Agricultural Policy Monitoring and Evaluation 2024

4. Australia

Main findings

Support to agriculture

Australia’s support to agricultural producers (Producer Support Estimate, PSE) is among the lowest in the OECD, estimated at 2.3% of gross farm receipts in 2021-23, slightly lower than the 3.7% observed 20 years before. Policy settings are characterised by a strong emphasis on market openness, building resilience, and investments in general services, including research and development (R&D), hydrological infrastructure, and biosecurity.

Market Price Support (MPS) to producers ended in 2000 and domestic prices for Australia’s main agricultural outputs have been at parity with world prices since then. Most producer support in 2021-23 was in the form of disaster relief payments, and income-smoothing programmes that address cashflow fluctuations. Payments on variable input use are also used, mainly concessional loans for on-farm investments, including in response to adverse events.

The General Services Support Estimate (GSSE) averaged 2.1% of the value of agricultural production during 2021-23, higher than the 1.9% of the early 2000s but below the OECD average of 3.3%. More than half of this went to support for R&D, innovation, and extension services (corresponding to 1.3% of agricultural production value, compared with 1.1% in the OECD on average). Public expenditure to develop and upgrade infrastructure (mostly hydrological) and strengthen biosecurity represented most of the remaining general services expenditure.

Overall support to agriculture (Total Support Estimate, TSE) represented 0.2% of Gross Domestic Product (GDP) in 2021-23, essentially unchanged since 2000-02.

Key recent policy changes

Biosecurity funding will increase in 2023-24. In addition, the biosecurity budget, which was previously decided on an annual basis, will become permanent from 2027/28.

The Nature Repair Act came into effect in December 2023, allowing for a range of landholders (including the agricultural sector) to voluntarily run projects that lead to improvements in biodiversity. Projects could include the protection and conservation of sites of high environmental value, and restoration of formerly degraded areas. Successful projects will be awarded a certificate which could be traded to other parties who wish to support long-term conservation and improvement of nature and associated ecosystem services.

Starting from 2023-24, the Australian Department of Agriculture, Fisheries and Forestry particularly through the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) will receive additional funding to enhance its capability to support productivity and profitability. Regional data sources will be improved with respect to climate-related risks, biosecurity incursions, and natural disasters. These data will be used to inform on the adoption of low emission technologies and practices by farmers and to conduct economic impact assessments of domestic and international emission policies on Australian farmers.

Assessment and recommendations

• A significant amount of funding is directed to innovation seeking sustainable productivity growth, but productivity growth has slowed down from 2.18% average annual growth rates in 1977-2000 to 0.6% in 2000-2021 due to climate change, lower mechanisation potential, changes in natural conditions and volatile prices in the last two decades. Increasing sustainable productivity growth will require structural adjustments from low to high productivity farms, increased R&D funding and more incentives for climate change mitigation and adaptation.

• My Climate View, an online platform by the Climate Services for Agriculture, is a good way to encourage long-term adaptation to climate change. Investments in this platform could be leveraged to support the development of new approaches such as index-based insurance for drought. Concessional loans, income-support schemes and ex post drought relief measures should be systematically assessed and monitored to ensure they do not inhibit climate change adaptation, structural adjustment and long-term transformative change.

• Extension services and agricultural education receive less funding than other parts of the AKIS. Scaling up knowledge-transfer services in partnership with the private sector as in the Cooperative Research Centres (CRCs) can facilitate uptake of innovations, support sustainable productivity growth, and strengthen on-farm capacity to manage risks.

• While Australia’s rural research and development corporations (RDCs) are well positioned to support adaptation in traditional crop and livestock production systems, research efforts should also be directed towards long-term resilience and transformative change. Carbon and biodiversity markets should be explored to provide farmers with new and diversified sources of income, if carefully designed with robust performance and integrity standards.

