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Australian Cattle Council : Yearbook 2009
CA TTLE COUNCIL OF AUSTRALIA YEARBOOK 2009 agriCultural terms of trade and produCtivity – putting the magnifying glass on the value of rd&e Of the more tangible impacts arising from RD&E activities, it is productivity gains (increased outputs relative to inputs) that have largely underpinned the competitiveness of Australian agriculture relative to other sectors (Figure 3) in an increasingly challenging operating environment. Growth trends in the value and quantity of agricultural output have largely offset short-term volatility associated with severe climatic events such as drought, a factor that only exacerbates the importance of maintaining or increasing this trend in lieu of predictions for long-term climate change. TYPE OF FARM Dairy farms Cropping farms AVERAGE PRODUCTIVITY GAIN 1.6% p.a. 3.6 % p.a. Mixed crop-livestock 2.6% p.a. Wool specialists Beef specialists All broadacre farms 0.6% p.a. 2.1 % p.a. 2.6 % p.a. Table 1 – Average annual productivity gains for various broadacre agricultural sectors between 1978 and 1999 (Knopke et al. 2000) To demonstrate the value of productivity growth to agricultural GVP, counterfactual or “what would be the case without” analyses of productivity are often used. In one such analysis, Mullen (2007) reports that “if agriculture had remained static and continued using 1953 levels of technology, real [value of] agricultural output may have only been about A$10 billion pa in 2004” – a level that would have been less than 30% of the ~$34 billion pa that was achieved. The author goes onto to add that ”70% of the value of farm output in 2004 came from various sources of productivity growth including…new technologies developed and implemented as a result of agricultural research and extension activities.” Figure 3 – Multi-factor productivity of various industry sectors. Base year 1985-86 = 100 (ABS, 2007) With few exceptions, productivity growth has increased agriculture’s ability to offset the long-term downward trend in terms or trade (cost of production relative to prices received) over the past 50 years (Mullen, 2007) and has directly underpinned substantial increases in agricultural gross value of production (GVP) over this period (Figure 4). Long-term trends in beef industry productivity growth are approximately on par with those for total agriculture and somewhat below the average for all broadacre industries; this is a function of the very high levels of productivity being obtained in the cropping sector (Table 1). Figure 4 – Value of productivity growth in Australian agriculture, 1953 – 2006 (Keating and Carberry, 2008) Precise evaluation and attribution of the value of RD&E activities is a challenging but necessary task for all RD&E providers. In 2005, the Centre for International Economics (CIE) was engaged to develop an evaluation framework that examined the cost/benefit ratio associated with investments made by Australia’s major on-farm RD&E providers, including Meat & Livestock Australia (MLA), all state and territory departments of primary industries (DPIs) and Australia’s Commonwealth Scientific and Industrial Research Organisation (CSIRO). 75 1117_CCA Yearbook 2009.indd 75 5/5/09 8:01:35 PM