Agriculture White Paper: Productivity Commission Submission

In the Productivity Commission's submission to the Agricultural Competitiveness White Paper, the Commission made the following main points:

• Governments should focus on providing an environment that facilitates innovation and productivity gains by farm enterprises and allows market forces to allocate land, water and management skills to their highest valued uses.

– Policies that: distort market signals (such as industry assistance); impede efficient risk management and structural adjustment (such as concessional loans for drought or impediments to farm aggregation); or discourage innovation (such as bans on genetically modified technologies) might help some producers, but at the expense of the competitiveness of the sector overall.

• A strong capacity to adjust is crucial for agricultural competitiveness.

– The agricultural sector has undergone significant structural change leading to fewer, but larger and more efficient farms. Policies that unnecessarily impede business entry, exit and efficient scale only undermine competitiveness.

• Most risks are most efficiently managed by farm businesses themselves, enhancing their self-reliance and resilience.

• Trading scarce water has increased farm output and productivity. Remaining unnecessary restrictions on water trading should be removed.

• An efficient supply chain is critical.

– Pro-competitive developments in grain port terminal infrastructure indicate scope to phase out and remove mandatory access arrangements for port terminals.

– Infrastructure decisions including for transport and irrigation investments should be based on transparent and rigorous assessments. Review and reform of coastal shipping is urgently required.

• The greatest benefits of trade liberalisation would be realised on a multilateral basis.

– Bilateral trade agreements might improve market access for some agricultural producers, but others inevitably miss out. Agreements almost always involve complex rules of origin offsetting access benefits and risk costly trade diversion.

• Changes designed to increase the success rate for anti-dumping actions could be a double edged sword for agricultural producers, potentially increasing input costs and encouraging the introduction of similar arrangements by trading partners.