• Sustainable management of water resources is essential for Australian farmers to adapt to higher temperatures, lower winter rainfall, and increased frequency of drought and extreme weather events. Investments in water infrastructure should be assessed regarding their effects on water consumption and return flows to groundwater and surface water as well as other socio-economic impacts. Irrigation infrastructure subsidies should be weighed against alternatives such as direct purchases of water entitlements, as has been done in the Murray Darling Basin.

• The Australian Carbon Credit Unit (ACCU) scheme supports projects to reduce or avoid GHG emissions or store carbon, but has yet to demonstrate significant reductions of agricultural emissions. In 2023, ACCUs with an abatement equivalent of 17.2 MtCO₂eq were issued, which is well below the estimated potential from land-based offsets. Increasing its scale and effectiveness in agriculture and building confidence in the transparency and integrity of ACCUs is essential to its success in reducing agricultural GHG emissions.

• Funding to accelerate the development and commercialisation of technological solutions to reduce emissions rightly focuses on methane emissions from enteric fermentation of livestock, which represent 70% of Australia’s agricultural emissions. However, the extent to which technologies such as feed supplements can drive reductions remains uncertain. To support the red meat industry’s target of carbon neutrality by 2030, other tools like emissions taxes, standards, and regulations will be needed to create sufficient incentives for farmers to adopt low-emission technologies.

Development of support to agriculture

Figure 4.1. Australia: Development of support to agriculture

Table 4.1. Australia: Estimates of support to agriculture

Million USD

.	1986-88	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	14 358	19 605	61 512	65 923	65 402	53 209
of which: share of MPS commodities (%)	82.36	74.30	73.03	74.05	75.20	69.85
Total value of consumption (at farm gate)	5 072	7 514	21 749	21 827	21 946	21 472
Producer Support Estimate (PSE)	1 411	761	1 448	1 234	1 599	1 510
Support based on commodity output	1 000	0	0	0	0	0
Market price support¹	1 000	0	0	0	0	0
Positive market price support	1 002	0	0	0	0	0
Negative market price support	-2	0	0	0	0	0
Payments based on output	0	0	0	0	0	0
Payments based on input use	230	309	584	576	612	564
Based on variable input use	217	14	165	144	190	161
with input constraints	0	4	13	14	13	13
Based on fixed capital formation	4	145	246	279	235	225
with input constraints	0	0	0	0	0	0
Based on on-farm services	9	149	173	153	187	178
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	0	11	534	307	662	634
Based on Receipts / Income	0	11	534	307	662	634
Based on Area planted / Animal numbers	0	0	0	0	0	0
with input constraints	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production required	0	0	0	0	0	0
Payments based on non-current A/An/R/I, production not required	181	442	301	321	297	285
With variable payment rates	181	343	298	318	294	282
with commodity exceptions	0	110	67	71	66	63
With fixed payment rates	0	99	3	4	3	3
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	0	0	29	30	28	27
Based on long-term resource retirement	0	0	0	0	0	0
Based on a specific non-commodity output	0	0	10	11	10	9
Based on other non-commodity criteria	0	0	19	20	19	18
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	9.65	3.74	2.32	1.84	2.39	2.76
Producer NPC (coeff.)	1.08	1.00	1.00	1.00	1.00	1.00
Producer NAC (coeff.)	1.11	1.04	1.02	1.02	1.02	1.03
General Services Support Estimate (GSSE)	98	370	1 353	1 605	1 253	1 200
Agricultural knowledge and innovation system	95	252	783	813	784	752
Inspection and control	3	39	117	130	113	108
Development and maintenance of infrastructure	0	75	306	274	329	314
Marketing and promotion	0	4	142	382	22	21
Cost of public stockholding	0	0	0	0	0	0
Miscellaneous	0	0	5	6	5	5
Percentage GSSE (% of TSE)	6.48	36.45	48.03	56.54	43.92	44.29
Consumer Support Estimate (CSE)	-513	-116	0	0	0	0
Transfers to producers from consumers	-513	0	0	0	0	0
Other transfers from consumers	0	0	0	0	0	0
Transfers to consumers from taxpayers	0	-116	0	0	0	0
Excess feed cost	0	0	0	0	0	0
Percentage CSE (%)	-10.12	-1.52	0.00	0.00	0.00	0.00
Consumer NPC (coeff.)	1.11	1.00	1.00	1.00	1.00	1.00
Consumer NAC (coeff.)	1.11	1.02	1.00	1.00	1.00	1.00
Total Support Estimate (TSE)	1 509	1 015	2 801	2 840	2 852	2 710
Transfers from consumers	513	0	0	0	0	0
Transfers from taxpayers	996	1 015	2 801	2 840	2 852	2 710
Budget revenues	0	0	0	0	0	0
Percentage TSE (% of GDP)	0.65	0.25	0.16	0.16	0.16	0.16
Total Budgetary Support Estimate (TBSE)	509	1 015	2 801	2 840	2 852	2 710
Percentage TBSE (% of GDP)	0.22	0.25	0.16	0.16	0.16	0.16
GDP deflator (1986-88 = 100)	100	149	279	262	282	292
Exchange rate (national currency per USD)	1.40	1.83	1.43	1.33	1.44	1.51

