ABARES Outlook a smash

Growth in Australia’s agriculture sector continues to smash records, with the gross value of Australian farm production is forecast to reach $63.8 billion in 2016–17, and farm cash income for Australian broadacre farms is projected to average $216,000 per farm in 2016–17. Source: AFDJ eNews

Acting Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, said the results, revealed at the 2017 ABARES Outlook Conference, reflected the hard work of Australia’s farmers and the Coalition Government’s willingness to back the sector.

“The gross value of agricultural production is forecast to hit a record $63.8 billion in 2016–17; real net farm cash income is estimated to have been $25.7 billion in 2015–16, well above the 20-year average to 2014–15 of $15.6 billion; and broadacre farm cash incomes at the national level are estimated to be the highest for 20 years, averaging $216,000 a farm,” Minister Joyce said.

“In the latest National Accounts figures, agriculture contributed 0.5 percentage points to the Australian economy’s 2.4% growth in the December quarter 2016. This was the largest contribution among all 19 sectors of the economy.”

The 2017 ABARES Outlook Conference was where the March 2017 edition of Agricultural Commodities was released.

ABARES acting Executive Director, Peter Gooday, said the data provided more evidence that agricultural innovation not only underpins the creation of new opportunities and markets, but would be essential to protect markets we already have.

“Two of the big challenges Australian agriculture is facing at the moment are climate variability and increased competition in key export markets,” Mr Gooday said.
“For example, while wheat production rises and falls with seasonal conditions, some of our recent work shows that underlying wheat yields have improved significantly since the mid-2000s when the effect of climate variation is accounted for.

“Climate adjusted wheat yields have grown from 1.8 tonnes per hectare in 2005-06, to reach 2.2 tonnes per hectare in 2014-15.

“This is important because it means that technological progress is offsetting the effects of deteriorating seasonal conditions, which will be essential if we are to remain globally competitive.”

After an extraordinary year for Australian grains and oilseed production, ABARES has forecast yields to return to average levels in 2017–18.

ABARES Acting Assistant Secretary, Alistair Davidson, said the forecast decline in production came on the back of record crops of wheat, barley and canola following outstanding seasonal conditions in 2016–17.

“Total winter crop production is estimated to reach a record 58.9Mt—that’s around 30% above the previous record set in 2011–12,” Mr Davidson said.

“Our estimates put national wheat production at 35.1Mt, which is 17% above its 2011–12 record, canola equalling the 2012-13 record from a smaller area planted and barley and pulses both reaching record numbers.

“Following a decade of strong growth, grain farm incomes are forecast to rise in 2016–17 to average around $398,000 a farm.”

Growth in global demand for grains and oilseed is expected to continue over the next five years, driven by population and income growth – particularly in developing countries across Asia, the Middle East and northern Africa.

ABARES Economist Tom Jackson said the forecast followed record winter grain production, high prices for beef cattle and good prices for sheep, lamb and wool.

“When broadacre farms are separated into the beef, sheep and cropping sectors, it’s clear that farms in all three of these sectors have had a very good run in the past few years,” Mr Jackson said.

Average farm cash income for cropping farms is forecast to rise 25% to $398,000 per farm in 2016–17.

Farm cash income is expected to rise 27% for sheep farms to average $133,000 per farm, and 2% for beef farms to average $163,000 per farm.
Beef prices have nearly doubled in real terms over the past three years to levels not seen since the late 1970s. Lamb prices have also been growing strongly, increasing by around 50% over the past four years.

Mr Jackson said that overall, the forecasts demonstrated that Australian agriculture was a strong and resilient sector, with farms continually innovating, investing and getting better at what they do.