Ag output values flatline at $61b as virus and restocking cut earnings

ABARES says ag production, exports under pressure but coping with coronavirus


An improved season will be a drag on some agricultural production earnings this year as producers rebuild after drought, withholding livestock from market


Despite six months of farm-reviving rainfall and a big crop sector rebound in many parts of rural Australia, the gross value of agricultural production will stay flat at $61 billion in 2020-21.

Coronavirus is partly to blame and could erode harvest earnings even further later in the financial year according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

However, ironically the improved season would also drag some production earnings down as livestock producers withheld sheep and cattle from the market in an effort to rebuild numbers while feed was available.

The value of livestock production across almost every category, except the poultry sectors, was likely to fall more than $4.4b or 14pc to $28.9b according to ABARES.

While a crop-led recovery following several years of drought would inject $32b into the farm economy, lower grain prices and global market uncertainty caused by the COVID-19 recession were set to continue and temper earnings growth across the industry.

Executive director Dr Steve Hatfield-Dodds said reduced grain prices and more grain stockpiling on farms, plus tighter livestock supplies and coronavirus disruption in global markets would also undermine agricultural export earnings.

Total farm export returns were now forecast to fall to $43.5b in 2020-21 - down about 10pc on last year

However, he said agriculture was in a solid position to see out falling prices and a pandemic-induced economic downturn.


If the pandemic recovery gained momentum faster than currently expected the national commodity forecaster has even predicted higher returns from wine, wool and lamb and fewer labour supply issues and costs, regardless of whether international tourist movements open up.

On the other hand, ABARES warned the farm sector would be much more sensitive to the potential of any more periodic outbreaks and lockdowns, overseas and locally, this summer.

They would trigger further falls in consumer spending, greater disruption to domestic and offshore supply chains and labour shortages in horticulture and domestic meat processing facilities.

Pandemic-related travel restrictions and manufacturing facility closures are not expected to result in meaningful reductions in total agricultural production, - Steve Hatfield-Dodds, ABARES

While agriculture currently appeared far less disrupted than other sectors of the economy, there were some important "watch points", including a potential rising Australian dollar and the supply of casual and contract labour.

Fortunately people still needed to eat, even if the economic downturn meant they cut spending in other areas, Dr Hatfield-Dodds said.

"COVID-19 pandemic-related travel restrictions and manufacturing facility closures are not expected to result in meaningful reductions in Australia's total agricultural production," he said.

"Agricultural trade has also been less affected than other goods because shipping, the main mode of transport for agricultural trade, has been less disrupted than other forms of transport such as airfreight."

However, the lack of overseas workers would present significant challenges during summer and autumn if travel restrictions remained.

ABARES' September quarterly outlook noted while capital city fresh produce markets had increasing supplies of newly harvest fruit and vegetables at the moment, if labour disruptions continued into late summer and autumn this would clash with the peak fruit, nut and vegetable harvest season across all states when demand for casual and contract help was at a premium.

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