Agricultural Reforms in Australia Single Economy

Question: Describe about the Agricultural Reforms in Australia for Single Economy. Answer: Introduction In the whole world, no single economy can claim that it does not support agricultural activities. It is one of the conditions necessary for ensuring survival. Economies that have well improved agricultural systems have a greater supply of food products, which in turn reduces the cost of living (Langridge, Cordell, and DOcchio, 2014). The income spent on food can, in that case, be used in the purchase of other goods and services required by the households. Other than the supply of food, agriculture is a basic source of income. Fuglie, Wang and Ball (2012) noted pointed out that this agricultural sector in Australia provide many employment opportunities. This is especially on those people living in the rural areas. In the case of Australia, most people practice both small and large scale farming. Agricultural practices in Australia differ from one place to another since climatic conditions also differ. While in some areas, the climate supports agricultural growth, in other areas, only pastoralism prevails. The reason for this is because there exist some rainfall shortages in some of the areas. Agriculture in Australia was introduced so many years ago. Its introduction was later developed to ensure that there was food security. So many challenges have been faced over the years. Whereas some of the economic and environmental factors have contributed to increased agricultural production, others, have contributed to the reduction of the output produced. The reforms for agriculture have mainly been meant to contain these challenges. Some of the reforms have been successful, others have failed, and others are still under implementation. This paper will include some of the problems facing farmers and the reforms implemented on the same. The projected reforms if any will also be provided. Conclusions will be drawn, and necessary recommendations made after the reforms consideration. Financial Reforms Financial reforms in Australian Agriculture were introduced to curb the challenges faced by most farmers who practice small-scale farming. Farmers income is in most cases not insured. This is because it is difficult to insure all farmers owing to their production of similar products and therefore facing similar risks. If for instance, a bad climatic challenge occurs, it would affect all the farmers. Johnston and Frengley (1994) argued that there is a high possibility of the small scale farmers being unable to repay their loans. For this case, financial institutions are not willing to lend them with the necessary capital required for development. It explains why some farming practices are still outdated up to date. The introduction of micro-finance institutions according to Johnson and Forbes (2000), is the best reform in ensuring that the poor farmers have access to credit. Irrigation Reforms Water shortages is a great challenge for Australian farmers. Reforms are therefore necessary to ensure that farmers are able to carry out their activities without necessarily relying on rainfall. According to Vidot (2015), the government has an initiative of conserving water for irrigation by constructing large dams to act as reservoirs. The Economist.com (2007) pointed out that governmental intervention was to be raised to control the level of water pollution and increased usage for exploitation by farmers. Farming in Urban Areas Initially, farming was mostly practiced in the rural areas. They supplied most of the food products consumed in the urban areas. In the urban areas, there exist the challenge of the availability of small pieces of land held by the households (Burton, 2012). Moreover, these areas are more industrialized and highly congested. This reduces the suitability of this climate in supporting crops growth and development. The high population growth in Australia created the rationale for seeking better methods of supplying more food (Langridge, Cordell and DOcchio, 2014). The advancement in technology has enabled some farmers to create a crop supporting facilities such as greenhouses in the urban areas. Though it poses some climatic effect challenges, it has led to increased food supply in the areas. Tax Reforms The implementation of the Farm Management Deposits (FDMs) legislation is among the key agricultural reforms in Australia. The poor Australian climate, market prices fluctuations, and natural disasters are the major factors that contribute to most financial risks facing the farmers. This legislation was meant to induce farmers to save more during periods of greater output production, so as to minimize the impact of low output production period (Ato.gov.au, 2015). According to Chan (2014), these deposits are very attractive as they are tax-free; tax is only charged upon the withdrawal of the saved money. This has helped in ensuring that farmers have enough capital to carry out their activities (financial security) even after a bad season (Agriculture.gov.au, 2016). Crop Insurance Reforms This is one of the reforms that have proven unsuccessful over the years (Vidot, 2015). The unwillingness of insurance companies in insuring crops production has significantly contributed to the failed success. Conclusion The increased population growth and human development have raised the demand for food products. The supply of cheap food products in Australia has been as a result of increased food supply. The increased supply has been facilitated by advancement in technology and increased investment in research and development. The Australian government intervention in the agricultural sector has resulted in improved food production. Agricultural reforms have enabled the Australian economy to produce quality products; it is one big exporter of agricultural products. Recommendations The government and policy makers should strive to ensure that all the reforms that have not been successful earlier be successful. For instance, crop insurance could induce farmers to produce more. There should be increased research and development investment to ensure that better reforms are introduced that will help Australia sustain its high food production level in the future. Factors such as infrastructure should be significantly improved to facilitate better agricultural practices. The government should regulate the housing construction in urban areas so as to free up some land for urban farming. It should also have an initiative to make the dry areas favorable for agricultural activities as this would boost production. The government should formulate policies to ensure that favor small-scale farmers in access to capital. References Agriculture.gov.au. (2016). Farm Management Deposits. [Online] Available at: https://www.agriculture.gov.au/ag-farm-food/drought/assistance/fmd [Accessed 30 Aug. 2016]. Ato.gov.au, (2015). Farm management deposits scheme | Australian Taxation Office. [Online] Available at: https://www.ato.gov.au/Business/Primary-producers/In-detail/Farm-management-deposits-scheme/Farm-management-deposits-scheme/ [Accessed 29 Aug. 2016]. Burton, P. (2012). Grow your own: making Australian cities more food-secure. [Online] Theconversation.com. Available at: https://theconversation.com/grow-your-own-making-australian-cities-more-food-secure-8021 [Accessed 30 Aug. 2016]. Chan, G. (2014). Australian farmers hold $3.21bn in farm management deposits. [Online] the Guardian. Available at: https://www.theguardian.com/world/2014/mar/25/australian-farmers-hold-321bn-in-farm-management-deposits [Accessed 30 Aug. 2016]. Economist.com. (2007). The big dry | The Economist. [Online] Available at: https://www.economist.com/node/9071007 [Accessed 29 Aug. 2016]. Fuglie, K., Wang, S. and Ball, V. (2012). Productivity Growth in Agriculture. Wallingford Oxfordshire, UK: CABI. Johnson, R. and Forbes, R. (2000). Recent productivity trends in New Zealand primary sectors. [Wellington, N.Z.: Ministry of Agriculture and Forestry. Johnston, W. and Frengley, G. (1994). Economic Adjustments and Changes in Financial Viability of the Farming Sector: The New Zealand Experience. American Journal of Agricultural Economics, 76(5), p.1034. Langridge, P., Cordell, D. and DOcchio, M. (2014). Agriculture in Australia: growing more than our farming future. [Online] Theconversation.com. Available at: https://theconversation.com/agriculture-in-australia-growing-more-than-our-farming-future-22843 [Accessed 30 Aug. 2016]. Vidot, A. (2015). Farmers approve of White Paper vision. [Online] ABC Rural. Available at: https://www.abc.net.au/news/2015-07-04/farmers-welcome-agriculture-white-paper/6595250 [Accessed 29 Aug. 2016].