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Industry outlook

There is much research and information available into the economic, social and environmental factors affecting the Agriculture industry, and a wide range of information and research into workforce trends and skills needs done by Commonwealth and State Governments, industry peak bodies and industry representatives as well as research organisations such as ABARES and CSIRO. Figures 2.1 to 2.3 provide a short summary of the main industry drivers, major national policy drivers and key labour market and skills related issues affecting the sector.



Figure 2.1: Major industry drivers1




Global climate

  • Australia currently produces sufficient food to feed up to 60 million people but has a population of less than 23 million.

  • Climate change, water scarcity and soil degradation make it more prudent and sustainable for some countries to import food rather than using up precious

water resources on growing their own, a scenario that presents significant potential for Australia’s agricultural sector.





Australian climate and natural resources

  • Australia is projected to be one of the most adversely affected countries by climate change with average temperatures projected to rise by 0.6 to 1.5ºC by 2030. Some predictions suggest food production in Australia could be reduced by over 15 per cent.

  • Changes to water temperature, sea level, rainfall and ocean chemistry will impact on the distribution and abundance of some commercial species around Australia’s shores.

  • Scientists and producers are continuing to explore potential for different crop varieties, planting dates, and precision technologies to manage finite resources, and greater use of precision irrigation and global positioning systems to determine changing soil quality.






Exports and the $

    • Victoria’s largest exports of goods include wool, wheat and milk, and in 2012-13, there were strong increases in exports of canola, fruit and nuts, meat and cheese.

    • However, the high Australian dollar adversely affects the competitiveness of exporters. The real exchange rate, which adjusts the Australian dollar for differences in inflation rates across countries, is the best measure of trade competitiveness. The real exchange rate in the financial year to 2013 was at its highest since the early 1970s.






Global demand

  • With the growth of the Asian middle classes, exports of Australia’s meat, dairy and seafood sectors are highlighted as facing unprecedented opportunities as the demand for protein rises exponentially.

  • In 2012, ABARES projected the real value of world agrifood demand to be 77 per cent higher than in 2007 by 2050, or an average annual increase of 1.3 per cent.







Supermarket duopoly

    • The Australian Food and Grocery Council cite the market share of the two major supermarket chains: Coles and Woolworths as the most significant challenge facing the food industry, and these major retailers continue to drive wholesale change to farming practices through product-specific policies (see Food and Beverage Manufacturing report for further examples of product-specific issues e.g. milk pricing).

    • However, export trends in the Agricultural sector and shifting consumer tastes towards healthier food options provides opportunities.







Supply chain

    • Continuing closures in the food processing sector are removing a key link in the agrifood value chain which transforms bulk commodities into higher value produce with greater profit. Without a robust food processing sector – which is not an industry quickly rebuilt - producers remain vulnerable to easing commodity prices and domestic price wars

(see also Food and Beverage Manufacturing Skills and Training Needs Report).

    • Siting of large processing manufacturers next to the farm gate provides economies of scale, but impacts on the long-term viability of smaller farmers.




1 ABARES, 2012; Australian Food and Grocery Council

Figure 2.2: Major national policy drivers




Australia in the Asian Century - White Paper

  • In October 2012, the Australian Government released Australia in the Asian Century - a wide-reaching policy document, setting ambitious targets for the country to achieve by 2025. In relation to agriculture, the document outlines as one of its objectives that, “Australias agriculture and food production system will be globally competitive, with

productive and sustainable agriculture and food businesses. Australian food producers and processors will be recognised globally as innovative and reliable producers of more and higher quality food and agricultural products, services and technology to Asia.”





National Food Plan

    • Launched in May 2013, the Australian Government’s National Food Plan sets the delivery direction of Australia in the Asian Century White Paper and covers key issues such as trends, opportunities and challenges, exports, sustainability and climate change, global and local food security as well as building a skilled workforce.

    • The plan states that “Australia must build on its world–leading research capacity, skilled and innovative workforce and reliable infrastructure and biosecurity system. Investment is needed to ensure our food businesses have the skills and capital to adopt new technologies, adapt quickly to changing market and environmental conditions

and capitalise on opportunities.”……….and to this end, it identifies one of the goals for 2025 as: Australias agriculture and fisheries workforce will have built its skills base, increasing the proportion with post-school qualifications.




Free Trade Agreements
  • Currently Australia exports around 65 per cent of its farm products and 75 per cent of its fish products, so the sector is reliant on continued and improved access to global markets.

  • Australia currently has six FTAs in place – with New Zealand, Singapore, Thailand, US, Chile and (with NZ) the Association of South East Asian Nations. The countries covered by these FTAs account for 28 per cent of Australia’s total trade.

