Supply and demand for commodity components: implications of free trade versus the AUSFTA for the US dairy industry*

During the negotiations on the Australia–US free trade agreement (AUSFTA), the US dairy industry vigorously opposed opening the US market to imports of Australian dairy products on the grounds that the US industry would be devastated. Subsequently, the agreement signed in February 2004 made an exception for dairy, providing for only limited quota expansion and no free trade, even at the end of the long implementation period. This paper presents a simulation model of world dairy markets, represented by supply and demand equations for fat and non‐fat components of milk and manufactured dairy products. We use the model to analyse the effects on US milk markets of both a hypothetical agreement, allowing free bilateral trade in dairy products, and the actual AUSFTA. An important contribution to the literature is the derivation of explicit supply and demand relationships for milk components. The components model allows an analysis of long‐term production, consumption, and trade patterns that is not tied to specific, fungible products. Simulations indicate that increased imports from Australia resulting from bilateral trade liberalisation would have resulted in small reductions in US milk prices and production. The much smaller increases in Australian access to the US market under the actual AUSFTA will have even smaller, almost negligible, impacts.     

Deregulation reforms,resource reallocation and aggregate productivity growth in the Australian dairy industry

Deregulation reforms in the Australian dairy industry had long‐lasting repercussions for Australian agriculture and the wider Australian economy. Using farm‐level data from 1979 to 2013, we investigate the effect of these reforms on productivity in the Australian dairy industry which arose from correcting resource misallocation between farms and across segregated state milk markets. Our results demonstrate that after the dairy reforms in 2000, relative market share shifted from less productive farms to more productive ones, and between farms using different production systems – generating additional productivity gains for the farm sector, but imposing some costs on downstream manufacturers by strengthening the seasonality of milk supply. Lessons from the Australian experience provide timely guidance for those countries exploring deregulation now or in the future to improve the industry‐level agricultural productivity growth through facilitating resource reallocation from less efficient to more efficient farms.     

FTA,Exchange rate pass‐through and export price behavior – Lessons from the Australian dairy sector

The growing number of bilateral and regional free trade agreements (FTAs) alongside exchange rate volatility has raised a question on whether these affect exporters’ pricing behaviors, hence competitiveness. This study contributes to this topic by examining Australian dairy export price behavior across eight major markets taking into account the extent of pass‐through of exchange rate and tariff as well as FTAs between Australia and its trading partners. Commodity‐level dairy trade data from 1996 to 2016 and the feasible generalized least squares methods are employed. The study finds incomplete pass‐through at the industry level. The dairy export prices decrease by 1.7% if Australian dollar depreciates by 10%, while 10% tariff reduction is associated with 0.7% export price cut. Results at the commodity level show different pricing behaviors across destination and commodity markets. Overall, apart from the tariff effects, there is minimal evidence of the impacts of FTAs on dairy export prices.     

The importance of farmer education in South Australia

There is a significant challenge involved with balancing food security at local and global levels whilst mitigating the environmental and social consequences of the historically productivist agri-food system. This work will address the importance of education in the South Australian agricultural sector as a tool to maximise beneficial outcomes. The results of a blended method research project, which involved farmers and governance stakeholders in South Australia, are presented as empirical evidence highlighting the positive roles that formal education, in particular university education, have in regard to increasing sustainability. It was found that higher levels of formal education contributed to farmers being more likely to prioritise the socio-environmental outcomes of their agricultural land use. There was also a dramatic reduction in farmer concerns with government support mechanisms as education levels went from secondary or less, through to vocational qualifications, and finally university degrees. Interviews with agricultural governance stakeholders emphasised the role of education in building the adaptive capacity of farmers, and the subsequent positive outcomes for the future development of the South Australian agricultural industry. These results suggest that further education provides farmers with the capacity to compete effectively in a liberalised economy.     

