order: Australian agriculture's place in global trade wars.
  • Andrew Marshall (2023). Australian agriculture not only escaped the threat of extra US tariffs on our exports last week, it seems to have far less to fear from the global repercussions of the aggressive tariff agenda than anybody expected. The Australian, March 2023.