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Australia are: wheat, barley, oats, sorghum, rice, soybean, rapeseed, sunflower, sugar, cotton, milk, beef and veal, sheep meat, wool, pig meat, poultry and eggs.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

Support to agriculture comprises a mix of direct budgetary outlays, concessional loans and tax concessions. Direct support is provided to upgrade on-farm infrastructure that aims to improve the efficiency of natural resource use. Several programmes also support the development and uptake of farming practices to enhance sustainability, including through innovation take-up and pilot testing of certification schemes.1 Price support is low and domestic prices are aligned with world prices.

Concessional loan schemes target investments in new farm businesses, farm succession arrangements, drought resilience and preparedness. The Regional Investment Corporation (RIC) has administered the Australian Government’s concessional farm business loans since 2018, providing concessional interest rates.

Income stabilisation tools such as the Farm Management Deposits Scheme and income tax averaging arrangements are designed to strengthen financial risk management by helping primary producers to deal more effectively with fluctuations in cash flows. For producers experiencing hardship, regardless of the cause, the Farm Household Allowance provides basic income support. This is supplemented with natural disaster assistance provided as concessional loans through the Disaster Recovery Funding Arrangements that came into force in 2018.2 Primary producers experiencing financial hardship can also access free, confidential financial counselling under the Rural Financial Counselling Services Program.

The new Australian Government Drought Plan 2024-29 is expected to be published in 2024, and will replace the Drought Response, Resilience and Preparedness Plan published in 2019. The new plan sets out the government’s programmes and activities before, during and after drought, and the principles that will guide its actions as conditions dry.

The Future Drought Fund (FDF) is an AUD 5 billion (USD 3.3 billion) commitment by the government to build drought resilience in domestic agriculture, landscapes, and communities. The FDF invests in a broad portfolio and is managed with the aim of generating at least a 2% return above the inflation rate per annum. AUD 100 million (USD 66 million) of the returns are made available each year to support farmers to become more resilient to the effects of future drought (Australian Government, 2022[1]).

Research and development (R&D) programmes are a major component of Australian support to agriculture. Rural research and development corporations (RDCs) are a primary vehicle to support rural innovation. RDCs are a partnership between the government and industry created to share funding and strategic direction-setting for primary industry R&D, investment in R&D and subsequent adoption of R&D outputs. A compulsory levy system collects contributions from primary producers to finance RDCs, and the government provides matched funding for R&D expenditure, up to legislated caps.

A smaller portion of public expenditure goes to the development and maintenance of infrastructure and inspection services, including pest and disease control activities. The Emergency Animal Disease Response Agreement (EADRA) is a cost-sharing agreement between Australia’s governments and industry groups which aims to reduce the risk and minimise the impact in case of a disease outbreak. While industry and governments cost-share actions to address pest and disease outbreaks, trade-related costs of biosecurity and food safety inspection services are covered by industry.

