Australian Farmers Set to Achieve Record $73 Billion Season

Farmer inspects a dead Barley crop on his farm in Parkes, Australia, on Oct. 25, 2006. Ian Waldie/Getty Images

Australian agricultural producers are expecting a record-breaking harvest this season due to a perfect combination of price increases and higher production volumes.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) upgraded its 2021-22 financial year agriculture forecast to $73 billion (the U.S.$53.5 billion).

It will be the first time Australia’s gross agriculture value surpassed $70 billion if realised.

Agriculture Minister David Littleproud said he was confident that the sector would be able to hit the $70 billion mark at the very least.

“We had a cracking year last year but this year we’re going to set new records,” Littleproud told the ABC. “We’re for the first time going to get over 70 billion.”

An aerial view of fields of Canola crops near the town of Harden, south-west of Sydney, Australia, on Sept. 15, 2020. AAP Image/Mick Tsikas

ABARES notes that the sector will greatly benefit from a “remarkable combination of events” of favourable domestic seasonal conditions and unfavourable overseas conditions.

Domestically, Australian farmers have enjoyed widespread favourable growing weather conditions leading to near-record high harvest volumes. Meanwhile, key international competitors have suffered from poor growing seasons that have led to higher grain prices.

“Unfortunately, all good things must come to an end,” ABARES executive director Jared Greenville told the ABC. “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.”

The value for most of Australia’s top export commodities is expected to grow despite the ongoing politically motivated trade war by the Chinese Communist Party.

However, the wine industry will continue to struggle from Chinese tariffs, with its export value expected to drop 13 percent.

Forecast price changes for Australia’s top 10 agricultural exports, 2021–22. Department of Agriculture, Water, and the Environment, 2021

Challenges Still Remain

ABARES noted that the sector faced three main challenges to realising a record year, including ongoing labour shortages, the threat of mice populations, and commodity price risks.

Labour shortages will particularly affect horticulture, meaning Australians are likely to see higher fruit and vegetable prices. Littleproud called it the biggest constraint to the growth of the sector.

To help farmers with this issue, the government announced an agriculture visa on Aug. 23, aimed at Pacific Islanders and Southeast Asian workers, including a pathway to permanent residency.

“The agriculture visa delivers what so many primary producers are crying out for,” Deputy Prime Minister Joyce said in a joint statement. “It will give regional Australia the workers they need to get produce to plate in Australia, as well as our export markets.

Fruit picker harvests oranges on a farm near Leeton, NSW, Australia, on Oct. 1, 2020. AAP Image/Lukas Coch

While the mice plague still is expected to cause serious problems in the affected areas of Australia, ABARES said it would not significantly affect national production.

“While mouse numbers are unlikely to impact the harvest, they may affect grain stored on-site,” Littleproud said. “Bulk handlers are already upping their storage make sure that we can get as much crop to the market as possible.”

ABARES also said that current high international freight costs will particularly affect exporters of cotton, pulse, and horticulture goods.

The possibility of further deteriorating trade relationships with economic partners was also noted.

“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,” ABARES said.

However, the agriculture minister said this was a year to be proud of as the agriculture sector navigated through the uncertainty of a pandemic.

“Australians backed our farmers during the tough years of drought; we are now seeing those very farmers help the Australian community and Australian economy through and beyond the pandemic,” Littleproud said.