Cropping

ABARES looks at big picture

By Rodney Woods

Profitability is more important than gross value, according to Australian Bureau of Agricultural and Resource Economics and Sciences executive director Steve Hatfield-Dodds.

He was speaking at the ABARES Regional Outlook conference in Shepparton on October 10, and explained competition was always a ‘‘big picture’’ problem.

‘‘The big picture issue for agriculture is always competitiveness,’’ Dr Hatfield-Dodds said.

‘‘Australia has had some good years. The last five years, in particular, have been good and I’m sure you’ve all heard about the NFF’s target of nominal gross value of farm gate production being $100 billion by 2030.

‘‘So if you just look at the raw numbers for the last 20 years and project that growth rate ahead, you’re pretty close, you can argue, within five per cent or so of hitting that target,’’ he said.

‘‘But the ABARES view is that there are some risks in the background and you shouldn’t be taking that sort of target for granted.

‘‘The biggest risk from my perspective is that price growth has been strong in recent decades.

‘‘For livestock, it’s all price growth over the last five years or so and for crops it’s about 50:50.

‘‘For commodities, as a whole, about 90 per cent of past value growth has been prices rather than volume.

‘‘Now in some sense that goes to the topic of are we using a gross value target as a proxy?

‘‘We would hope that we are using it as a proxy because what really matters is profitability in our view rather than gross value and in crops, for example, volumes haven’t been increasing, but being really disciplined on inputs has meant profits have been growing while volumes and values haven’t been.’’

Dr Hatfield-Dodds also revealed the value of agricultural exports had grown by $13billion, thanks to positive contributions in the livestock and horticulture sectors, in the last decade, with the total figure set to reach $50billion in the next five years.

This increase is much larger than the increase in gross value of agricultural production, which is rising steadily and is forecast to reach $63billion by 2022-23.