Australia’s Nationally Determined Contribution (NDC) commits to achieving net zero emissions by 2050 and reducing GHG emissions to 43% below 2005 levels by 2030. While agriculture is included in economy-wide emissions reduction targets, no specific emissions reduction targets have been defined for the agricultural sector. Investments in climate-smart and sustainable agriculture projects have increased in recent years, providing support for technological solutions to reduce methane emissions from livestock, improve soil health, build resilience to climate change, and protect natural capital and biodiversity.

The Australian Carbon Credit Unit (ACCU) Scheme, formerly known as the Emissions Reduction Fund, was established in 2011 under the Carbon Credits (Carbon Farming Initiative) Act. The ACCU scheme provides incentives for businesses to undertake voluntary emissions reductions and carbon sequestration projects that meet strict integrity requirements, including in relation to additionality. Agricultural landowners and farmers can earn income by generating ACCUs for every tonne of emissions reduced or carbon stored through a project and selling these to the government or third parties. As of March 2023, the scheme had committed AUD 2.7 billion (USD 1.8 billion) through 15 auctions for a total of 217.3 MtCO₂eq of abatement, including 14.8 MtCO₂eq of agricultural emissions.

Improving market transparency is also part of the government’s assistance to the food sector. One example is the mandatory dairy code of conduct under the authority of the Australian Competition and Consumer Commission (ACCC), which came into force in January 2020 (Australian Government, 2019[2]).

Australia has 18 comprehensive regional or bilateral free trade agreements in force.3 Policies support access to export markets, including helping small exporters overcome market access barriers and costs associated with exports registration. Tariff rates on imports of agricultural and food products are, on average, 3.2% lower than on non-agricultural goods (WTO, 2022[3]). A number of SPS measures are in place to manage pest and disease risks that could harm the sector and affect plant, animal and human health as well as the environment more broadly.

Innovation for sustainable productivity growth

Strategic planning

In July 2023 the National Statement on Climate Change and Agriculture, a joint initiative of Commonwealth, state and territory governments was established. It emphasises the importance of sustainably increasing agricultural productivity and profitability. This will be achieved by targeting investment in research and development, and increasing the focus on training, education and capacity building to support uptake and adoption of innovations and technologies.

The capacities of ABARES have been expanded by an average of AUD 9.6 million (USD 6.4 million) per year for the next four years to better deliver the government’s policy priorities of tackling climate change while boosting the economic resilience and productivity of agriculture.

Research and innovation

Australia manages approximately AUD 800 million (USD 530 million) annually through its RDCs, of which the majority is collected through farm levies and the remaining part from the government. RDCs undertake diverse research, development and extension (RD&E) activities that improve efficiency, productivity, competitiveness, and innovation along the supply chain.

Agricultural Innovation Australia (AIA), founded by the 15 RDCs in 2020, is a not-for-profit public company, established to facilitate joint investment and collaboration in significant, cross-sectoral agricultural opportunities and challenges. AIA’s remit is to identify, develop and attract investment in initiatives that drive sustainability, productivity and profitability.

Since 1990, the government has implemented grants to establish Cooperative Research Centres (CRCs) and provide funding for medium to long-term, industry-led research collaborations. The CRC programme links researchers with industry and government and focuses on research applications. Some of the current active CRCs have an agriculture focus, including: 

• The Future Food Systems CRC, which partners leading Australian universities with industry and government bodies to deliver impactful research in the future food systems domain. Its mission is to develop smart, sustainable, resilient food systems that capitalise on value added and shore up food security. 

• The Food Agility CRC aims to broker, design and deliver innovation programmes for the agri-food industry, ensuring maximum impact for investment. They specialise in using data and digital technology to increase profits and improve sustainability.

• The CRC for High Performance Soils aims to give farmers the knowledge and tools they need to make decisions on extremely complex soil management issues.

• The CRC for Zero Net Emissions from Agriculture aims to further develop and scale up technologies to reduce methane emissions from grazing cattle and sheep, and to improve crop quality and production.