Being good neighbours: Current practices,barriers, and opportunities for community engagement in Australian plantation forestry

Although community engagement (CE) is widely recognised as an essential element of sustainable management, few studies have evaluated CE at an industry-wide scale, i.e. in terms of the specific CE needs and best practice methods needed when addressing engagement issues that apply across more than one business in an industry. We explored stakeholder views of the barriers to industry-wide CE within the Australian plantation forest industry. Interviews with key informants were conducted in 2010 throughout three major plantation regions in Australia: Tasmania, south west Western Australia, and the Green Triangle region (south west Victoria and south east of South Australia). We found that stakeholders often considered CE implemented by the forest plantation industry ineffective, due to: (a) lack of strong industry voice, (b) issues of trust, and (c) because technical experts in the forest industry lack skills in CE. Measures that are likely to promote more effective CE are discussed, including enhancement of relationships with external stakeholders, and enhancing CE skills of forestry professionals.     

Profitability of incremental generic promotion of Australian dairy products

The motivation for this study rests on two factors. First, Australian dairy farmers spend around $20 million annually on generic promotion and estimates of the returns from this expenditure are required to facilitate efficient investment decisions. Second, while the Australian dairy industry has been highly regulated, there has been a substantial reduction in assistance over the past decade and farm‐gate milk prices were deregulated on 1 July 2000. The profit potential of promotion may vary with the degree of regulation, so past estimates of the returns from promotion may not hold in the competitive environment of the future. Hence, the aim of this study is to examine the effects of government intervention on the profitability for dairy farmers of incremental changes in generic dairy promotion expenditure using a perfectly competitive market as a reference point. Competitive market price and quantity outcomes for the Australian dairy industry are estimated. The impacts of increments in dairy product and competing product generic promotion expenditures on dairy farmers’ profits are assessed using equilibrium displacement modelling. Finally, graphical procedures are used to examine the effects of dairy industry regulation on the profitability of dairy promotion.     

Technology choice and efficiency on Australian dairy farms*

Deregulation of the Australian dairy industry, specifically the removal of price subsidies to ‘market milk’, as well as ongoing drought in many dairy regions, has placed considerable pressure on farm cash income and a search for ways in which dairy farms can be made to operate more efficiently. Using traditional farm survey data and a unique biannual data set on farm technology use, this paper estimates a stochastic production frontier and technical efficiency model for dairy farms in New South Wales and Victoria, determining the relative importance of each input in dairy production, the effects of key technology variables on farm efficiency, and overall farm profiles based on the efficiency rankings of dairy producers. Results show that production exhibits constant returns to scale and although feed concentration and the number of cows milked at peak season matter, the key determinants of differences in dairy farm efficiency are the type of dairy shed used and the proportion of irrigated farm area. Overall farm profiles indicate that those in the ‘high efficiency group’ largely employ either rotary or swing‐over dairy shed technology and have almost three times the proportional amount of land under irrigation.     

Input usage,output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry*

In this paper we estimate a Translog output distance function for a balanced panel of state level data for the Australian dairy processing sector. We estimate a fixed effects specification employing Bayesian methods, with and without the imposition of monotonicity and curvature restrictions. Our results indicate that Tasmania and Victoria are the most technically efficient states with New South Wales being the least efficient. The imposition of theoretical restrictions marginally affects the results especially with respect to estimates of technical change and industry deregulation. Importantly, our bias estimates show changes in both input use and output mix that result from deregulation. Specifically, we find that deregulation has positively biased the production of butter, cheese and powders.     

基于三方演化博弈的中国乳制品集聚形成机制及对策研究

目的 随着国内乳制品产业的发展,乳业集聚格局特征日趋明显,不仅有助于提高产业内分工水平、产业竞争力,而且在培育本土品牌,解决市场失灵等方面发挥重要作用。方法 文章针对当前我国乳制品产业国际竞争力弱、市场信心疲软、质量安全余波未消、原料成本高—产品价格低的两难困境,通过构建演化博弈模型,分析奶农、奶站、乳制品企业选择集中规模化策略行为的演化博弈稳定策略,在此基础上,根据产业行为主体决策,分析乳制品产业集聚形成机制。结果 三方博弈主体的演化均衡策略的变化受各自支付矩阵影响,进而从微观个体的复制决策,在要素、资源禀赋等推动下,围绕利益相关主体,实现国内乳制品产业集聚的形成。结论 引导区域乳制品产业集聚、加强乳制品质量管控力度、提高行业管理与检测水平等有助于高效促进乳业集聚形成,培育国内乳业竞争力。     

