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Australian Cattle Council : Yearbook 2010
62 YEARBOOK 2010 CATTLE COUNCIL OF AUSTRALIA Southern Australia Meat Research Council & North Australia Beef Research Council Stronger collaboration among beef industry research, development and extension (RD&E) providers, together with more effective partnerships between government, industry bodies and the private sector, has the potential to significantly increase the impact of R&D and new technology on future industry profitability, competitiveness and sustainability. PRODUCTIVITY UNDERPINS AGRICULTURAL OUTPUT AND VALUE Australian agriculture has a long and proud history of retaining competitive advantage, and mitigating the effects of declining terms of trade (cost of production relative to prices received, Figure 1), by increasing the productivity (outputs relative to inputs) with which it operates. In fact, the Productivity Commission cites productivity growth as having accounted for the entire increase in agricultural outputs over the last thirty years, a period in which total agricultural output grew at an average of more than 2% pa (Table 1) and contributed a staggering $170b (2001 terms) to the sector and Australian economy (PC, 2005). While highly vulnerable to the vagaries of climate and seasonal conditions, agriculture has remained at, or near, the forefront of productivity levels when compared to other industry sectors for more than two decades (Figure 2). Figure 1: Terms of trade, Australian broadacre farms, 1977-78 to 2001-02 (Index 1977-78 = 100). PC, 2005 Type of farm Average productivity gain Dairy farms 1.6% p.a. Cropping farms 3.6 % p.a. Mixed crop-livestock 2.6% p.a. Wool specialists 0.6% p.a. Beef specialists 2.1 % p.a. All broadacre farms 2.6 % p.a. Table 1: Average annual productivity gains for various broadacre agricultural sectors between 1978 and 1999 (Knopke et al. 2000) R&D AND INNOVATION UNDERPINS PRODUCTIVITY The adoption of new, and the better integration of existing, R&D outputs are commonly cited as being the major contributors to productivity gains in agriculture (IC, 1997). Mullen (2007) estimates that 70% of farm output value in 2004 was derived from productivity growth, including that derived from new technologies developed and implemented as a result of agricultural research and extension activities (Figure 3). DOING MORE WITH LESS -- THE PRESSURE TO ADAPT AND PERFORM WILL ONLY INCREASE Impressive as it has been historically, agriculture's ability to remain focussed on continued improvements in productivity will only become more critical in the future. The pressures associated with climate change, food security, input costs, market competition, and resource Figure 3: Value of productivity growth in Australian agriculture, 1953-2008 (Sheng et al, 2010) Figure 2: Multi-factor productivity of various industry sectors. Base year 1985-86 = 100 (ABS, 2007)