After climbing to a record $85 billion this financial year, the farm sector has been warned to brace for sliding farmgate production to about $79b as drier seasons, lower market prices and shrinking export earnings hit home in 2023-24.
In the wake of three bumper years which pushed the gross value of farm output tantalisingly closer to the industry's $100b goal, drying weather patterns are tipped to cut the overall value of Australian agriculture by 14 per cent in the coming year.
The value of farm exports could fall even further - by about 17pc, to $65b - according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
However, next financial year is still expected to be the fourth highest farm production season on record in real terms, with some notable upbeat prospects for the wool and horticulture sectors.
Strong demand from China was forecast to lift wool prices and take total Australian production values up by $175 million to $3.3b in 2023-24.
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Horticultural crop values were set to rise about $1.5b to reach a record $18b, thanks to, in particular, strengthening nut production and rising domestic fruit and vegetable consumption.
ABARES noted drier conditions in 2023-24 should also ease winegrape sector disease pressures which restrained the 2022-23 vintage's output.
While the value of the grain crop was forecast to fall almost a quarter against the 2022-23 season production, it still won't be a shabby number if it does achieve the above average $44b result which ABARES has anticipated.
Executive director, Dr Jared Greenville said it was likely farmers would experience the influence of either drier than average El Nino weather patterns or a positive Indian Ocean Dipole trend in coming months, which would reduce crop yields.
"Crop production in 2023-24 is forecast to fall by 34pc from the record production volume of 2022-23," he said.
"At the same time, domestic prices for most crops are expected to fall in 2023-24."
Prospects were more mixed for the livestock sector.
Beef and veal production values were set to slide $319m to $14.7b and sheepmeat production would be worth $146m less at $4.3b, despite forecasts of a respective 6pc and 2pc rise in output as livestock turn-off rates increased because of reduced pasture availability.
With more stock offered for sale, prices would be lower, taking the total value of livestock production, including milk, down by about 2pc to $35 billion in 2023-24.
Agricultural commodity prices overseas were also expected to slip as global production increased, although post-COVID wool demand from China was likely to be an exception to the easing export value trend.
Overseas price trends were expected to push milk production's gross value down to about $5.6b (a fall of $280m), despite a slight increase in actual volume produced.
Overall crop export values were forecast to fall 24pc to $38b and livestock 2pc to $27b.
ABARES said inflationary pressures and rising interest rates were dampening consumer appetites domestically and globally and would also continue to put pressure on farm input costs, including labour expenses and farmers' spending power.
However, input costs for fuel, fertiliser and freight had eased from the historic peaks of 2022, although they remained above long term averages.
The Australian Bureau of Statistics import price index for fertiliser fell 36pc in March, which was more than a third below its peak a year ago.
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