To support the development of technologies to deliver low-emission feed supplements to grazing animals and other solutions to reduce methane emissions from grazing livestock, AUD 29 million (USD 19 million) has been committed under the Methane Emissions Reduction in Livestock (MERiL) programme. For example, part of the budget is spent on research into the abatement potential and productivity benefits of low-emitting livestock supplements and forages.

A R&D corporation, AgriFutures, is working with education providers and industry on a National Food and Fibre Education Strategy. This strategy is aimed at fostering an interest in food and fibre industries amongst school students from an early age.’

Several research projects aim at improving soil carbon estimation technologies and models. This will help farmers eventually to increase productivity, store more carbon in the ground and reduce greenhouse gas emissions.

Programme implementation

To support farmers to adopt more sustainable agriculture practices and build resilience to climate change, more than AUD 60 million (USD 40 million) annually is being invested through the Climate-Smart Agriculture Programme between 2024-28. It aims at driving agricultural growth, competitiveness and sustainability by adopting sustainable natural resource management (NRM) practices that improve soil health and protect natural capital.

Several programmes foster innovation to tackle the negative impacts of droughts through innovation hubs, information sharing and knowledge management. The Drought Resilience Innovation Grants Programme, established in 2020, supports projects at different stages to test and drive the development and adoption of new and innovative technologies and practices to improve preparedness and drought resilience of Australian farmers and agriculture-dependent communities.

Recent policy developments

Domestic policy developments in 2023-24

Biosecurity funding has increased and is being sustained from 2023-24 onwards. The budget increases by a total of AUD 1.03 billion (USD 0.68 billion) and is divided over the next four years. From 2027/28, there will be a permanent annual budget of AUD 267 million (USD 177 million). This is the first permanent budget on biosecurity in Australia’s history, as before the budget was determined on an annual basis. The funding maintains operational and technical functions and biosecurity policies.

AUD 56 million (USD 37 million) in new soil measures were announced in the 2023-24 Budget to support the National Soil Action Plan 2023 to 2028: AUD 20 million (USD 13 million) for bilateral partnership agreements with the states and territories to deliver locally appropriate soil-related activities that provide clear progress against the four priority actions of the National Soil Action Plan 2023 to 2028; AUD 36 million (USD 24 million) under the Natural Heritage Trust Climate Smart Agriculture Program to implement a national soil monitoring programme, continue development of the Australian National Soil Information System, and continue support for the Regional Soil Coordinators and Soil Extension Community of Practice.

The Australian Animal Welfare Strategy, which expired in 2014, was renewed in 2023 with an annual budget of AUD 1.25 million (USD 0.83 million) over four years. The aim is to help to achieve stakeholder co‑ordination, to address community and international expectations and to maintain animal welfare practices in line with the scientific evidence.

Policies to mitigate emissions from agriculture

The 2023-2024 MYEFO provided a further AUD 2.5 million (USD 1.7 million) p.a. over two years from 2023–24 to develop the Agriculture and Land Sectoral Plan to address key issues for agriculture as part of the economy-wide transition to net zero emissions. This will help governments, industry and communities to plan for the future and mitigate emissions from the land use sector.

A new legislation from June 2023 grants tax concessions for income received from carbon farming. Eligible primary producers will be able to ascribe the proceeds of the sale of Australian Carbon Credit Units (ACCUs) as primary production income and could thereby benefit from favourable tax conditions.

Policies to facilitate climate change adaptation in agriculture

The Nature Repair Act will allow parties that are interested in supporting improvements in native biodiversity to partner with landholders and invest in projects designed to achieve specific outcomes. The act is designed to allow multiple projects to occur on the same project site/area, so that project operators and landholders can deliver a range of benefits including adaptation to climate change, generation of carbon credits, and improvements in local biodiversity. Successful projects will be awarded a certificate which could be traded to other parties who wish to support long term conservation and improvement of nature and associated ecosystem services.

