The answer was YES, in capital letters. We have a second area of high activity ahead looming – grain and other agricultural products – where Europe and the US are big players and struggling. It's our traditional growth engine.
Recent wheat prices have gone through the roof, reflecting the US drought and the fact that bank credit in Europe has almost evaporated, making it hard to fund farmers.
Other grain prices have also jumped. Meanwhile, most of our farms have had good rains and they are set for a bumper harvest at a time of high prices. Obviously we may end up with too much rain but already many farmers have started to sell forward.
That means Victoria, New South Wales, South Australia and southern WA are about to have a huge injection of cash, which will not only boost regional centres but will find its way to the capitals. The carbon tax and the Murray River games have make the current government very unpopular in the bush so the National Party is set to really entrench itself as the representative of this booming sector. Nationals Senate leader Barnaby Joyce, who understands the issues affecting farming Australia better than most politicians, will carry enormous clout.
Some of our Darrell Lea writers to The Conversation have tried to divide Australian commerce into segments. Let me add my contribution and go for four divisions. Australia’s first segment is clearly mining and resources. The second could be manufacturing and construction. The third is services, including retail and the public service, while the fourth is agriculture.
Manufacturing and construction, plus services, carried Australia through two decades but are now struggling. But when they overcome their productivity issues they will revive. Services, and especially retail, are struggling, especially where they have not adapted to the new environment. There is not enough money to maintain the current number of public servants so there will be labour shedding – which will force productivity improvement because the public servants remaining will have to find a way to maintain services. Our fourth segment, agriculture, has declined as a proportion but it is larger than you may think.
Here are some statistics from the National Farmers' Federation: There are around 134,000 farm businesses in Australia and they employ 317,000 people. But overall the farm sector employs 1.6 million people. While farm gate production adds only 3 per cent of Australia’s GDP the wider sector contributes 12 per cent.
Agriculture remains an important part of the national business fabric. And so we have two out of four segments in the Australian economy firing. That’s not too bad.