The Influence Of Globalisation on Agricultural Biotechnology

In a bid to aid globalisation, the Australian Government established liberal trade policy agreements with low wage economies. However, according to a manufacturing report released in 2018 by the Department of Industry, Innovation and Science, it suggests liberal trade policies are hampering the growth of Australia's manufacturing industry instead of fueling economic growth. Australia’s manufacturing industry contributes 6% to the Australian GDP, however the utilisation of manufacturing has declined considerably over recent years. The Australian manufacturing industry exports $96.1 billion worth of goods and employ 856,000 people, however this industry has fallen from a high in 1995, where it contributed 14% of GDP and employed more than 1,000,000 people (Australian Government 2018.). However, the downturn of the Australian manufacturing industry is certainly not a strong indicator of the Australian economy. The following Analytical Exposition investigates the impact of globalisation and the role that low wage economies play in the challenges of globalisation that face the Australian manufacturing industry in particular Agricultural Biotechnology.

Biotechnology is the process of applying science and technology to living organisms, parts, products and models, to alter living or non-living materials to produce knowledge and biotechnology products and services. “In its simplest form, biotechnology is type of technology based on biology, it’s job is to harness cellular and biomolecular processes to develop technologies and products that help improve our lives and the health of our planet” (Biotechnology Innovation Organisation n.d). “Australia is a major force of biotechnology and pharmaceutical innovation with excellent research facilities, world-class scientists and a strong regulatory regime” (AusTrade 2019). Australia provides opportunities in biomedical, diagnostics, medical devices and agri-biotech (Aus Trade 2019.) With statistics from the Scientific American Worldview report in May 2018, ranking Australia in the top five bio-economies globally, ahead of Germany and the United Kingdom, Australia’s biotechnology industry continues to show growth for the third consecutive year. Despite the challenges of the global economy, the biotechnology industry is expected to continue growing, reaching around $8 billion in revenue over the current year.

Australia's Biotechnology industry holds a competitive position in the world regarding comparative advantage against low wage economies. These economies simply don’t possess the money to replicate biotechnology study and Australia have more skilled workers, where for example China employ workers based on quantity over quality, meaning Australia has a lower opportunity cost than China (Ross Gittins 2016.). The introduction of agricultural biotechnology has met with opposition, this is true in Europe, as people are viewing new agricultural methods and production as threats to existing production. However, the biotechnology industry is considered one of the most globalized, it is dominated by small and medium sized enterprises in most economies. (Juan Vieira 2005.) There is a trend identified by the EO 2008 global biotechnology report that many Western biotechnology companies use a method where the companies lay off workers whilst also hiring new workers due to their willingness to work for a lower wage without foregoing education or productivity levels. The report identifies this as a way to cut costs to increase opportunity to increase chances of expanding globally, eventually new workers will raise their salary as competition for their work continues. However, regarding the overall more sustainable approach to the globalization of biotechnology, it is important to say that the best way would be to enable western markets to see emerging markets as not a way to get cheaper labor but as potential consumer bases, having a wider variety of consumers which will bring in more revenue (Ernst & Young 2008.) However, it’s important to note that emerging consumer bases are yet to acquire enough funds to invest in western products, the report indicates that western companies should work in collaboration with innovative companies in the emerging markets to develop affordable products designed specifically to the local emerging markets conditions of life. (Ernst & Young 2008). The Australian Government wants local firms to be internationally competitive, this means that Australian firms can complete or sell their goods and services in markets around the world, without reliance on protection or special government assistance. The federal government uses policies to encourage trade and make local firms more competitive, for example the liberal trade policy to encourage international trade which fuels economic growth. Liberal trade policies are the actions by which a country reduces its tariffs and other trade barriers to improve competitiveness.

