Coming off a record year for Agricultural exports has growers and producers primed to show it wasn’t a fluke
Agricultural exports achieved a new record high value in 2022-23, building upon a strong rise in the prior year.
For the record, in 2022-23, the value of agricultural exports reached $79.9 billion, a rise of $12.5 billion, and that represents an 18.6% increase over the year before.
And it was the season before, 2021-22, where it all seemed to come together, with a rise of an impressive $18 billion, 36.6% higher than 2020-21. Export value was 49.4% above the five-year average.
When you start to break down this phenomenal growth in export value, it was primarily driven by rises in broadacre crops and cotton.
Broadacre crops added an increase of $7.1 billion, 19.6% more in export value in 2022-23, rising to $31 billion. This was more than double the value of broadacre crops when compared to two seasons prior, in 2020-21.
Consecutive years of record-setting crop production and high commodity prices drove this extraordinary level of export value in 2022-23. But it must be noted that exports tallied for 2022-23 did include volumes from the winter crop grown in 2021-22, a record at the time, and that was added to the subsequent record crop grown in 2022-23.
In addition to grain crop export records was the rise in cotton exports that more than doubled in value to $4.9 billion, up $2.7 billion from the year before.
Increased beef production was also in the record mix and helped drive a rise of $726 million, 5.9% more in the value of cattle industry exports than the previous 12 months.
Sugar was another strong growth commodity, adding a further $650 million, for a 32.1% increase in 2022-23, on top of the strong rise already recorded for beef in 2021-22.
These gains more than offset a drop in the value of wine exports where there was a 7.5% dip, and smaller declines of three per cent or less for dairy, wool, sheep and vegetables.
The future still looks bright, even taking into account the anticipated effect of drought conditions that as yet are still to eventuate, it’s predicted the value of agricultural exports in 2023-24 will fall to $65 billion, and that’s below the record setting levels seen in the past two years, but would still be the third most valuable year on record.
This decline is primarily due to a reduction in crop production. Current industry estimates are for a 34% decline in winter crop production compared to last season. This is due to the anticipated losses from severe drought conditions with the potential for an El Niño event and a positive Indian Ocean Dipole to both eventuate this year.
The season didn’t set out this way, there was plenty of enthusiasm from growers and a high volume of ground up to 23 million hectares was planted for crops.
And the expectation of a 34% drop in their harvest result this season is still a remote possibility for many growers in high rainfall areas sitting on substantial holdings of well established crops.
But for areas already affected by dryer conditions, in addition to reduced crop volumes that could arise from an El Niño event still to be called by The Bureau, lower prices for other commodities could also weigh on the value of exports.
Livestock products including red meat, wool and dairy are all experiencing lower commodity prices in recent months. Although production levels of red meat are set to rise in 2023-24, lower prices will likely limit growth in export value.
Challenging economic conditions for consumers in key markets are weighing on prices for exports and are not expected to improve in the near term.
The elephant in the room could take a swing on the trapeze in an upward trend if the appetite for local products to be shipped overseas also gets a boost from the value they offer from a low Australian dollar.
State export performance
All states except Tasmania and the Northern Territory saw an increase in the value of agricultural exports in 2022-23. Western Australia had the largest year-on-year increase, jumping 33.2% to $16.2 billion.
This followed a 53.9% increase in the previous year. The rapid rise of Western Australian exports saw the state reclaim its position as the second largest exporter behind Victoria.
Western Australian exports exceeded New South Wales for the first time since 2018-19, and the WA rise in export value is on the back of good seasonal conditions for cropping.
Crop exports accounted for 75.4% of the value of Western Australia’s agricultural exports in 2022-23.
Favourable cropping conditions also supported export growth in Victoria, New South Wales, Queensland, and South Australia. All four of these states had strong export growth in 2022-23, and as a result, their exports were all 30% or more above the five-year average.
Victoria maintained its position as the number one exporter in 2022-23 with growth of 7.7% taking it to $18.7 billion. Victorian agricultural exports increased due to strong growth in crop, horticulture, and cattle industry exports.
New South Wales was the third largest exporting state with an export value of $13.4 billion, up 6.6% year-on-year. Queensland saw relatively stronger growth of 17.8%, taking its export value to $12.5 billion.
Likewise, South Australia saw strong growth of 19.4%, rising to a value of $8.9 billion.
Tasmania saw a 1.6% drop in export value in 2022-23, falling to just over $1 billion.
A lower value of dairy export was the primary driver of this fall. Dairy exports fell 25.8% in 2022-23, however, remained well above the long-term average value. Tasmanian export value did find support from seafood exports, which increased by 13% in 2022-23.
The value of the Northern Territory’s exports dropped five per cent in 2022-23 to its lowest level since 2013-14 at $392.5 million.
The main driver of the Northern Territory’s decline was a 13.5% reduction in cattle export value. Cattle exports generally account for around 95% of the Territory’s agricultural exports.
Export markets
Growth was a consistent story across Australian agriculture’s major export markets in 2022-23. The top 13 markets all recorded year-on-year growth and the top 12 markets all achieved record highs.
China was the largest growth market in dollar terms for the second year in a row. The value of exports to China rose $3.1 billion (+22.7%) in 2022-23 to a record high of $16.6 billion.
Over the past two financial years, exports to China have grown by $5.9 billion (+54.7%) following a sharp decline in 2020-21.
Growth to China in 2022-23 was led by an increase in wheat exports of $1.5 billion (+66%). Beef, almonds and cotton also saw growth.
Despite the strong rise, China’s share of total export value only rose moderately from 20.1% in 2021-22 to 20.8% in 2022-23. This remains below the five-year average of 24.7% and a peak of 29.3% from 2019-20.
The substantial increase in the value of wheat exports helped drive growth of over $1 billion or more across four other markets: Vietnam, South Korea, Indonesia and Thailand. Vietnam saw the largest growth of these markets with a rise of $1.8 billion (+53.5%) due to strong growth in both cotton and wheat exports.
Japan and the US retained their places as Australian agriculture’s second and third most valuable markets, but both saw modest growth of less than 10%.
Export value to Japan rose only $283 million (+4.6%) to $2.2 billion as growth in crop exports was diluted by reduced beef export value.
Conversely, the US saw an increase in beef export value but declines in the value of sheep meat and wine exports saw growth of just $451 million (+8.7%) to $5.6 billion in 2022-23.
Australian agriculture did not see any further diversification of export markets in 2022-23 but held onto the gains made in the previous two years.
The top five markets accounted for 48.6% of value in 2022-23, up from 48.1% in 2021-22 but down on the five-year average of 53.2%.
Another measure of diversification is the share of value to the top 10 markets, excluding China. This group of markets accounted for 45.6% of value in 2022-23, up from 43.5% in 2021-22 and above the five-year average of 43.3%.
This suggests that while the reliance on China has lessened in recent years, there has not been much diversification outside of the other major markets.