澳大利亚常规油气行业现状及行业特点分析——高收益行业的高风险挑战

澳大利亚常规油气行业中天然气在资源储量、供需、进出口方面呈现乐观的开发前景,而石油行业则一直呈下滑趋势。澳大利亚油气行业的优势和机遇：油气资源储量丰富且地理位置优越;现任政府支持能源行业发展;行业成熟且享有巨额利润空间;优质的投资环境。劣势和挑战：石油产业对外依存度越来越高;基础设施缺失影响东海岸油气供给;多项外部影响压榨利润空间;美国廉价天然气长期来讲将对市场形成冲击。投资策略：（1）分析价格走势、关注汇率利息;（2）把握亚太市场、提前锁定长协;（3）好社区工作、取得环境审批;（4）利用规模效益、严格控制成本。     

Elasticity of demand for Australian cotton in Japan

Although a relatively small producer, Australia exports more than 90 per cent of its cotton production, making it the world's third largest cotton exporter in recent years. This means that export performance plays a major role in determining the profitability of the Australian cotton industry. The primary aim of this study was to determine the competitive position of Australian cotton in the Japanese market, based on the original non-linear Almost Ideal Demand System model using data from 1972 to 1998. The main findings are that the USA had a relatively strong market position and that Australia needs to improve its cost competitiveness and quality image to advance its market standing.     

UNDERWRITING ASSISTANCE TO THE AUSTRALIAN WHEAT INDUSTRY — AN APPLICATION OF OPTION PRICING THEORY

For the ten crop seasons 1979-80 to 1988-89, returns to producers in the Australian wheat industry were underwritten by a government-guaranteed price floor. Similar schemes operate in other rural industries (dairy, apples and pears, dried fruits). Although the underwriting provisions have only been triggered once (in the 1986-87 season), the provision of this scheme has acted to reduce the risk normally associated with returns to producers of wheat in all years of its operation. This reduction in risk has been granted free-of-charge by the Commonwealth Government. The guaranteed price can be viewed as a put option taken out by the Government on behalf of growers — it gives growers the option to sell to the Australian Wheat Board at this floor price. The aim of this paper is to apply to this underwriting arrangement the Black-Scholes formula for valuing options, in order to estimate the cost that growers would otherwise have had to pay to obtain cover (through put options) equivalent to the guaranteed price. We also estimate the magnitude of this form of assistance to the industry, which (until now) has not been taken into account unless the returns to growers fell below the guaranteed price.     

澳大利亚沙化防治经验及其对我国的启示

澳大利亚地处世界上四大沙尘窝之一,是土地沙化较为严重的国家。澳大利亚政府采取了一系列政策措施,有效地遏制了土地沙化,减轻了风沙危害,改善了生态环境。借鉴澳大利亚经验,提出了我国应从制定优惠政策、活化机制、落实责任、加强部门协作、加强治沙队伍建设、加大治沙宣传等方面的政策建议。     

The organic industry in Australia: Current and future trends

Accurate information is critical for investment, policy alignment and to support agricultural development. In Australia information relating to the size, growth, current and future value of the organic sector has been incoherent and, in some cases, contradictory. This study seeks to address this gap by synthesising industry and government data with the results of an online quantitative survey as well as a series of in-depth interviews to capture the value added component of the organic industry in Australia. By sub-dividing the total organic industry into thirteen categories which makes for meaningful analysis and interpretation, we aimed to estimate the compound average growth rate, the current value added and future trends in the Australian organic industry. This has resulted in some interesting findings, hence the methodology could potentially serve as a benchmark for the reporting of organic food growth globally. The findings also have important implications for various stakeholders including, growers of organic products, investors, land use policy makers and industry operators.     

二噁英的理化性质及在乳及乳制品中污染的研究进展

本文主要分析了二噁英的理化性质,重点介绍了乳及乳制品中二噁英的污染情况,并提出有效措施给予预防和解决,以有效降低二噁英在乳及乳制品中的危害性,确保乳及乳制品行业的健康发展。通过对二噁英的理化性质进行研究,为乳及乳制品的安全生产提供可靠保障,以实现经济与社会效益的最大化。     

Persistence of firm‐level profitability in the European dairy processing industry

Based on autoregressive (AR) models and Arellano‐Bond dynamic panel estimation, this article analyses profit persistence in the European dairy processing industry. The sample comprises 590 dairy processors from the following five countries: Belgium, France, Italy, Spain, and the United Kingdom. The AR models indicate that cooperatives which account for around 20% of all firms in the dairy processing sector are not primarily profit oriented. In addition, the results point toward a high level of competition as profit persistence is rather low even if cooperatives are excluded. The panel model reveals that short‐ as well as long‐run profit persistence is influenced by firm and industry characteristics.     