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The industry of Biotechnology is an influential engineering technology that has the ability to radically transform many industries, including agriculture. Australia believes biotechnology can offer farmers and the community crops that are of higher quality and higher yield. These transgenic crops are able to be grown in non-ideal soil and in drought conditions and have been engineered to improve sustainability through reduced chemical applications. “In 2016 genetically altered crops were grown by more than 18 million farmers in 26 countries, including Argentina, Brazil and the United States” (Department of Agriculture and Water Resources 2018). The number of genetically altered crops planted increased more than 100 times from 1.7 million hectares in 1996 to over 185.1 million hectares in 2016 (ISAAA 2016), this increase made genetically altered crops the fastest crop technology in recent times (ISAAA 2016). Revolution has long supported agricultural productivity growth in Australia, in 1996 Australian cotton farmers first used plants that had been genetically altered for pest resistance, this innovation enabled the farmers to significantly reduce their use of pesticides. Since the 2000’s the total farm income generated from the use of genetically altered cotton has increased by around $78.6 million. (Brookes & Barfoot 2014).

Through the continued innovation of agricultural biotechnology farmers and the community can expect to see more seed yield per acre, plants that naturally resist diseases and farming techniques that improve soil conservation. We can enhance and improve human health through the continued innovations of plant therapies (Biotechnology Innovation Organisation n.d). Biotechnology has certainly produced a lot of positives for the world, however it is hard to ignore the disadvantages and potential negative impacts. 'In agriculture, there are concerns that genetically altered crops could potentially transfer genetic material into natural, unmodified plants. For example, a crop that is herbicide resistant may transfer some of its traits to a weed, which would result in an herbicide resistant weed” (Joshua Suico 2018). Another concern centers around the uncertainty that “genetically modified food may produce new proteins and may act as new allergens and cause allergic reactions in humans. Scientists cannot regulate the site of insertion of genes in the plant genome and this will induce new allergens into the food chain”. (Joshua Suico 2018) The Biotechnology market demand is demonstrated by it’s industry growth from 2014 to 2019, with an average of 2.9 % industry growth rate. While this is the case now, it is important to mention the potential future of Biotechnology, the Industry is likely to grow in the next 5 years, this will be driven by a greater demand for the products that can be manufactured and a greater acceptance of Biotechnology products. Therefore, the industry is forecast to obtain revenue from a wide range of sources, such as Government and non-profit organisations as well as the private sector. (IBISWorld 2019.) “With focus on the agricultural side of biotechnology, the global market accounted for $20 billion in 2017, this number is expected to increase majorly, with an expected market value of $51.93 by 2026”. (Grand View Research 2017). An illustration of why market value is expected to increase is because of the demand for products in the agricultural biotechnology Industry. “Products that are on the demand are biofuels and growing transgenic crops owing to rising food demand”. (Dublin 2019).

The effectiveness of Biotechnology has been recorded for many decades with evidence suggesting farming based biotechnology adds to both environmental and economic sustainability (Biotechnology Innovation Organisation n.d.). Farmers choose biotech crops as they lower production costs and increase yield. It is important to note that farmers also receive a greater financial return using environmentally friendly farming practices through the use of agricultural biotechnology. “The decrease in field plowing has allowed farmers to use less fuel and store additional carbon on the soil. In 2007, this was equivalent to removing 31.2 billion pounds of carbon dioxide from the atmosphere or equal to removing nearly 6.3 million cars from the road for one year”. (Brookes, Graham, & Peter Barfoot. 2009.). With Australia implementing Liberal trade policies, making Australia more competitive in the international market there will be many advantages Australia can look forward to. With Australia being internationally competitive, Australian firms should compete more successfully against imports at home and be able to grow their export markets. In addition, being internationally competitive will not only improve Australia's external stability by reducing our CAD, being more competitive will benefit us all by lifting the rate of economic growth in GDP, increasing national income, creating jobs and lowering inflation. Australia’s manufacturing industry is very capable to deal with the challenges of globalisation, this is because globalisation is able to increase exports which enables Australian companies better quality access to distribution channels across the international market. (Mark Vaile 2000.)

While the economic benefits of biotechnology for agriculture and the economy cannot always be readily quantified, it seems clear that the existing benefits are significant and future benefits could be large. A range of biotechnology techniques are being used to develop functional foods, which can produce economic benefits along the chain, although many of the benefits may accrue to industry players beyond the farm gate. However, in the long term an important benefit to the economy and society of functional foods is likely to be lower health costs and a healthier Australian community.