If the OECD's calculations are correct Australian farmers need to brace for a sobering flatlining in global commodity prices after 2025 as traditionally low productivity nations like India pick up the pace.
The subdued price trends expected by the Organisation for Economic Co-operation and Development are also forecast to collide with continuing pressure from farm input costs which began surging at the start of this decade.
International cost and price pressures are likely to spur increasing farm consolidation in Australia, notably in the livestock and wine sectors, the agriculture industry's Outlook 2024 conference has been told.
Although global hunger levels have also risen again in recent years and international grain and meat market demand and supply chain volatility have driven some big price spikes, the world's current low- to mid-scale protein producers are tipped to make significant productivity gains by the early 2030s.
In the decade to 2032 agricultural production gains would be led by a variety of African nations at almost 2.5 per cent annual growth, followed by South East Asia (about 1.2pc) and Latin America (1.1pc), notably Brazil.
The outlook conference also noted the potential rise in grain output from the Russian Federation states and Ukraine if the Black Sea region's productivity was not currently undermined by war and trade sanctions.
The scope for productivity growth by our competitors is much greater - we'll have to respond
- Dr Jared Greenville, ABARES
The impressive growth gains expected from emerging economies compared with Australia's average farm productivity growth of just 0.6pc - down from about 2.2pc 20 years ago.
"The scope for productivity growth by our competitors is much greater - we'll have to respond with gains of our own," said Australian Bureau of Agricultural Resource Economics and Sciences executive director, Jared Greenville.
The OECD's trade and agriculture director, Marion Jansen, told the long-running annual ABARES outlook event that aside from the price and cost challenges ahead for Australian primary producers, farmers everywhere were being pressured to improve the environmental sustainability of their operations.
However, she noted OECD modelling suggested a general reduction in global agricultural greenhouse gas emission intensity by 2032, and even a reduction in farmland use as production efficiency lifted in developing regions, particularly Africa.
Dr Greenville said cutting Australian farm emissions would go hand in hand with achieving greater productivity and profitability and responding to market dynamics.
Although Australia's low agricultural emissions and chemical and fertiliser use levels were already at "enviable world's best" levels, he said more change was needed to meet global market demands and consumer expectations.
"We need to invest now to profitably reduce emissions," he said.
"We don't want to lock in practices that limit our sustainability potential and embed inefficiencies into the sector."
Unpopular wins
While unpopular, Dr Greenville said stricter laws around land clearing and water use reforms had already underpinned our agricultural sustainability credentials.
Dealing with these reforms efficiently was difficult and, in the case of water buybacks, highly unpopular, but it was inevitable and important for Australia's competitive transition to a sustainable, net zero economy.
Also inevitable and socially challenging was the likelihood that sustainability and production efficiency demands, and global terms of trade pressures, would cause more farm enterprise rationalisation.
Productivity growth and industry reforms achieved in the 1980s, 1990s and early 2000s had lifted the real term value of broadacre farm cash income by 3.5pc annually into the current year.
However, it had also triggered a decline in the number of broadacre enterprises from 120,000 to less than 88,000.
Dr Greenville said although recent farm cost increases had been temporarily accommodated by farmers when farm commodities were breaking records in 2021 and 2022, farm profits were still being squeezed by those costs.
Squeezed out
"At some point if those terms of trade continue to decline we'll see a jump in consolidation activity, especially if there's something significant like a lengthy dry season event," he said.
"The livestock sector is likely to experience much more consolidation given it has a considerable variation between producers who do well and those who are not making big profits.
"In the wine industry prices are so low, demand is declining, global markets are oversupplied and input and management costs aren't getting any easier.
"The wine market's telling grape producers not to produce as much, or grow something else."
Dr Greenville said the Australian dairy industry's per cow milk production was rising, but it still had further to go to match overseas rivals.
Despite significant Australian dairy farmer attrition last past decade and the subsequent recent rise in milk payments, he expected more producers to exit and more farm consolidation or farmland conversion to other uses.
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).
