Victoria's farmers have been less impacted by drought than other states, according to the Australian Bureau of Agricultural and Resource Economics and Sciences senior economist Andrew Cameron.
Mr Cameron spoke to Country News after the ABARES Outlook conference, which was held in Canberra last week, and said Victorian farm incomes were on track to break records but high costs were affecting profits.
“Overall it hasn’t been too bad for Victorian agriculture as the drought effect is not as bad as other states,” he said.
“The winter crop had a good run, especially compared to other states, and Victoria is looking at cash income records but profits are not so rosy due to costs of labour, depreciation and inventory change.”
It's not just farm incomes that are on track for a record-breaking season, with milk prices also reaching new heights — but input costs and bushfires in Gippsland have reduced the impact of these prices.
Mr Cameron said for grain prices there was not much upside from a price perspective, but lower grades of grain were performing well in Australia due to severe drought conditions in northern NSW and Queensland, where farmers are on the lookout for supplementary feed.
Meanwhile, he said livestock prices would remain high for the next five years.
“Beef and lamb exports are in a good position to take advantage of Chinese needs (due to African swine fever),” he said.
“But the ability to fill that gap is not as easy with destocking (happening here).
“We forecast for the next five years prices for lamb, beef and even pork to be really good, while wool will be amazingly good.
“The prices will fall off as swine fever dies down as it will take away demand for red meat, but red meat prices will stay at historically high levels and it will be a rosy outlook for those who can keep animals.”
Mr Cameron said the ability for industries to remain competitive and how they deal with climate change and drought will be the biggest issues facing agriculture going forward.