July 28th 2001

  Buy Issue 2613

Articles from this issue:

EDITORIAL: The message from Aston

COVER: Dumped imports threaten Golden Circle

Trade lessons for small countries

Straws in the Wind

Media: New program, same old ABC

ABARE's export figures 'fanciful' (letter)

Issues lost in barley debate (letter)

The good and bad of the US model

Children already have protectors - their parents!

The lessons of T.G.H Strehlow

Rearming school cadets

What Beijing Olympics Supporters Ignored

Adult stem cell research provides ethical genetic therapy

Taiwan wracked by political infighting

Books promotion page

ABARE's export figures 'fanciful' (letter)

by Mark McGovern

News Weekly, July 28, 2001
Those involved in the historic Customs House Meeting in Brisbane, are:
Front row (from left): Kevin Donovan (ABS Canberra), Mark Mazzanti (Darling Downs Pork Producer, and National Party Representative), Rowell Walton (Condamine Grain Grower, and chairman of the National Party Agriculture Production Destination Committee) and Rolf Mitsdorffer (economist and chairman of the Queensland National Party Treasury and Economic Committee.
Back row: Kevin Toivonen (ABS Canberra), Rod Jensen (Emeritus Professor of Economics, University of Queensland), Jim Williamson (ABS Canberra), Ian Bobbin (ABS Canberra), Dr Mark McGovern (Queensland University of Technology School of Marketing and International Business), Guy West (Associate Professor of Economics, University Of Queensland; and Dick Jeremy (Chinchilla beef producer and Queensland National Party Representative). Missing is Ted Kolsen (Emeritus Professor of Economics, University of Queensland) who also attended the meeting.


When I first publicly raised the issue of agricultural exports in December 1996 with then Primary Industries Minister, John Anderson, at a Forum organised by the Queensland Heads of Churches in Brisbane, I thought that the matter would be quickly cleared up. It has taken almost five years but considerable progress has now been made. Only a few parties, such as ABARE and some Farmers Federations, now publicly claim fanciful levels of farm exports.

All parties are now agreed that around 22 per cent of total farm production is exported essentially unchanged, including Agriculture Minister Warren Truss in a meeting in September 2000, and ABARE's Dr Brian Fisher in his letter to News Weekly of June 22, 2001.

The export proportion varies from sector to sector. Only seven of 53 sectors analysed exported more than half of their production; these were the ginned cotton, wheat, wool, wool scouring, raw sugar, fresh meat and lobster/crayfish sectors.

Such were my findings for the reference year of 1993-94, which have been published in various places since 1997. (My 1996 estimates referred to the 1992-93 year, with essentially the same findings.)

Thus (and contrary to claims by Dr Fisher and some others) I have explicitly addressed the issue of processed foods. Indeed, in order to try and make some sense of the claims of ABARE and others, I allowed a very broad sector classification.

The sectors identified in my input-output analysis as heavily export-oriented are largely those that ABARE and others talk about at length. They rarely make mention of other sectors which principally serve the domestic market, such as hay, poultry, fruit and vegetable products, bakery products, paper or flavoured milk.

It's not just a matter of selective reporting by ABARE and others, however. It's also a matter of some extremely generous export inclusions. The alert reader may have wondered what paper, flavoured milk or bakery products are doing in discussions of "farm sector" exports. ABARE, it seems, chooses to include in "farm sector rural exports" many "products" and "preparations" as well as "wine, paper and paperboard, and tuna which are not included in rural exports by the ABS." (McGovern 1999 p. 238, citing ABARE 1997).

Having included in "farm sector rural" exports all manner of processed products as long as they seem to have been once upon a farm, ABARE and others then exclude these from the value of production used for comparisons. Their recipe is to take "big" export numbers from wine and grapes, biscuits and grain, cheese and milk, sugar and cane, meats and animals, and so on, then divide by the "small" total value of production of grapes, grain, milk, cane, animals and so on. Bingo! A big but meaningless proportion. The comparison is flawed because unlikes are being compared.

