Agricultural policy reform and adjustment in Australia and New Zealand.

Agricultural agents, be they farmers, processors or marketers, adapt rapidly to new economic and policy environments. As a result, the effects of policy reform are not as severe as feared because adjustment costs are shared between market participants. Short-term declines may even be reversed after adjustment has taken place. This chapter illustrates these lessons from the experiences of the Australian dairy sector and the New Zealand sheep and beef sectors following reforms in agricultural policies. These sectors were able to adapt to reductions in government support. They were able to improve farm profitability and increase productivity by adopting new technologies, improving management practices, and diversifying the farm business.