Uncertainty from trade wars between the US and China has had an impact on the Australian agricultural sector, undermining its exports, according to an AgriFutures report which urged leaders to restore stability for agricultural commodities.
Also, the research found a wide range of both risks and opportunities for Australia’s agricultural interests, noting that some products were likely to fare better than others.
AgriFutures’ senior manager of business development, Jen Medway said that a good example was the dairy industry, which could potentially benefit from trade opportunities with China on the back of additional tariffs imposed on US dairy products.
However, a prospective US-Japan free trade agreement could negatively impact the industry as US producers disadvantaged in the Chinese market could gain improved access to Japan.
Following this, the trade wars were expected to have a limited impact for the Australian wool industry as the relatively small size of the US wool export market to Asia would buffer any significant uncertainty for Australian wool exporters as a result of the increased tariffs.
Another area which would see increased competition is in Australia’s fresh, chilled and frozen beef exports due to risks identified in Australia’s two biggest beef export markets – Japan and the US, the report found.
AgriFutures Australia managing director, John Harvey, said that the importance of the report findings was to put rigour around our understanding of the top line impacts for agriculture products because of the trade wars.
“It will inform Australian industry input on how best to ameliorate the detrimental side effects of current and possible future trade measures,” he said.
“The longer this period of uncertainty lasts, the more commercial decisions will need to be made by Australia’s agricultural stakeholders facing the prospect of sudden and unpredictable policy changes at the global level.”
The key take-away message from the report was that as a medium-sized, open economy dependent on trade to underpin economic growth, Australia would benefit significantly from the confidence and predictability inspired by the smooth operation of the international trade regime.