vegetables

22
Analysing the
economics of
horticulture
R&D
Drive Train
WITH THE 2016 NATIONAL
HORTICULTURE CONVENTION ONLY
A FEW MONTHS AWAY, VEGETABLES
AUSTRALIA TAKES A LOOK BACK AT
TWO SPEAKER SESSIONS FROM LAST
YEAR’S CONVENTION THAT EXAMINED
THE ECONOMIC LANDSCAPE OF THE
HORTICULTURE INDUSTRY AND
IDENTIFIED THE OPPORTUNITIES
AND RISKS THAT COULD IMPACT
THE FINANCIAL PERFORMANCE OF A
GROWER’S BUSINESS. CAMILLA THOMAS
REPORTS.
Director of Independent
Economics Chris Murphy.
Economics can often seem
like another language to the
layman.
But two experts in the field
– Director of Independent
Economics Chris Murphy and
Director of consulting firm
Equity Economics, James
Bond – simplified the complex
interrelationship between
industry and economics during
the 2015 National Horticulture
Convention speaker sessions.
Mr Bond and Mr Murphy
spoke about how potential
changes to domestic and
international economies may
affect the Australian horticulture
industry.
Seven scenarios
Recently, Mr Murphy was
commissioned by Horticulture
Innovation Australia Limited
(Hort Innovation) to explore
the effects of seven scenarios
that would alter the Australian
economy and the vegetable
growing industry.
The scenarios were:
1. What would be the impact
if the GST was broadened to
include basic food?
2. What is the impact on
the industry of greater export
access?
3. Given the health benefits
of fresh vegetables, what would
be the impact if the government
introduced a subsidy of five per
cent of local sales to consumers
of levied fresh vegetables?
4. If the prices of vegetables
were to fall by 10 per cent, how
would that impact the local
industry?
5. What would be the impacts
of a disease affecting levy
vegetable growing?
6. If the government
decided to withdraw the diesel
fuel rebate that is currently
available, what would be the
impacts of that?
7. If there was extra
government research and
development funding, sufficient
to boost productivity in levy
vegetable growing by five per
cent, what would the impacts
be?
“These are all ‘what ifs’ but
it will help the industry to be
prepared if these changes do
happen,” Mr Murphy said.
Possible impacts
Director of Equity
Economics James Bond.
While extending the GST to
include basic foods would
raise about $5.4 billion in
government revenue annually,
Mr Murphy indicated that this
would not necessarily result in
an increase in profitability for
the fresh food industry.
“The introduction of GST
on basic foods would be a
significant negative for the
industry, with losses of about
three to five per cent,” he said.
“On the other hand, a five
per cent government subsidy
or a five per cent boost to
productivity would lead to
production gains of three