Starting from 2023-24, ABARES will receive AUD 38.3 million (USD 25.7 million) for four years, followed by AUD 7.6 million (USD 5 million) per year from 2027‑28 onwards to enhance its capabilities in supporting productivity and profitability. As part of this budget, AUD 16.1 million (USD 10.7 million) will be allocated towards improving regional data sources to better respond to climate-related risks, biosecurity incursions, and natural disasters. AUD 9.4 million (USD 6.2 million) is foreseen to gather information on the adoption of low emission technologies and practices by farmers. The remaining AUD 12.8 million (USD 8.5 million) has been earmarked for impact assessments of both domestic and international emission policies on Australian farmers.

Trade policy developments in 2023-24

Australia’s trade policy seeks further market opening through multilateral, bilateral and regional trade agreements (DFAT, 2023[4]). Recent developments were mainly related to progress in trade agreements, export promotion and strengthening biosecurity.

Under the title “securing the future of agricultural trade” AUD 34.8 million (USD 23 million) is annually invested over three years from 2023 onwards to help agriculture navigate through a changing trade landscape. The programme seeks to avoid trade disruptions of agricultural goods. A major part of the funding is used to ensure that the regulatory frameworks of trading partners are met. A smaller portion of the budget (AUD 2.9 million - USD 1.9 million) is invested per year to secure an ongoing export of live cattle to Indonesia and Malaysia which had been suspended in 2023 due to animal diseases in Australia.

Starting in 2023, the Fresh and Secure Trade Alliance (FASTA) programme provides AUD 16.3 million (USD 10.8 million) annually to support Australia’s horticultural exports through investments in biosecurity and pest management. The programme unites state governments and several universities and will span over eight years.

To respond to community expectation in relation to sheep welfare the government has established an independent panel to advise on phasing out live sheep export by sea from Australia. The panel provides advice to government to develop an orderly phase-out plan that considers the needs of affected individuals, businesses and local communities and which identifies opportunities for future growth in the domestic sheep industry. The initiative will be supported with AUD 2.8 million (USD 1.9 million) per year over a two-year period.

In December 2023 Australia and the United Arab Emirates started negotiations on a Comprehensive Economic Partnership Agreement (CEPA). This would be Australia’s first bilateral trade agreement with a country from the Middle East. The Department of Foreign Affairs has initiated a consultation process with interested stakeholders about existing tariff and non-tariff barriers that should be addressed by the agreement.

A 10-year National Agricultural Traceability Strategy 2023 to 2033 published in 2023 and its first five-year implementation plan aim to enhance current traceability systems by making them further connected, aligned and interoperable along domestic agricultural supply chains. This will ensure they remain fit for purpose, efficient and dynamic, and accelerate exports and strengthen responses to biosecurity and food safety. This national approach will also support emerging ESG reporting requirements and protect cultural intellectual property. The national strategy has a particular focus on agricultural commodities and products (including First Nations Australians’ products), live production animals and biosecurity emergency response, while being highly relevant to broader product movements.

Policy context

Key economic and agricultural statistics

Australia is the world’s 19^th largest economy in purchasing power parity (PPP) terms and the sixth largest country by land area, accounting for 12% of all agricultural land in the 54 countries included in this report, but only 0.5% of the total population of these countries. The country’s GDP per capita is more than twice the average of the countries covered in this report (Table 4.2). Agriculture represents a small share of the economy, accounting for just 3.8% of GDP and 2.2% of total employment in 2021. Australia is an important producer of agricultural commodities. In 2021, the country ranked as the world’s second-largest producer of sheep meat and wool, the seventh-largest producer of beef, and is also among the world’s top-ten producers of wheat, barley, oats, rapeseed and sugar cane.

After 28 years of uninterrupted GDP growth, economic growth became negative in 2020 as the COVID-19 pandemic hit. After a sharp contraction, real GDP growth rebounded quickly and has been strong at 1.9% in 2023, while the unemployment rate has fallen from 6.5% in 2020 to 3.7% in 2023 (Figure 4.3). Inflation decreased to 5.6% in 2023, after it reached its highest level in more than three decades in 2022 with 6.6%.

