What happens next?
– Emerging policy responses to COVID-19 impacts on Australian agriculture

Richard Heath

Executive Director, Australian Farm Institute

The world is a very different place now compared to when the last Insights was released. The February newsletter was released the day after the Commonwealth Government implemented its emergency response plan for COVID-19 and before the first death attributable to the disease in Australia. Ironically, the focus of that edition was disease risk and biosecurity incursions, however I am sure that most people at that stage thought that the devastation wrought upon various fisheries from disease outbreaks was far removed from any analogous threat to human populations. While there is historical precedent of massive pandemics (and indeed recent experience of slightly less globally impactful diseases such as Ebola and SARS), the scale of the disruption caused by COVID-19 has not been seen by most people alive today.

Now that the immediate health threat has been supressed in Australia, attention is turning to whether this current disruption has permanent implications that will change the ways we experience our day-to-day lives, run businesses and interact with governments. While it is still too early to make definitive calls on likely outcomes, many areas of policy and strategy that would have been considered intransigent pre-COVID-19 are being reconsidered in the context of substantially different operating environments.

For agriculture this is a particularly interesting time. While there have of course been impacts, both through loss of markets and disruption to supply chains, compared to most other sectors of the Australian economy the immediate impact has been relatively limited and confined to specific industries or markets. The improvement in seasonal conditions on the east coast has by far outweighed the negative impact of COVID-19 in terms of confidence, and Australian agriculture has generally been spared the scale of disruption that has occurred in some other countries. For example, in the US it was estimated at one stage in April that 40% of pork processing capacity was shut down due to coronavirus infections in abattoir staff. This meant 200,000 pigs per week were not being processed, leading to a massive supply/demand disruption which impacted prices and the purposeless euthanasia of stranded livestock.

The breakdown of highly concentrated and specialised supply chains which have evolved to efficiently deliver just-in-time inputs and outputs for agriculture (and indeed the whole economy) has been one of the defining features of the COVID-19 pandemic. In response, one of the main agricultural policy issues to address post-coronavirus will be the need to build supply chain resilience in the face of global shocks. Some of the likely questions to be discussed in this context will include:

  • Is it healthy for Australian agriculture to be so highly dependent on a few key countries for exports?
  • How can more domestic manufacturing capacity be encouraged so that value is captured onshore and requirements for importation of processed foods are lessened?
  • Should all food categories have surplus production in Australia so that imports are not required?
  • How should we manage the need for adequate strategic reserves of inputs such as fuel, fertiliser and chemicals?

There is a tendency in times of great global disruption to revert to protectionist paradigms and many of these policy areas will involve challenging discussions about issues such as food sovereignty. As a trading nation, Australia must ensure the natural desire to protect against shocks to concentrated global supply chains for imports does not compromise future credibility in promoting open trade to provide markets for our exports.

The full impact of COVID-19 is still uncertain and is likely to be for some time, so appropriate long-term policies and responsive strategies are yet to be formed. The scope of the economic impact will undoubtedly have a large determination on the extent of change that may be visited on a range of agricultural and economic policies impacting the Australian farm sector.

Policy development will also be taking place in a paradox created by government responses to COVID-19 to date. Massive, nationwide programs have been enacted rapidly and have been well received, demonstrating the capacity for Australian governments to deliver transformational change in very short time spans. This provides a precedent for similarly transformational action on other pressing issues; however, the size of those very programs has depleted the fiscal resources required to responsibly act at such a scale in the future.

While the signs are positive that three months from now the next Insights newsletter will be able to report on some resolution of the immediate impacts of COVID-19, I am less optimistic that the long-term implications – and a thorough understanding of how Australian agriculture might have fundamentally changed as a result – will be as clear.