Exports in Turmoil Due to Lack of Equipment

Article by: Hari Yellina

Premium Fresh, a Tasmanian farmer, finished harvesting onions at the end of March. Jim Ertler, Managing Director, stated at the start of the year that they had planted less for this season owing to shipping uncertainties, and he was proven correct. “Due to a lack of equipment, export has been a disaster. This was not the situation for all Australian exporters; it depended on where you were shipping to and from, but Tasmania had a particularly difficult time.” Domestic pricing has been reasonable, although Queensland experienced some troubles during their season, which runs from November to January, and the decent prices have continued for the Tasmanian season, which began in January, but it has to be seen how it will do. As we can see, input costs are rising in Tasmania and across Australia, with freight being the most significant, according to Jim. “It’s a large country, and the cost of petrol has risen dramatically.” “Despite being part of the Pacific Islander Program, our input costs have climbed by 30-40%, and we are facing labour issues.”

Exports in Australia

Trends in worldwide demand and Australia’s competitiveness in international markets have a significant impact on Australian exports. The resource-intensive character of emerging Asia’s rapid expansion has been an essential driver of events during the last ten years as a major supplier of resource commodities. The competitiveness of Australia’s non-resource exporters has been harmed by the exchange rate rise, which has reduced export revenue relative to domestic production costs over the same time. Over the last decade, export growth has repeatedly lagged behind the Bank’s and other macroeconomic analysts’ estimates, despite Asia’s strong growth, particularly in China, exceeding consensus forecasts.

While export growth slowed in most advanced economies, the causes for the downturn in Australia were distinct from those in other advanced economies (Graph 2). This reflects the reality that Australia is primarily a commodity exporter, whereas other sophisticated economies are more likely to export manufactured goods and services. Lower-cost producers from developing Asia have been putting pressure on manufacturers. Furthermore, other advanced economies were more severely impacted than Australia by global economic cycle downturns in the early 2000s and the global financial crisis. Australia’s export slowdown, on the other hand, was primarily caused by supply restrictions in resource exports and the impact of the exchange rate increase on non-commodity exports.

There are some striking similarities between the recent downturn in Australian exports and the prior downturn from the mid-1970s to the early 1980s: the world economy experienced two downturns relatively close together in the mid-1970s and early 1980s; in addition, commodity prices rose sharply in the 1970s, resource investment soared, and Australia’s real exchange rate was at a relatively high level earlier in the period. Looking ahead, once the current spike in resource investment is fully reflected in greater production and export capacity, the prospects for stronger export growth in the future years seem promising.