Table 4.2. Australia: Contextual indicators

	Australia		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	539	1 805	1.3%	1.3%
Population (million)	19	26	0.4%	0.5%
Land area (thousand km2)	7 682	7 692	9.4%	9.3%
Agricultural area (AA) (thousand ha)	455 469	363 519	15.2%	12.5%
			All countries1
Population density (inhabitants/km2)	2	3	52	64
GDP per capita (USD in PPPs)	28 333	69 419	9 363	25 965
Trade as % of GDP	16.5	20.2	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	3.8	2.5	2.9	3.8
Agriculture share in employment (%)	4.8	2.2	-	-
Agro-food exports (% of total exports)	23.1	12.4	6.4	8.0
Agro-food imports (% of total imports)	4.3	5.9	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	55	62	-	-
Livestock in total agricultural production (%)	45	38	-	-
Share of arable land in AA (%)	5	9	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Australia is a net exporter of agricultural products. Around 70% of the value of agricultural production is exported, and the country is a major exporter of wheat, barley, cattle, beef, sheep meat, dairy, wool, rapeseed, fruit and nuts and pulses. Primary goods for final consumption and further processing make up 41% of the country’s agro-food exports. Approximately three-quarters of Australia’s agro-food imports go to domestic final consumption and the remaining share (26%) is destined for the processing industry (Figure 4.4).

Over the 2012-21 period, agricultural output declined by 0.4% per year, compared to a 1.9% per year increase globally (Figure 4.5). This was partly due to a decline in total factor productivity (TFP), which fell by -0.7% per year (compared with the global average of 1.1% growth). Primary factor growth also declined at -0.02% per year, driven by a decline in the agricultural land area. These declines were partly offset by an intensification of intermediate input use, which grew at 0.3% per year.

Agriculture accounted for 14.9% of Australia’s GHG emissions in 2021-22 and can play an important role in helping the country to achieve its economy-wide target of net-zero emissions by 2050 (Table 4.3). Agriculture’s contribution to GHG emissions has declined over the past two decades but remains above the OECD level. The share of agriculture in total energy use has increased slightly since 2000 and was above the OECD average in 2022, despite the small share of the sector in the economy.

Compared to the OECD area, agriculture accounts for a relatively high share of total water abstractions. While aggregate national indicators suggest that water stress is less of a problem than in many OECD countries, water availability and competition for natural resources with other sectors remains a significant constraint that is likely to be exacerbated by climate change. Estimates also indicate a relatively low nitrogen surplus balance and point to a low phosphorous balance.

Table 4.3. Australia: Productivity and environmental indicators

	Australia		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	1.3%	-0.7%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	20.6	17.8	32.1	28.2
Phosphorus balance, kg/ha	1.3	0.9	3.3	2.3
Agriculture share of total energy use (%)	2.3	3.4	1.7	2.0
Agriculture share of GHG emissions (%)	17.7	14.9	8.7	10.1
Share of irrigated land in AA (%)	0.5	0.5	-	-
Share of agriculture in water abstractions (%)¹	67.7	67.0	47.0	49.5
Water stress indicator	4.5	3.3	8.7	..

Note: * or closest available year.

1. Data are not comparable between time periods, 2020 data from (Australian Bureau of Meteorology, 2021).

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Before the 1980s, Australian agriculture was supported by a range of measures designed to maintain and stabilise farm income, and to provide farmers with support to offset the perceived disadvantages of remoteness. In 1980, Australia had 65 statutory marketing boards that used border protection through tariffs and import controls to divide domestic and international markets, and set higher prices in domestic markets (Table ‎4.4). Price stabilisation schemes assisted export industries such as wheat, manufactured dairy products, sugar, and dried vine fruit. Other policy measures included fertiliser subsidies, income tax incentives, rural credit, subsidies for agricultural research and extension, and public investment in land and water development and rural infrastructure.

