Agriculture - A Changing Sector

Australian agriculture has undergone extensive change over the last few decades, according to a research paper released by the Productivity Commission.

The Commission paper, Trends in Australian Agriculture, found that agricultural output, while quite volatile because of droughts and other seasonal variations, increased by around two and a half times in real terms over the last four decades. This increase in output was achieved without an increase in the number of agricultural workers, reflecting strong productivity growth in the sector. In fact, in trend terms, agricultural employment has been relatively flat over the last forty years — declining by less than half of one per cent a year.

But with even more rapid growth in other parts of the economy, notably the services sector, agriculture’s share of output has declined from around 14 per cent of GDP in the early 1960s to 4 per cent in 2003-04. Agriculture’s share of employment has also more than halved since the late 1960s.

According to the Commission, this relative decline is no cause for concern. Commissioner Mike Woods said, ‘Agriculture’s output and employment performance is the result of positive factors such as strong productivity growth in the sector and rising demand for services as incomes have risen. This is consistent with the experiences of high-income economies’.

The Commission identifies a number of significant changes in the make-up of the sector over the last two decades. For example:

The Commission paper examines the role and performance of Australia’s agriculture sector over the long term, tracing key trends in trade, employment and productivity as well as structural changes within the sector.