The Future Productivity and Competitiveness Challenge for Australian Agriculture

Abstract

The objective of this paper is to review likely trends in key drivers of productivity with a view to suggesting the rate of productivity growth that is likely to be required to maintain the competitiveness of Australian agriculture both within the Australian economy and relative to the agricultural sectors of other economies. The paper also canvasses prospect for achieving this level of productivity performance over the period to 2030.Growth in agricultural productivity has slowed over the last two decades and a significant proportion of this slowdown in growth can be attributed to the stagnation in public investment in agricultural R&D since the late 1970s. The prospect that rate of growth of TFP could stay at less than 1.0% rather than recover to a long term rate of 2.0% is obviously quite concerning for the future competitiveness of agriculture both domestically and internationally. It would seem that to maintain TFP growth in the 2.0 – 2.5% per year range, investment in agricultural R&D has to be returned to a level of 3.0% of agriculture’s GVP (or 5% of GDP), a major challenge for government and industry.