Dr Fisher himself provided clear evidence of this "Bingo!" confusion, in his comment that anyone suggesting as my arguments would imply "that Australian farmers do not produce commodities such as sugar or beef for export, is plainly wrong" (Fisher 2001, paragraph 6). It is Dr Fisher who is wrong, since sugar comes from a mill (and refinery), beef from a meatworks.

Farmers produce cane, cattle and other usually unprocessed products, not commodities. Such elementary errors tarnish the once proud reputation of ABARE, and raise questions as to the basic ability of the organisation to deliver the high-quality analysis that we might expect.

The failure of ABARE and others to provide any supporting data of worth, including at a presentation with their Minister, points to some very serious problems. It is simply not good enough for Ministers such as Warren Truss to hear advice from bureaucrats who said in my presence that we know exports are important because "if you fly up the coast you can count the ships". Leaving aside the question of how we pick the export ships from those with imports, our Ministers clearly deserve and need much better advice.

Such things might seem like hair-splitting but they lead to multi-billion-dollar confusions. Failure to analyse market realities properly impoverishes rural and regional Australia. Sadly, for organisations such as ABARE and some Farmer Federations, it seems the facts should not be allowed to get in the way of a good story or of an ageing trade agenda.

Fortunately, and thanks to the determined efforts of a number of committed citizens, awareness of the real situation is growing. The export market is important but it accounts for a lesser share than the domestic market overall.

If we wish to link processed product exports ex-factory with the value of farm gate production to account for the "final destination" of farm product, then a number of problems exist. Alternative assumptions yield a range of estimates of what have been termed "indirect" farm exports.

I am currently finalising a further paper on this issue for a Bendigo conference in October, and will be making it available when completed. I am sure that relevant papers from ABARE and others would also be welcome at the conference.

As preliminary information I would offer these comments.

1. The Customs House Agreement of May 2000 finds "indirect exports" of 3 per cent (first round manufacturing) to perhaps 10 per cent. This gives total (direct and indirect) exports as a likely 25 per cent, and a maximum of 32 per cent. Claims of 80 per cent total exports were agreed to be clearly wrong.

2. If we apply ABARE's methodology we find that Australian domestic consumption accounts for at least 205 per cent of aggregate farm production. Other nonsenses also follow.

My 1999 paper stands as the only independently refereed publication. As is standard academic practice I circulated drafts, including one with an invitation to ABARE to present its own paper at a 1998 seminar. Academic journals welcome criticism of published works. I understand that the Editors have received no such comments or criticisms.

Clearly the time has come for official agencies to move beyond unsubstantiated assertions and I am happy to expand further on any issues. I hope to be able to advise shortly on an electronic source for my papers, including full references for this letter.

It was Banjo Paterson who noted that it was "of the greatest importance to every man … that he should understand what it is that fixes his prospects, and circumstances in life". Our generation needs to rediscover market realities.

The current debate over farm exports is part of our discovery, and I trust that all relevant parties will soon be agreed, with markets appropriately understood. Then, perhaps, they may be effectively harnessed to advance the prosperity of Australia and Australians, rural and urban.

Mark McGovern,
School of Marketing and International Business,
Queensland University of Technology,

Brisbane, Qld

Listen to
News Weekly Podcasts

All you need to know about
the wider impact of transgenderism on society.
TRANSGENDER: one shade of grey, 353pp, $39.99

Join email list

Join e-newsletter list

Your cart has 0 items

Subscribe to NewsWeekly

Research Papers

Trending articles

ROYAL COMMISSION Hatchet job on Cardinal Pell breached basic principle of fairness

COVER STORY Gearing up to ditch free-trade policy

CANBERRA OBSERVED Regret over our rushed marriage to China

NATIONAL AFFAIRS Crucial to get Virgin Australia flying again

CANBERRA OBSERVED What's China's beef with our barley?

EDITORIAL Rebuilding industry won't just happen: here's what's needed

EDITORIAL Post-covid19, create a national development bank

© Copyright NewsWeekly.com.au 2017
Last Modified:
April 4, 2018, 6:45 pm