Drying weather conditions have triggered a big $11 billion fall in Australian grain crop production expectations, contributing to a 14 per cent cut in the overall value of agricultural output in 2023-24.
Yet, despite deteriorating seasonal prospects and lower global prices for most farm commodities, the combined agriculture, fisheries and forestry sector is still on track to achieve its third-highest annual gross value on record - about $86 billion.
For agriculture alone, production is forecast to fall $13b to $80b, down from last financial year's record $92b result.
National commodity forecaster, the Australian Bureau of Agricultural and Resource Economics and Sciences, expected farm sector exports to also fall in value by 17pc, or $13b, down from a record $65b in 2022-23.
The total export value of farm, fisheries and forestry sales overseas would likely be $70b, down from $83b, largely because of poorer returns to agricultural producers and traders.
ABARES executive director, Dr Jared Greenville, said the farm sector remained strong despite challenging domestic conditions and an expected slide in global commodity prices.
"As we come out of a higher rainfall La Nina period and move into a drier El Nino climate it is expected that below average rainfall and warmer temperatures will reduce crop yields and production from the previous year's record highs," he said.
Total crop production values were set to fall 20pc in 2023-24 to $46b.
The figure is actually up about $1.6b on ABARES' June prediction thanks to better than expected June and July rainfall in southern grainbelt regions on both sides of the continent.
Wheat production and overseas market declines were expected to account for about half the fall in crop values - about $6.2b for 25.4 million tonnes.
The canola (5.2m tonnes) and barley (10.5m tonnes) crops were likely to be down in value by $2.7b and $1.3b, respectively.
"National winter crop production is expected to be around 45.2m tonnes, slightly below the 10-year average," Dr Greenville said.
"Drier conditions are so far having the greatest impact on northern cropping areas, with prospects for the southern cropping regions holding up after better than expected winter rainfall."
Summer crop plantings were also expected to dip from last year, but forecasts remained above average as high water storage levels would help make up for lower spring and summer rainfall expectations in those mostly northern cropping zones.
Dr Greenville said drier conditions also meant livestock producers would be forced to send more animals to slaughter, resulting in a 14pc rise in beef and veal volume output and 6pc in the sheepmeat market.
"As supply increases, saleyard prices for cattle and sheep are expected to fall; sheep prices are forecast to fall below their long-term average," he said.
"At the same time, global meat prices are falling.
"These factors will mean, despite higher production volumes, the value of livestock production is expected to fall by $1.6b to $34b in 2023-24."
Meanwhile, farmers were also still facing elevated input costs across key categories such as fertiliser, diesel and labour.
Fertiliser supplies had been constrained at the start of this financial year by greater than expected demand in some cropping regions.
High interest rates were also increasing the costs of debt repayments and labour costs reflected ongoing high competition for skilled farm sector workers.
Dr Greenville said despite the various challenges, it was important to remember this year's falls were coming off the back of record years which had helped rebuild financial reserves.
"Our agricultural sector remains resilient and competitive." he said.
ABARES' latest quarterly agricultural overview has noted that despite falling global crop prices overall, restricted supplies for some commodities would likely see prices remain elevated for some crops, and global wheat supply was also forecast to fall slightly in 2023-24.
Substantially lower production in Australia would be a key contributor, as well as reduced Russian exports and ongoing uncertainty around Black Sea exports.
The Ukraine war meant global grain and oilseed prices were expected to remain volatile.
International rice prices were also expected to be elevated following India's recent ban on non-basmati exports to stabilise its domestic supplies, forcing global prices to a 12-year high in July.
On the home front, grain crop production values were likely to be slightly offset by higher horticulture, winegrape and sugar production values.
Horticulture crops were tipped to rise in value to a record $18b thanks to higher production and growing domestic demand, while sugar values were set to lift $300m on the back of strong global values.
Winegrape values were tipped to be up $100m to $1b because drier conditions were likely to boost production by reducing disease issues such as powdery mildew which hit the crop hard in certain regions last year.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
