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Weather to blame for falling farmer incomes and production, commodity forecaster ABARES says

By national rural reporter Brett Worthington, Tuesday March 6, 2018 - 07:31 EDT
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The commodity forecaster ABARES expects farm incomes and production will fall this financial year. - ABC

Australia's commodity forecaster expects farmer incomes will fall this financial year as production levels take a hit due to poor seasonal conditions.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) outlook, released today, shows farm production is expected to fall 5 per cent to $59 billion this financial year.

The outlook states farmer incomes are expected to remain high in historical terms despite the forecast falls.

The ABARES report paints a brighter picture for future years, with production tipped to increase 3 per cent to $61 billion in 2018-19 before reaching $63 billion in 2022-23.

ABARES analysts expect the livestock and horticultural industries will drive that growth.

They are forecasting livestock farmer incomes will grow faster than cropping properties because of a more favourable price outlook for the livestock sector.

Crops: Wheat, barley and cotton prices to rise

The crop outlook for 2018-19 offers a mixed bag for grain growers, with wheat and barely prices tipped to rise 6 per cent as oilseed prices fall, down 4 per cent.

A factor in the forecast growth for wheat prices is an expected fall in wheat production in exporting countries, down from .

However, wheat prices are tipped to ease in later years as improved productivity in the Black Sea region boosts global supply levels.

ABARES expects world sugar prices will fall as supply outstrips demand.

That is likely to bring with it a 9 per cent fall in prices during the next financial year.

Analysts expect higher consumer incomes will drive higher prices for the cotton industry in the next year — ABARES expects prices will rise 5 per cent.

Livestock: Dairy prices to rise and beef prices to fall

ABARES expects world dairy prices for butter and cheese will rise this financial year .

Farmgate milk prices are tipped to increase in 2018-19 before falling slightly in future years.

Lower prices in Australia's main export markets and reduced supply due to prolonged dry conditions are likely to slash beef cattle saleyard prices by 15 per cent this year.

ABARES analysts do not expect these prices will increase until 2021-22.

A 7 per cent increase in Australian live exports this year is tipped to be followed by a 4 per cent jump in the next financial year.

The outlook report attributes Indonesia import regulations as the biggest risk for forecast growth in the live export industry.

It is a more buoyant forecast for saleyard lamb and sheep prices, which are tipped to increase in the next year before coming under downward pressure in future years.

An increased supply of pigs and greater competition are likely to cut pig prices by 20 per cent this year.

The report states if that is achieved, it will be the lowest price in real terms and the largest annual decline on record.

Increased demand for chicken is expect to boost production to 1.4 million tonnes in the next five years.

ABARES expects wool prices will continue to increase but remain below record levels.

Horticulture: Nut, fruit and vegetable production to rise

ABARES is forecasting horticultural production will increase to $13.6 billion in 2022-23 thanks to growth in fruit and nut industries.

Analysts expect demand from China will boost fruit production, but domestic prices are forecast to fall thanks to greater competition in the Australian market.

While nut production is increasing, world prices are likely to fall as global nut supplies outpace demand.

The value of fruit and nut production was the same as vegetable production in 2013-14.

While vegetable production has not grown at the same rate, it is tipped to increase in the coming years.

China was also responsible for growth in Australia's wine industry in recent years.

But ABARES expects the value of wine exports, in real terms, to be "largely unchanged" in the next five years.


© ABC 2018

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