The fact that the Australian agribusiness sector exports far more raw commodities and food products than it imports often tends to hide the fact that Australia's food processing sector is losing competitiveness. Evidence of this loss is provided in this article, which looks at Australia's recent balance of trade (exports minus imports) for different processed food items. The traditional explanation is that labour costs and exchange rates are the main contributing factors, but they alone do not seem sufficient to explain the recent sharp decline in the net trade balance for Australian processed foods.
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