The Federal Government’s commodity forecaster is predicting a five per cent drop in farm production this financial year, but this figure is set to increase once again in 2018-19.
The forecast figure of $59billion is set to be the lowest of the next five years as the Australian Bureau of Agricultural and Resource Economics and Sciences, in its latest review of commodities, expects steady growth during that period.
ABARES executive director Steve Hatfield-Dodds said the gross value of farm production was estimated to have increased at an annual rate of two per cent during the past six years to 2017-18, blaming the five per cent reduction forecast for 2017-18 on last year’s season.
‘‘Our forecast farm production of $59billion in 2017-18 is largely due to a return towards trend in the gross value of crops from record production in 2016-17,’’ Dr Hatfield-Dodds said.
‘‘Our price projections for the next five years are influenced by two key drivers.
‘‘Global crop production is trending down from the very high levels of 2016-17, but is expected to be enough to keep stocks high and prices low out to 2022-23, provided no major supply shocks occur.
‘‘For livestock, the US beef cycle has moved to a phase of increased production, intensifying competition in Australia’s export markets.
‘‘For the period to 2022-23, we project this will keep prices below the recent highs associated with US production bottoming out in 2015-16.
‘‘With this flat outlook for prices, growth in the value of agricultural production and exports will come mainly from increased volume, underpinned by rising demand as incomes and populations in importing countries grow.’’
Australian horticultural production’s gross value is projected to increase to $13.6billion in 2022-23, which the forecaster says will be largely driven by increased fruit and nut production, while livestock production is forecast to increase by about three per cent to $29.6 billion in 2018-19, following a forecast increase of two per cent in 2017-18.
In terms of export, in 2017-18 the value is expected to decline by four per cent to $47billion, before growing steadily to reach $50 billion by 2022/23.