Given that we have a cost of living crisis in Australia, the idea of exporting produce can seem strange. After all, the more food that is sent overseas, the less is available for Australians, and that potentially pushes prices up.
Australia also exports a lot of food. An amount that surprises a lot of people. Australia is a major global breadbasket agricultural exporter, with around 70 per cent of its total agricultural production sent overseas. That translates to $78.1 billion of agricultural products.
But why is so much food being sent overseas, and is this a problem for both domestic prices and even national food security?
The benefits of exporting
One thing you need to understand about Australian produce is that it can attract reasonable revenue. By value, the share of domestic production for export has risen to sit at around 58 per cent. Farmers make more from selling their produce overseas, in other words, which is a lifeline that few of them can ignore when the domestic situation for produce is often so dire.
Additionally, the needs for food in overseas markets is growing rapidly, especially as emerging economies develop a larger middle class and the demand for food grows in kind. On the other hand, Australia has a modest population and gradual consumption growth, which limits the domestic demand for agricultural products.
In short, if they want to expand and maintain profitability, Australian farmers need to access new and growing international markets, especially in Asia, where the demand for high-quality food is rising. One of the most powerful examples of that is Yellow Tail wine, which is regularly rated as the most powerful wine brand in the world, precisely because it exports so much, even as domestic demand is relatively modest.
Exporting also helps Australian farmers to diversify their income sources and reduce their exposure to domestic market fluctuations. Again, with the domestic market being an effective monopoly shared by three major supermarket chains, diversification – a critical commercial strategy – can only happen by looking abroad. Australia has a well-deserved reputation as a producer of clean, green, and safe food, particularly for beef, wheat, canola, barley, sugar, and dairy, and so it’s an excellent opportunity for Australian farmers to capitalise on being considered one of the world’s best, and price their produce in kind.
The implications for domestic consumers and food security
While it’s understandable, then, that Australian farmers frequently look abroad, there does remain the question of whether this is done at the expense of Australians, and is potentially contributing to the high cost of food.
The answer is no.
Australia produces more food than it consumes, and so if we didn’t have a robust export business, even more produce would end up in landfill, to the cost of both the environment and farmers. We are also at no risk of our exports causing locals to go hungry. Australia is actually ranked in the top ten for food security globally.
Exporting does not mean that Australian farmers are neglecting the domestic market or selling inferior products. On the contrary, exporting helps Australian farmers to improve their productivity, profitability, and sustainability, which in turn benefits domestic consumers. By exporting, Australian farmers can achieve economies of scale, have the money and resources they need to invest in new technologies and innovations, and also look to diversify the produce that they grow. It wasn’t that long ago that Japanese favourites like wagyu and yuzu citrus were unheard of in Australia. Now they’re grown locally, and that’s only possible because Australia is part of a robust national trade.
And because the farmers have diversified their incomes, they are actually running a lower-risk business, meaning they can operate on smaller margins while staying viable. In other words, if Australia wasn’t exporting all this produce, prices would be even higher, because the farmers would be entirely reliant on domestic sales to stay afloat.
Read more: Five things each of us can do to support Aussie farmers.
At a time when the supermarkets are under intense scrutiny and it does seem like prices are excessively high, it’s easy to go looking for scapegoats. While it might seem like exporting is an issue pulling food from Australian plates, it’s actually one of the best weapons we have in delivering food security, as it has ensured a sufficient, affordable, and diverse food supply for its population. Exporting is one of the rare win-win situations for both Australian farmers and consumers.
