Australian farmers and regional towns could be collateral damage from ongoing trade tensions between China and the United States, the agriculture minister has warned.
The Australian Bureau of Agricultural and Resource Economics' latest outlook raised concerns of an uncertain long-term picture for export earnings.
"Trade tensions could lower income growth in Australia's largest export markets, and competition is increasing in many important markets," the report released on Tuesday said.
Agriculture Minister David Littleproud said a trade war between the US and China would benefit no one.
"There'll be collateral damage if that's the case and Australia could be a part of that," he told reporters in Canberra.
"If we don't trade, we don't have an agricultural sector and we don't have regional towns. Simple as that."
Meanwhile, Mr Littleproud said Australia was working with China in a "calm and diplomatic" way to head off tensions about barley exports amid fears farmers could be hit with extra tariffs.
"I think we'll see some more movement in the coming month or two," he said.
He said Australia was unafraid to take issues to the World Trade Organisation, pointing to recent action against India over subsidies which could cost the Australian sugar industry $360 million over two years.
"We're not afraid to go to the umpire if we don't think that we've been treated fairly," Mr Littleproud said.
Labor has promised to study the detail of a free trade agreement between Indonesia and Australia which was finalised on Monday.
Mr Littleproud urged the opposition to back the deal, along with a separate pact with Peru, and pass both in the three remaining days of parliament before the May federal election.
"I just ask them to take a step back from their union bosses and look practically at what will be achieved for regional and rural Australia, particularly for agriculture," he said.
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