Australia’s agricultural policy evolved significantly starting in the mid-1980s. Competition policy reforms in the 1980s and 1990s led to dismantling marketing boards and the removal of policies that distort agricultural production and trade. The National Drought Policy introduced in 1992 formalised the transfer of drought risk management to farmers and repurposed government support towards resilience-strengthening activities. Open trade and anti-dumping legislation ensured competitive markets across the whole economy, reducing the need for sector-specific measures. Price stabilisation policies were relaxed, with price and output controls removed and centralised marketing schemes gradually dismantled (Gray, Oss-Emer and Sheng, 2014[5]). Tariffs were reduced. Floating exchange rates and trade liberalisation reduced price volatility in agricultural commodities.

In Australia, total support to the sector is composed of general services and budgetary payments to producers. Market price support was progressively phased out during the 1990s, and support to producers (PSE) is now among the lowest in the OECD. Producer support is mostly delivered through payments based on inputs and payments not requiring production.

Table 4.4. Australia: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to 1980s	Closed economy (interventionist agricultural policy)	High tariffs Production quotas Price controls Tariff protection and import controls carried out by 65 statutory commodity marketing boards
1980-Present	Reforms and trade liberalisation	Floating exchange rates Removal of agricultural price and output controls Gradual dismantling of Statutory marketing authorities Reduction of agricultural tariffs on both outputs and inputs Sanitary and phytosanitary (SPS) measures strengthened

References

[1] Australian Government (2022), Drought Policy, Department of Agriculture, Water and the Environment, https://www.awe.gov.au/agriculture-land/farm-food-drought/drought/drought-policy.

[2] Australian Government (2019), Competition and Consumer (Industry Codes—Dairy) Regulations 2019, https://www.legislation.gov.au/Details/F2019L01610.

[4] DFAT (2023), Australia’s free trade agreements (FTAs), Australian Government Department of Foreign Affairs and Trade, https://www.dfat.gov.au/trade/agreements/trade-agreements (accessed on 20 March 2023).

[5] Gray, E., M. Oss-Emer and Y. Sheng (2014), Australian agricultural productivity growth: Past reforms and future opportunities, ABARES research report 14.2.

[3] WTO (2022), Tariff profiles: Australia, World Trade Organization, https://www.wto.org/english/res_e/statis_e/daily_update_e/tariff_profiles/AU_E.pdf.

Notes

← 1.  Examples include the Smart Farms programme and Smart Farming Partnerships under the second phase of the National Landcare Program 2019-23 (https://www.awe.gov.au/agriculture-land/farm-food-drought/natural-resources/landcare/national-landcare-program/australian-government-investment-in-landcare) and the Agriculture Biodiversity Stewardship Package (https://www.agriculture.gov.au/about/reporting/budget/sustaining-future-australian-farming).

← 2.  Depending on the scale of the disaster, a range of assistance can be made available to primary producers impacted by natural disasters. For example, in the 2019-20 Black Summer Bushfires and 2022 NSW and Queensland floods, primary producers were eligible for AUD 75 000 (USD 56 300) clean up grants, concessional loans along with continued access to the Farm Household Allowance.

← 3.  These are agreements with New Zealand (ANZCERTA 1983), Singapore (SAFTA 2003), Thailand (TAFTA 2005), the United States (AUSFTA 2005), Chile (ACI-FTA 2009), the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA 2010), Malaysia (MAFTA 2013), Korea (KAFTA 2014), Japan (JAEPA 2015), the People’s Republic of China (ChAFTA 2015), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP 2018), Hong Kong, China (A-HKFTA 2020), Peru (PAFTA 2020), Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA 2020), the Pacific Agreement on Closer Economic Relations (PACER Plus 2020), the Regional Comprehensive Economic Partnership Agreement (RCEP 2022), the Australia-India Economic Co-operation and Trade Agreement (ECTA 2022) and the United Kingdom (A-UKFTA 2023).