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Australia's agriculture industry will produce a record $73 billion worth of produce in 2021-22 up from $66.3 billion in 2020-21 the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARE) September crop report released Monday said

Australia Agriculture Sep 2021 Prices

 Highlights

  • Australian farmers are expected to grow and sell a record $73 billion of produce in 2021-22, up from $66.3 billion in 2020-21 and $59.6 billion in the drought ravaged 2017-18.
  • Good Australian weather conditions and high prices are boosting returns for livestock, grains, fruit and vegetable farmers
  • Drought in Russia, Canada, and the United States has been putting a pressure on prices to rise higher also.
  • There are however challenges for the farm sector from the global supply crunch hitting freight and labour costs.
  • Couple that with a mouse plague, COVID-19 delta variations and foreign trade friction with China

In this background economists at the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) now expect the agriculture industry will grow a massive $73 billion worth of produce this financial year. If the ABARES forecasts hits 2021-22 will be the first time farmers have broken through the $70 billion barrier.

Australia Agriculture Sep 2021 Gross Production

Weather has played it's part in two parts.

  1. Australia's good weather across most of the country
  2. Drought in Russia, Canada, and the United States

Returns for grain growers are now expected to export $30 billion of winter crop, an increase of 17 per cent. ABARES says sugar, cotton, and grain growers are on track to take in almost $40 billion in 2021-22.

Livestock prices are near record highs with the "almost insatiable hunger for protein, a return to good seasons, and herd rebuilding is expected. " The value of the red meat sector forecast to jump by 8 per cent this year to $33.5 billion.

Australia Agriculture Sep 2021 Production Volumes

The value of Australian grown fruit and vegetables is expected to hit a record, bringing in more than $12 billion at the farm gate. ABARES expects a global economic recovery to keep wool prices strong and the high cost of livestock feed in China to drive up demand for Australian dairy products.

"The forecast for next year is due to a combination of factors, all tumbling neatly into place," said ABARES executive director Jared Greenville. "While there are risks related to mice, labour availability, and continued uncertainties due to COVID-19, we are expecting national production to remain robust."

The value of Australia's food and fibre exports is also expected to be a record, jumping by 12 per cent to $54.7 billion for 2021-22.

Australia Agriculture Sep 2021 Top Agriculture Exports

The latest commodity forecast, released by ABARES today, shows the value of Australia's farm production revised up by 12 per cent, or $8 billion, considered the largest revision made in a single quarter for 21 years.

Potential Disruptors

ABARES has identified Australia's international trade relationships, access to farm workers, high international freight costs, and pests, in particular the mouse plague as potential disrupters. Distribution of the COVID-19 vaccine was also a concern.

"The speed of COVID-19 vaccine distribution is the key downside risk, especially in emerging and developing economies," today's report said. "Continued outbreaks increase the risk of further virus variants which could be more resistant to vaccines, more infectious, or more likely to cause death or serious illness. "This would slow the recovery in travel and discretionary spending, and lead to reduced prices for agricultural products."

 

 Australia Agriculture Sep 2021 Top Agriculture Exports Value

Chinese Bullying

A Chinese official has openly declared that Beijing has singled out Australia for economic punishment, saying the federal government cannot profit from China while "smearing" it.

It said the loss of Australia's most valuable market, China, for wine and barley due to political tensions was still having an effect on returns.

"While agricultural exporters are proving adept at diversifying into new markets or taking advantages of changes in trade flows, this does come with transition costs and lower prices as has been seen for barley," Dr Greenville said.

  • Dr Greenville estimated the price of Australian barley had dropped by as much as 20 per cent since China introduced tariffs in May 2020.
  • According to ABARES, the value of wine exports will fall an extra 12 per cent in 2021-22 also due to tariffs imposed by China.

ABARES said the labour shortage, exacerbated by COVID border restrictions, contributed to about a 5 per cent jump in the retail price of fruit and vegetables last year. ABARES expects retail prices for fruit and vegetables will be similar again this year.

Beyond 2021-22

ABARES expects Australia's agricultural production is likely to fall beyond 2021-22 assuming better seasonal conditions return for overseas competitors.

"Unfortunately, all good things must come to an end," Dr Greenville said. "Australian farmers operate in one of the world's most variable climates so we cannot expect the good seasons to keep coming. The same can be said for high world prices."

Agriculture minister David Littleproud described the forecast as "pandemic-defying". "We are dealing in unprecedented economic times, and plenty of industries in Australia haven't been lucky enough to see that kind of growth," he said. "We're looking at our second good year in a row, with a bumper crop harvest, international demand for our produce and a strong market for livestock."

ABARES World precipitation May to July 2021

In Australia, average to above average rainfall during May in western cropping regions and during June in the east resulted in a boost to soil moisture levels. This created ideal growing conditions for wheat, conditions barley and canola in the 2 largest grain-producing states – New South Wales and Western Australia

However, a drier than normal May and June across parts of southern Australia saw a late start to the growing season in some areas of Victoria and South Australia. These areas will rely on continued rainfall throughout the remainder of the growing season to maintain crop production potential

In the northern hemisphere, May to July 2021 rainfall affected the development and yield prospects of spring wheat and canola crops, as well as summer crops such as corn, cotton, rice, sunflowers and grain sorghum. Over the 3 months to 31 July 2021, below average rainfall and unseasonably hot temperatures have reduced production prospects across much of Canada, Kazakhstan, Turkey, the Russian Federation, northern United States and parts of central United States

 In contrast, rainfall was above average across the eastern and southern United States, India, China, Ukraine, South-East Asia and parts of the European Union. This is expected to benefit crop production in these

The National Farmers' Federation has set a government-endorsed goal to grow the industry to be worth $100 billion by 2030.

Source: ABARES September Commodity Report

From The TradersCommunity News Desk

From a sunburnt country

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