September 18, 2018
The value of Australia’s farm production is forecast to remain relatively unchanged in 2018-19 at $60 billion despite the drought in Queensland and NSW.
This is well above the 10-year average of $55 billion.
Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released its latest forecasts on Tuesday in the September quarter agricultural commodities report.
ABARES executive director Dr Steve Hatfield-Dodds said dry conditions were affecting agricultural production in eastern Australia but there was expected strong production in Western Australia.
Rising grain prices, high livestock prices and a lower Australian dollar were also providing support to farm incomes.
“The value of crop production is forecast to decline by 3 per cent to $30 billion in 2018–19, reflecting a 12 per cent fall in the volume of winter crop production nationally, especially in drought-affected cropping regions in NSW and Queensland,” Dr Hatfield-Dodds said.
“Offsetting this lower volume, we are expecting higher prices for canola, coarse grains, cotton and wheat. A favourable exchange rate will result in a much smaller decline in the value of production, and help maintain returns to Australian exporters.
“A warmer winter has supported the production of a range of fruits and vegetables, and sugar and wine grape production have not been significantly affected by the drought.
“We’re expecting the value of livestock production to increase by 2 per cent to $30 billion in 2018–19, driven by increased supply of livestock as farmers destock in response to scarce pasture and rising feed costs.
“Relatively high world prices for meat are providing some support for cattle prices in Australia, but we are expecting beef prices to fall by around 9 per cent from the historically high levels of recent years.
“As we’ve seen, rising input costs are a significant challenge for some producers and we can expect increased competition in export markets as more cattle are turned off in the United States in response to dry conditions there.
“Despite a higher value of production, total export earnings are forecast to decline by 5 per cent from $49 billion to $45 billion, largely due to lower exportable supplies of canola, coarse grains, and wheat, and an increased domestic demand for grain.
“However these declines will be offset by a rise in export earnings for lamb, mutton, rice, cotton and cheese, due to strong global demand resulting from an increase in global economic growth.
“Export earnings for fisheries products are forecast to increase by 2 per cent in 2018–19 to $1.6 billion, after increasing by an estimated 10 per cent in 2017–18.”
- External link: Agriculture Commodities Report
