Author: Lindsay Hogan
Traceability and Australia’s agricultural exports: Economic principles underpinning policy framework
This report uses an economic framework to examine the role of government in tracking Australia’s agricultural exports from ‘paddock-to-plate’.
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Overview
This report uses an economic framework to examine the role of government in tracking Australia’s agricultural exports from ‘paddock-to-plate’. The report highlights fundamental economic principles that underpin decisions by government and industry to strengthen traceability and enhance market access – for example, by helping agricultural exporters meet emerging market access requirements on sustainability attributes. Traceability issues relating to emergency biosecurity responses in Australia are outside the scope of this report.
Australia’s agricultural traceability systems include all government regulation and industry arrangements that enable tracking and tracing of agricultural commodities and products along entire supply chains. Over the past several years, there has been growing interest in strengthening Australia’s traceability systems – particularly the use of new digital and other traceability tools – to support future growth in Australia’s agricultural exports. Key areas of concern are inefficient regulatory processes (for example, paper-based traceability tools), increasing levels of fraud in world agricultural trade, and increasing consumer concerns around sustainability claims.
Traceability policy framework for Australia’s agricultural exports
The Department of Agriculture, Fisheries and Forestry (DAFF) is responsible for negotiating issues around agricultural traceability systems and certifying that agricultural exports meet importing-country government requirements. Since 2021, the Australian Government has committed over $100 million into Australia’s agricultural traceability systems – there are several components to this investment which draws on the experience of Australia’s livestock traceability systems. Notably, Australia’s agricultural traceability policy framework has been codesigned in 3 key stages with input from key stakeholders:
- the National Traceability Framework, released in 2019, is a tool to guide stakeholders in enhancing traceability systems and promoting ‘brand Australia’ in international markets
- the 10-year National Agricultural Traceability Strategy, released in July 2023 by Agriculture ministers, outlines a nationally coordinated approach to enhance agricultural traceability across agricultural supply chains
- the first 5-year Implementation Plan of the Strategy, due to be released later in 2024, has been progressed with extensive consultation from 2022 to 2024.
A nationally coordinated approach between stakeholders is being achieved through the establishment of the Australian Agricultural Traceability Alliance of industry, governments, and other supply chain stakeholders, and more recently in 2023, the Australian Agricultural Traceability Governance Group (a high-level standing advisory group) and its subgroups. DAFF will also strengthen traceability through an Australian Agricultural Traceability Hub, and agricultural traceability policy, grants and projects:
- 7 agricultural traceability grant rounds since 2019–20, with total funding of $29 million, including $25 million awarded to 77 projects in the first 6 grant rounds and 1 grant round yet to be finalised.
- 8 major agricultural traceability projects with total funding of $41.47 million including, for example, the AgTrace Australia project to deliver industry pilots, and the development of the Australian Agricultural Sustainability Framework (AASF) and Indigenous Agricultural Product Framework.
Broad policy areas considered
Economic principles underpinning traceability policies for Australia’s agricultural exports are considered in 3 key areas.
- Export certification – government investment in the electronic certification (eCert) system may be considered on the basis of potential efficiency gains. The eCert system facilitates switching from paper to digital certification forms with the potential to include additional information to verify compliance with certain sustainability and other standards to support export growth to key destination markets.
- Fraud risk management – a significant issue in world agricultural trade, policy options may be considered in terms of their potential to reduce the likelihood of fraud occurring, including in destination markets, and/or reduce the consequences of fraud when it does occur. It is not feasible for Australia’s agricultural exporters to manage some types of fraud, particularly if the fraud takes place in other countries.
- Sustainable agricultural exports – policy options may be considered if these address significant information and other market failures and complement industry approaches to build Australia’s sustainable agricultural exports. First, the government has a well-established role in assessing and, if required, managing serious risks in agricultural trade around food safety, biosecurity and animal welfare, and a similar role may be considered for managing risks around sustainability standards in export supply chains, particularly if there are importing-country government requirements. Second, there may be a role for government to contribute to an evidence-based approach to increase the reliability and credibility of Australia’s sustainable agricultural exports.
Establishing an effective and efficient framework for standards, verification and traceability systems is key for achieving growth in Australia’s sustainable agricultural exports. Notably, a high level of consumer trust in product claims will have a positive impact on the profitability assessments of farm investment in sustainable agricultural exports in two ways – increased expected revenue (higher price premium), and a lower risk premium (increased consumer confidence results in a less risky investment).