Australian farm sector production next financial year is tipped to creep back up in gross value to where it was meant to be in 2023-24 before a dry winter and spring knocked the stuffing out of livestock markets and eroded winter crop results for many producers.
Despite better than expected summer seasonal conditions and productivity, the national farm commodities forecaster anticipates the gross value of farmgate production will end the current year at $80 billion - down 15 per cent on the big 2022-23 result.
But it would then regain some vigour to be worth $85b in 2024-25, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
By the following financial year it could even break $90b again, as it did in 2022-23 when the industry enjoyed its most valuable 12 months on record for food and fibre production.
Farm incomes
Average farm cash incomes for broadacre farms were forecast to be worth about $192,000 per farm in 2024-25, up 47pc from this financial year's tip from ABARES of $131,000.
Farm business profits Australia-wide are forecast to rebound from an average minus $40,000 in 2023-24 to $40,000 per farm next financial year, assuming an average climate forecast.
Farm cash incomes are calculated as the difference between revenue and costs, while business profit additionally considers a modelled build-up in trading stocks.
ABARES' modelling has assumed farmgate production hitting $91b by 2026-27, then softening again nearer $81b towards the end of the decade.
On the cropping front, horticulture was expected to keep kicking goals, with production growing more strongly than wheat and barley in 2024-25, increasing by $563 million to almost $18b, while export values would be a record $3.6b in 2023-24, and hit $4b in 2024-25, thanks largely to fruit and nut sales.
Meanwhile, the export outlook between between 2023 and 2029 was generally upbeat for some of Australia's highest value and fastest growing agricultural export markets where robust population growth was expected - up 11.3pc in the Middle East and Central Asia and 5pc in South East Asia.
In the meantime, however, that export vigour would be handbraked by what was likely to be another year of sluggish global economic growth, including less demand from China.
Dollar rising
Farmers were also likely to feel the Australian dollar become less export friendly as it lifted towards a $US70 cents average in 2024-25, contributing to a slip in the nominal value of farm exports to $64b - down 5pc on current year expectations.
The export drop would also be driven by declining domestic crop production expected in the year ahead and softer international prices for most crop commodities.
ABARES tipped nominal crop export values to fall 10pc to $36b in 2024-25 as prices continued easing around the world, also filtering through to domestic prices.
South American soybeans, US corn and record export volumes of wheat from the Russian Federation were expected to increase global supplies.
Conversely, however, the nominal value of livestock exports was set to rise 3pc to $28b, driven largely by rising red meat export values due to improving demand in major markets such as the US, Asia and the Middle East.
Despite China's hoped for resumption of Australian wine imports this year, overall wine sales overseas were tipped to shrink in value by another $83m to about $1.8b due to a long trend of declining global consumption hitting home and many major production regions continuing to have surpluses, particularly for red wine.
Economic growth around the world would be a concern for all sectors during 2024 - tipped to stay below 20-year trends and similar to the subdued levels of 2023.
ABARES noted higher interest rates and limited growth in real wages were weighing on disposable incomes, with consumer confidence at very low levels in many countries, although inflation was nearing target levels in most economies.
ABARES said an earlier than anticipated reduction in interest rates globally would help international consumption and investment growth.
However, if inflation persisted, prolonged high interest rates could damage business activity and household consumption further.
Considerable uncertainty around ongoing conflicts in the Middle East and Ukraine also remained a downside risk to the global outlook, especially if tensions further disrupted energy and goods supply chains.
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).
