Farmers set for $70b windfall

Tess BennettTechnology reporter

Sep 14, 2021 – 5.59pm

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Australian farmers are on track to deliver $70 billion of value for the first time, with bumper harvests and higher prices for most commodities outweighing challenges posed by mice plagues and labour shortages.

Favourable weather conditions will help lift the agriculture sector’s gross value of production (GVP) to $73 billion this financial year, according to forecasts by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

The high price of sugar is giving cane growers more certainty over their futures, says Stephen Calcagno. Sean Davey

Australian growers are also benefiting from a drought in Europe and North America which has pushed up international grain prices. Strong global prices for grains, cotton and sugar are tipped to lift the value of Australia’s crop production by 7 per cent to a record $39.5 billion.

North Queensland cane grower Stephen Calcagno is enjoying a sweet season. Sugar prices are so good that he and fellow growers are locking in forward contracts.

“Growers are actively securing those prices to guarantee the next two or three years for their crops,” Mr Calcagno said.

“It’s security. As you invest in your next crop at least you know you have a price locked in for 60 per cent of your crop.”

A strong market for beef and dairy products will help lift the value of livestock production by 8 per cent to $33.5 billion.

The latest forecast was revised up 12 per cent, or $8 billion, on the outlook issued by ABARES in June, making it the largest upgrade in a single quarter in at least 21 years.

ABARES executive director Jared Greenville said a near record harvest and a favourable global market would also push exports close to $55 billion.

The biggest contribution will come from crop exports, which are forecast to hit $30 billion, the highest since 2016-17. The value of livestock exports is forecast to increase by 7 per cent to $24.7 billion, driven by higher wool, beef, lamb and dairy exports.

“While there are risks related to mice, labour availability and continued uncertainties due to COVID-19, we are expecting national production to remain robust,” Dr Greenville said.

As a highly mechanised sector, cane growers have been somewhat insulated against labour shortages, Mr Calcagno said, noting the work is not as labour intensive as fruit picking, which is struggling to find workers.

Winemakers, however, will miss out on the good fortune. The value of wine exports is expected to drop by 12 per this financial year, following the loss of China as a major export market.

Looking beyond this financial year, ABARES warned the continued spread of COVID-19, labour shortages and pest management will continue to challenge Australia’s agriculture sector.

“Unfortunately, all good things must come to an end. 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,” Dr Greenville said.

“That said, the last two years have placed our farmers in a good position to take on any challenges ahead.”

Tess Bennett is a technology reporter with The Australian Financial Review, based in the Brisbane newsroom. She was previously the work & careers reporter. Connect with Tess on Twitter. Email Tess at tess.bennett@afr.com