AUSTRALIA’S farm production is expected to decline by 4pc to $58 billion in 2018-19 and tough decisions were needed to lift this to $100 billion by 2030, the ABARES Outlook 2019 conference in Canberra was told today.
ABARES’ chief commodity analyst, Peter Gooday, said the main driver of the production value drop was poor eastern winter crops, but high prices and the near-record crops in Western Australia provided a significant buffer.
“Western Australia is forecast to have produced its second largest grain crop — nearly 60pc of the Australian winter crop this year — which has helped make this the sixth straight year of above average performance.
“It is clear the ongoing drought in the eastern states and Queensland floods have devastated those affected,” he said.
“Improved commodity prices have helped, with grain prices expected to increase 11pc in 2018-19 and contribute to a 3pc rise in farmgate prices. Wheat prices rose by 5 per cent and barley prices by 16 per cent.”
Assuming average seasonal conditions, Mr Gooday said in 2019-20 the value of farm production is forecast to increase by 2pc to $59 billion and grow to $61 billion by 2023-24.
Farm profitability is expected to be lower in 2018-19 compared with the previous two years, but remain comparatively high.
“The average farm cash income for all broadacre farms is projected to fall by 18pc to $173,000 per farm in 2018-19 — still well above the 10-year average of $140,000.
“There is substantial regional variation though, with average incomes down by an average of 51pc on New South Wales broadacre farms and by 21pc on Queensland farms,” he said.
“In Western Australia farm incomes are projected to increase by 33pc to $490,000 per farm in 2018-19.
“Production falls are expected to impact export earnings, which are forecast to decline to $45 billion in 2019-20 due to falling livestock exports, after an expected 6pc decline in 2018-19 due to falling crop exports,” Mr Gooday said.
“This will be partially offset by an expected 4pc increase to export prices.
“Export earnings are then projected to increase to $47 billion by 2023-24.”
The full ABARES commodities report is available at agriculture.gov.au/ag-commodities-report.
In his conference opening address, ABARES executive director, Dr Steve Hatfield-Dodd said making tough choices will be central to Australian agriculture’s continued success.
He listed five key areas vital to Australia meeting the National Farmer Federation’s goal of lifting the value of Australian agricultural production to $100 billion by 2030.
These included ensuring agriculture is attractive to workers and investors; harnessing innovation to boost performance; promoting on-farm resilience and risk management; persisting with water reforms and respecting and responding to evolving consumer expectations.
“We should be mindful of the substantial, and sometimes painful, reforms that underpinned the growth achieved in recent decades — and that favourable global prices account for 90pc of past trend growth.”
Dr Hatfield-Dodd said each of the five areas bring both opportunities and threats, but support the theme of enhancing the wellbeing of producers, consumers, regions, and the nation to increase prosperity.
“We need to continue to harness innovation.
“Priorities include reducing fragmentation and improving collaboration on ‘whole of sector’ challenges, greater clarity and consistency around contributions and benefit sharing, and achieving faster adoption and commercialisation of successful research,” he said.
He said farms must remain resilient and manage risk effectively and Australia must persist with water reforms.
“The view that healthy industries require healthy catchments has not always been visible in recent debate and finger pointing, which is often framed in terms of trade-offs between ‘industry’ and ‘development’ versus the ‘environment’.
Dr Hatfield-Dodd said respecting and responding to evolving consumer expectations may well be the greatest opportunity and threat facing Australian agriculture.
“Producers are particularly exposed where real or perceived poor behaviour by a few players can tarnish the reputation or market access of an entire sector.”
“Australian agriculture has many advantages, and a track record of good performance, underpinned by tough choices.
“But to thrive and grow—to meet $100 billion—some difficult decisions will need to be made.”
All ABARES Outlook 2019 presentations will be published progressively on the ABARES website at http://www.agriculture.gov.au/abares/outlook