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Australia Agribusiness Report Q3 2009
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
Australia |
Published |
22 June 2009 |
Number of Pages |
53 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Australia became a net importer of rice following a record low production of rice in 2008
Australia became a net importer of rice following a record low production of rice in 2008. In the Australia Agribusiness Report for Q3 2009 we introduce the new Rice Outlook. Before the onset of the long drought in 2002, Australia was a significant rice exporter. Annual production of around one million tonnes in the late 1990s and first couple of years of this decade allowed the country to export upwards of half a million tonnes of rice a year. Since 2002, however, apart from a brief spike up above 1mn tonnes in 2006 when the weather seemed to be getting back to normal, output has been pitiful. In 2008, production fell to a record low of 19,000 tonnes. This has transformed Australia into a net rice importer.
While the next couple of years should see production creep back up, we doubt that Australia will return to regularly producing a large rice crop. Rice production in Australia is a thirsty business. Dwindling irrigation water supplies in New South Wales, where the country's rice production is based, will likely see farmers turn to less water-intensive crops. Though, if rice prices were to increase again as they did in 2008, production could increase for short periods.
There are increasing worries that the devastation of rice production could be a sign of things to come as changing weather patterns mean Australia, the world's driest continent, gets even drier. Following the long drought, the system of irrigation that feeds large parts of Australian agriculture is at record low levels. The health of the Murray-Darling river system is also reaching critical levels.
Climate change has moved rapidly up the agenda since Labor prime minister Kevin Rudd came to power at the end of 2007. While the majority of Australian farmers would agree that tackling climate change is in their best interest, there is increasing worries that the government's plans for a new emissions trading scheme will seriously dent the competitiveness of Australian agricultural products.
The scheme is set to come into effect in 2010, but under the current plans agriculture will be excluded until 2015 at the earliest. If livestock farmers are indeed forced to pay for the carbon emitted by their animals, production costs would shoot up. Assuming that the majority of Australia's competitors do not initiate their own schemes, the likelihood of which is very high, this would see the competitiveness of Australian products on the export markets hit hard. Even while agriculture is not included in the scheme, input costs will increase owing to higher prices for electricity, fuel and chemicals, according to a report cited in The Australian.
While the concern in the agricultural sector is understandable, we do not believe that the Australian government would unilaterally impose charges on the sector without other major producers following suit. A decision on whether to include agriculture in the emissions trading scheme is due to be made in 2013. Unless other agricultural nations are by that time willing to make a similar commitment to reducing the emissions of their farming sectors, it is highly unlikely that Australia's farmers will be made to pay up just yet.
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