In 2018–19 the value of farm production is expected to decline by 4 per cent to $58 billion, according to the latest Agricultural Commodities report launched at the Outlook 2019 conference in Canberra.
ABARES’ Chief Commodity Analyst, Peter Gooday, said the main driver of the drop was poor eastern winter crops, but high prices and the near record crops in Western Australia provided a significant buffer.
“Many would have predicted a greater fall in agricultural production given the significance of the drought along the east coast,” Mr Gooday said.
“Western Australia is forecast to have produced its second largest grain crop—nearly 60 per cent of the Australian winter crop this year (2019)—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.
“Improved commodity prices have helped, with grain prices expected to increase 11 per cent in 2018–19 and contribute to a 3 per cent rise in farmgate prices. Wheat prices rose by 5 per cent and barley prices by 16 per cent.
“Agricultural production is forecast to recover in 2019–20 and then grow slowly over the medium term, assuming a return to average seasonal conditions.
“In 2019–20 the value of farm production is forecast to increase by 2 per cent 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 18 per cent 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 51 per cent on New South Wales broadacre farms and by 21 per cent on Queensland farms.
“In Western Australia farm incomes are projected to increase by 33 per cent 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 6 per cent decline in 2018–19 due to falling crop exports.
“This will be partially offset by an expected 4 per cent increase to export prices.
“Export earnings are then projected to increase to $47 billion by 2023–24.”