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Australia's grains industry: factors influencing productivity growth

1 Jan 2006

The problem faced by Australia\'s grains industry is how to effectively address the pressures that are likely to affect farmers in the future. What is required by policy makers in the first instance is a robust framework that allows a simultaneous evaluation of the likely importance of these nonmarket factors on individual farm productivity growth over time. Total factor productivity analysis has long been used as a framework to better understand the forces that affect productivity in the hope of affecting them for the better. Past studies of productivity in the grains industry have typically focused on growth in industry productivity over time. However, as these studies have relied on data aggregated at an industry level, the scope to investigate the factors influencing these productivity changes at an individual farm level has been limited. In a more recent study, productivity estimates were produced at the farm level in two different years. This allowed factors that were important in explaining differences between farms to be investigated, but it was not possible to adequately identify factors that had a significant impact on productivity over time. Indeed, any changes in weather patterns or restrictions that affect land use could be expected to have a major influence on farm productivity both over time and between regions. The aim in this study is to investigate the importance of a wide range of factors that are likely to influence productivity on individual farms in Australia's grains industry over time. In particular, this research seeks to establish whether change to climate patterns, environmental regulations, structural adjustment and rural migration trends are likely to have an impact on productivity growth within Australia's grain growing industry in the future.

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