Ag production rebounds as country recovers from drought

The ABARES has forecasted winter crop production to jump by 53 per cent when farmers go to harvest later this year and early next year.

As previously reported, the total area planted this year has increased by 26 per cent to 22.5 million hectares mainly due to well-timed rainfall across the country.

“Winter crop production is forecast be to be 44.5 million tonnes in 2020–21, which is 11 per cent above the 10-year average to 2019–20,” said ABARES acting Executive Director, Peter Gooday.

“Yield prospects in New South Wales, Victoria and South Australia are forecast to be above average given favourable levels of soil moisture at the beginning of June and the likelihood of above average rainfall in July.”

This forecast assumes average seasonal conditions in spring because the Bureau of Meteorology outlook for spring is not yet available.

According to the ABARES' Australian crop report - June 2020, wheat production is forecast to increase by 76 per cent to 26.7 million tonnes, barley is forecast to increase by 17 per cent to 10.6 million tonnes and canola production is forecast to increase by 40 per cent to 3.2 million tonnes.

Amongst other crops, chickpeas production is forecast to increase by 135 per cent to 661,000 tonnes and oats production is forecast to increase by 81 per cent to 1.6 million tonnes.

Despite the jump in production, the total production value is expected to increase by just one per cent to $61 billion in 2020–21 as a result of falling prices.

Grain production is expected to rebound by 15 per cent to $30.8 billion but livestock production is forecast to fall 10 per cent to just above $30 billion, ending a run of very strong growth.

However, after three years of widespread drought, conditions have begun to improve, and restocking is likely to commence, ABARES said.

“A global economic slowdown combined with higher agricultural production is going to weigh on prices – price falls are forecast for most major commodities,” Gooday said.

“A bright spot is that red meat prices are expected to hold up, with the impact of African swine fever still driving protein demand in Asia.

“As we recover from drought, the value of farm exports is forecast to fall by around $2.7 billion to $44.4 billion in 2020–21, driven by falling meat exports and the rebuilding of domestic grain stocks.

“With graziers looking to rebuild herds and flocks, slaughter numbers - and therefore exports - are forecast to fall.”

Meat and live animal exports are forecast to fall by $3.5 billion and while exports of grain are expected to increase by almost $2.3 billion, over 4 million tonnes of the 2020–21 grain harvest is expected to be retained to rebuild domestic stocks.

“Replenishing our herds, flocks and grain stocks sets us up well for the long term,” Gooday said.

“While domestic grains stocks are sufficient to see us through to the winter harvest, this investment in grain stocks will be important in improving resilience in our supply.”

Gooday added Australian agriculture’s resilience and ability to adapt swiftly to challenges should position the sector well during the post pandemic recovery.

“With a few notable exceptions, Australian agriculture has not been severely impacted by COVID-19 and has shown that it can adapt in most cases,” he said.

“Exporters of high-value seafood, wine and meat products did face significant impacts, but have also demonstrated adaptation by expanding online sales and marketing directly to households.

“We recognise that there is an enormous amount of uncertainty regarding the economic impact of COVID and the duration of effects.

“This translates to more uncertainty in agricultural markets, but as we have seen, demand for Australian exports of food staples remains relatively steady, and our industry has shown it can adapt as conditions change.”