The Australian agricultural industry is forecast to be worth a record $81 billion as several commodities hit all-time highs, but the experts have warned price corrections are in store.
The Australian Bureau of Agricultural and Resource Economics and Sciences 2021-22 forecast and outlook report also predicted record levels of ag exports ($67b).
ABARES executive director Dr Jared Greenville said agricultural commodities had performed even better than initial forecasts, collectively beating last year's record by an "unprecedented" $12 billion.
"It can be put down to a combination of record high crop production, and the highest prices in real terms for Australian agricultural produce in 32 years," Dr Greenville said.
"Australia has harvested what will be the most valuable winter crop ever, even after accounting for flood and rain damage in parts of NSW."
However, the industry should not expect the good conditions to continue indefinitely. The sector's net production is expected to fall by about 6 per cent to $76 billion next financial year - which would still be the second highest year on record.
"With production at record highs and high prices, increases in income are likely to far outweigh the additional pressure of higher input costs for fuel, fertiliser, chemicals and labour," Dr Greenville said.
"But we will need to keep an eye on farm costs as commodity prices come back to normal."
The gross value of beef is forecast to increase by 8pc to a record $15.7 billion in 2021-22, pushed by due to record saleyard prices. High rainfall has led to greater pasture availability and widespread restocking. Graziers, eager to capitalise on pasture availability and facing a low national cattle herd, have broken cattle price records buying scarce cattle.
Sheep meat is forecast to break a new record of more than $5b, supported by record high prices and rising sheep meat production. Global inflation is expected to ease by the middle of 2022 and global incomes are expected to rise. As a result, lamb prices are expected to rise by 5pc, averaging 934 cents per kg in 2022-23.
Wheat is also breaking production records, predicted to reach $12.3b, despite wet harvests in southern Queensland and most of NSW. In 2022-23 production value is forecast to fall to around $9.5 billion, due to world production increasing, supply chain disruptions easing and fertiliser prices falling. Russia-Ukraine tensions will contribute to price volatility.
The gross value of barley production is forecast to increase by 23pc in 2021-22 to a record $3.8b, while sorghum production is predicted to hit $880m in 2021-22, more than double the 5-year average.
These increases in value reflect record barley production and above-average sorghum production, coupled with high world grain prices.
Value of Australian cotton production is predicted to soar to a record high of $4.3b, an increase of 157pc, as international freight disruptions drive cotton prices up. Production value is expected to decrease in 2022-23 to $3.6 billion in real terms due to lower international prices.
Canola also benefited from record prices due to tight global supply and favourable seasonal conditions, forest to reach a record $6.3b. In 2022-23, the gross value of canola production is forecast to fall to $3.5 billion, which will still be the second highest on record.
Horticulture is forecast to reach $12b, the second highest on record, despite labour supply issues, supported by favourable seasonal conditions and low water prices.
Wool export value is forecast to rise by 24pc to $3.5 billion to increased production volumes and higher international prices. Export value is expected to increase further in 2022-23 to $4.1b due to rising wool prices and the continued growth of the Australian sheep flock resulting in higher shorn wool production.
Australian sugar production is estimated to reach $1.5b, representing the most valuable sugar crop in real terms since 2016-17.
The gross value of wine production is expected to fall by 28pc to around $870m, driven by lower prices and lower production. This comes as the average price of wine grapes is expected to fall significantly because of sharp declines in the prices paid for red varietal grapes.
Milk production is forecast to increase just over $5 billion in 2021-22 due to a higher farmgate milk price. Strong export demand from China and tight global milk supply have caused prices to surge. Farmgate milk price to hit 58 cents in 2021-22 and remain high over the outlook.
READ MORE:
Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.