Agriculture braces for 'second and third wave impacts'

Agriculture braces for 'second and third wave' coronavirus impacts

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ABARES says Australia's agricultural sector must brace for a new wave of coronavirus impacts.

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Australia's agricultural sector must brace for a new wave of coronavirus impacts, the national farm commodities forecaster has warned.

According to a report by the Agricultural Bureau of Resource Economics and Sciences (ABARES), the global spread of COVID-19 is making the short-term outlook for Australia's agricultural sectors increasingly uncertain.

ABARES acting executive director, Peter Gooday, said the International Monetary Fund (IMF) was forecasting a 3 per cent contraction in global economic activity in 2020 - worse than the global financial crisis.

Mr Gooday said trade would continue because there was strong demand for our agricultural exports, but he warned of "softer prices from falling incomes".

"In the early days of the virus Australian agriculture's exposure to China was a risk," he said.

"The most exposed products were those typically associated with restaurants and cafés, and those feeding into manufacturing processes. We saw a drop in seafood exports but many other exports continued.

"China's success in controlling the spread of the virus has allowed it to loosen restrictions and put its economy on a path to recovery. Provided the recovery is sustained, the negative impacts on Australia's trade with China may be limited."

Mr Gooday said the virus had now spread well beyond China, making "second and third wave impacts" on Australian agriculture likely.

"In the immediate future, supply chain and logistics disruptions will create the most significant risk to the sector and hence to producer incomes," he said.

"The Government has taken a number of steps to keep agriculture producing and our food and fibre reaching export markets, significantly reducing these risks."

International trade policy responses to the COVID-19 pandemic have so far been concentrated around restricting wheat and rice trade.

However, this was expected to have limited impacts on Australian producers and consumers.

"Global stocks of major grains are currently very high, the outlook for global production is good, and the current restrictions are not expected to affect global markets significantly", Mr Gooday said.

"Despite the pandemic, it is the recent difficult seasonal conditions in Australia that will continue to dominate industry fortunes over the short term.

"While recent improvements in seasonal conditions will ease pressures on primary producers, the effects of COVID-19 compound the impacts on the sector from drought and this summer's bushfires.

"While there is considerable uncertainty in the outlook with the spread of COVID-19, the underlying medium-term prospects for the agriculture sector remain strong."

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