Internal and contextual drivers of dairy restructuring: evidence from French mountainous areas and post‐quota prospects

The end of the milk quota system in Europe has resulted in substantial structural changes to the dairy industry, calling its future into question, especially in mountainous areas. This study analyzes the internal and contextual factors that influence dairy restructuring in French mountainous areas. Three complementary logit models are used to specify farmer decisions (e.g., dairy production exit, stability, and growth). Original and exhaustive geo‐located administrative datasets are combined to create a farm longitudinal dataset and characterize farm‐restructuring patterns on a fine geographical scale. Farm size, corporate legal status, and specialization are positively associated with farm growth. Viable diversification strategies through either farm processing or agro‐environmental scheme contracting are also highlighted. Farm sustainability is supported by the economic success of the local industry and the propensity to adopt extensive practices. With respect to public policy, dairy policy appears to have the strongest impact. Thus, the liberalization of dairy policy threatens the future of dairy farming, particularly in areas with low milk density and no production under labels. This work calls for a policy that promotes the collective dimension of dairy farm performance. The current rural development policy alone may be insufficient to support farms’ long‐term sustainability.     

Agrarian Change and the Initial Development of an Aboriginal Bourgeoisie in Australia

While the commercial ambitions of indigenous capitalists are continuously displayed in Australia, little is known about the origins and initial development of the class. In this essay one area of the country, the north‐west of Western Australia (WA), is chosen to show how changes in the principal agricultural industry opened space for Aboriginal commerce. Despite the opposition of State governments and existing firms that dominated cattle and sheep production, this space was enlarged as pastoralism underwent major changes. The rise of the indigenous bourgeoisie was also facilitated by the growing power of the class's political representatives in electoral and in executive politics. Parallel with changes in Australian federalism, which gave the national government increased financial and other powers, Aboriginal representatives captured this shift for commercial advantage.     

Domestic and trade impacts of foot‐and‐mouth disease on the Australian beef industry

Australia is the sixth largest producer of beef and the second largest exporter of beef. Average beef exports from Australia are approximately 65 per cent of the total amount of beef produced, about 1.3 million tonnes. Australia is particularly vulnerable to diseases that are not endemic to the country and could close or disrupt its export markets for beef. In this study, we construct a bioeconomic optimisation model of the Australian beef industry that captures production and consumption decisions, domestically and internationally, and the impacts on the beef industry of a potentially catastrophic disease, foot‐and‐mouth disease (FMD). This study analyses localised to large‐scale outbreaks and suggests that changes in economic surplus because of FMD range from a positive net gain of $57 million to a net loss of $1.7 billion, with impacts on producers and consumers varying depending on the location of the outbreak, control levels and the nature of any trade ban.     

ECONOMIC EFFECTS OF RESEARCH INTO TRADED GOODS: THE CASE OF AUSTRALIAN WOOL

The final incidence of benefits and costs of wool industry research and development (R&D) undertaken in Australia depends greatly on the nature of the R&D and the way it is funded. Using preferred parameter values, the Australian share of benefits from farm-level R&D is 58 per cent (falling to 40 per cent if there is 50 per cent adoption of the new technology by producers overseas); the Australian shares of benefits from wool-processing R&D ere 24 per cent (topmaking) and 27 per cent (textile-processing). Under current funding arrangements, an Australian wool tax provides about one-eighth of total R&D funds, a matching government grant provides another one-eighth, and other public sector funds make up the remaining three-quarters. Under these arrangements, the final incidence of the costs is 95 per cent on Australians (mostly taxpayers at large), and the wool industry bears only 12.5 per cent of the costs of its R&D. One implication is that a wool tax alone is a more equitable and efficient means of financing wool-industry R&D than the current arrangements.