Australian farmers have done it tough over the past decade or so. Very tough. And there are a number of contributing factors. Primarily, and most significantly is the affect of the drought, but uncertain economic conditions too, have had an impact. Now there’s a glimmer of hope on the horizon in the form of Australia’s historic free trade agreement with China.

Experts are predicting that ChAFTA will provide a major boost to the Australian agricultural industry, with some going as far as to say that it will facilitate an agricultural boom.

China’s demand for Australian agricultural produce has increased about 11%over the past five years. The country’s desire for high quality food and fibre is in a rapid growth phase and ChAFTA will enable Australian farmers to strongly position themselves for the future, as key suppliers capable of satisfying China’s needs.

ChAFTA Overview

The Dairy industry, for example, is expecting to reap enormous benefits from ChAFTA. In 2013-2014 the Chinese purchased almost $600m of Australian dairy products. With tariffs being removed under ChAFTA over the next 4-11 years, sales are expected to continue to climb.

Australian beef farmers already supply around 60% of China’s beef imports and with tariffs of up to 25% being removed over 9 years, beef farmers will benefit even further. Under ChAFTA, all tariffs (which have been as a high as 30%) will be removed and on horticulture, and wine producers too, will benefit as the current 20% tariff is removed over 4 years.

In light of all this, the National Farmers Federation has said that it believes Australia is on the brink of “a golden age of agriculture.”

Optimism and Opportunity

Many individual farmers are optimistic too, saying that that the finalisation of the deal will provide the confidence and encouragement they need to invest further in their properties, knowing that the future of the industry has some certainty. Other primary producers are certainly more cautious, perhaps until the agreement is finalised in Parliament, but the collective sentiment is undoubtedly strong: ChAFTA is good news for the Australian agricultural industry, because it will give Australian farmers a stronger foothold in the Chinese market.

Combined with recent similar agreements with both Korea and Japan, ChAFTA means that Australian farmers can maximise the potential of business relationships with our Asian neighbours.

Proceed with cultural caution

However with this new era of facilitated trade and communication comes a greater need to understand Asians – they can be complex and fastidious business partners, and despite their proximity to each other, they are each vastly different and we need to understand and respect the differences if we are to have successful relationships.

Doing business with the Japanese is not the same as doing business with the Chinese. Or the Koreans. Subtle yet important cultural nuances must be acknowledged so that we can establish cross cultural and intercultural competence, which our Asian partners will value very highly and reward with their loyalty.

With these trade agreements in place, Australia has an unprecedented opportunity to forge and cultivate important international relationships with Asia, and it’s imperative that we get these right to set a strong foundation for successful long term outcomes.