  • A further nine FTAs are currently being negotiated - including China, Japan, Korea, India and Indonesia. The countries covered by these account for a further 45 per cent of Australia’s trade. Resolution of FTAs with Japan and Korea are of critical importance to agrifood sectors.





    • There are many other current plans and strategies covering and impacting upon the Agriculture sector. Some examples of these include:





Other relevant plans and strategies


  • Murray-Darling River Basin Plan

  • Marine Protection Areas

  • Animal Welfare Strategy

  • Australia’s Biodiversity Strategy 2010

- 2030




  • Blueprint for Australian Agriculture (see below)

  • Growing Food and Fibre (Victoria)

  • National drought reform (COAG)

  • Food and Agriculture into Asia (Victoria - taskforce in development)



Figure 2.3: Labour market drivers



Ageing workforce

    • Farming continues to be the most ‘mature occupation’ in the nation with an average age of 53, compared to 39 for all employed persons, and the industry expresses much concern around this.

    • Across Victoria 36 per cent of the workforce is aged 55 or above, compared to the ‘all industry’ average of 17 per cent.

    • The May 2012 Victorian Parliament inquiry identified that for young people, being your own boss is highly attractive, many farmers gain a passion for agriculture through family experience and farming job advertisements should highlight the professional nature of agricultural work, in order to attract more young people into the industry.







Image of the sector

    • The May Victorian Parliament inquiry identified that agriculture’s ability to attract and retain young people in rural Victoria is greatly impeded by its negative image.

    • Research by DEECD / The Allen Consulting Group in 2012 in the Loddon Mallee, Hume, Southern and Eastern Metropolitan regions found that 64 per cent of employers surveyed disagreed or strongly disagreed that ‘people are attracted to working in our industry. However, 68 per cent of respondents agreed or strongly agreed that ‘there are good career prospects for people in our industry.






Competition for labour

  • Agriculture is frequently competing with other sectors for labour, with salaries often far higher (e.g. in the Mining sector), and 83 per cent of respondents surveyed in the DEECD / The Allen Consulting Group research agreed/strongly agreed that competition from other industries is a barrier to recruitment.

  • A good proportion of agricultural work is seasonal, but 18 per cent of employer survey respondents (DEECD / The Allen Consulting Group) agreed or strongly agreed that they were recruiting migrants with 457 visas to address skills and labour shortages.






Innovation

    • ABARES research finds that agricultural productivity growth is closely linked to innovation and research & development, and Australian agrifood enjoys a world class research and development network, including 11 Cooperative Research Centres, CSIRO, 14 Research and Development Corporations and Collaborative Research Networks.

    • There remain however, significant issues around the ‘speed to market’ of moving new practices and knowledge from research and trial phases through to the extension, adoption and commercialisation stages.







Education and training

  • Significant opportunities for young people to learn about food and fibre exists in schools and training providers across Victoria.

  • Participation in non-formal training and education is popular, and stems from the short and relevant nature of the training.

  • In Victoria, vocational training enrolments in Agriculture courses have increased by 41.9 per cent between 2008 and 2012 (see Section 4).






Economic contribution

Between 2005-06 and 2011-12 the Agriculture industry (excluding Forestry) across Victoria grew in terms of employment from 72,000 workers to an estimated 77,100 in 2011-12. The sector currently represents 3 per cent of all employment across Victoria, and 24 per cent of Australia’s total Agricultural workforce (see Section 3 for further details).


At the national level, it is estimated that in 2011-12, the Agriculture sector contributed $50.4 billion to the overall Australian economy – Victoria’s proportion of this stood

at 15.5 per cent, which equated to $7.8 billion of the State’s economy (2.7 per cent of the total). This is forecast to rise to $9.4 billion by 2016 17 - an increase of $1.6 billion. The economic contribution of the Agriculture sector varies across the States and Territories — its share of output is considerably higher in South Australia, Tasmania, Western Australia and Queensland than it is in New South Wales or Victoria.


Figure 2.4, highlights the historical and estimated forecast growth of both employment and output in the sector from 2005-06 to 2016-17. Forecast figures are shown as dashed lines on the graph, and are subject to ongoing revision.




Figure 2.4: Employment and output trends in Victoria’s Agriculture sector


100
10,000



90 9,000
80 8,000

Employment in ‘000s workers

70 7,000

Output in $ millions

60 6,000
50 5,000
40 4,000
30 3,000

20 2,000


10 1,000

0 0


Employment Output
Source: Monash Centre of Policy Studies (CoPS), employment and output forecasts, June 2012.



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