Winter crop production for 2025-26 is forecast to improve if there is average winter rainfall.
Dairy production is declining, yet prices are rising. Livestock and produce values are following the same pattern, and successful crop production is heavily reliant on Australia’s unpredictable rainfall.
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What does this mean for the remainder of 2025?
According to the June quarter forecasts released by the Australian Bureau of Agricultural and Resource Economics and Sciences on June 3, the gross value of Australia’s agricultural production is expected to fall by 2.8 per cent to $90.7 billion in 2025-26, driven by lower crop and livestock production volumes.
Though, the value of agricultural production in 2025-26 is tipped to be the third-highest on record and worth $97.5 billion when fisheries and forestry are included.
Dairy
Australian milk production is forecast to decline marginally in 2025-26 due to a declining dairy farm herd given ongoing farm exits, slightly offset by higher yields.
Dairy cow numbers are forecast to fall by two per cent, high land values and input costs are expected to influence farm exits.
Because of this, dairy product production and exports are expected to decline in 2025-26 as declining milk production — and largely stable market milk sales — reduces the milk available for manufacturing.
But in terms of production value, the Australia farm gate milk price is forecast to rise by five per cent to 68.5¢/litre (about $8.90/kg of milk solids) in 2025-26, supported by higher processor competition driven by lower domestic milk production.
While the forecast farm gate milk price is down from the historic highs in 2022-23, the 2025-26 price is forecast to be two per cent above the 10-year average in real terms.
Livestock
Although livestock and livestock production volumes are expected to fall (down by three per cent) as farmers start restocking, demand for Australian livestock remains strong, as do export prices.
The gross value of production for livestock and livestock products is forecast to fall by one per cent, from $40.5 billion in 2024-25 to $40.0 billion in 2025-26.
The forecast fall in production value is being driven by sheep meat and live sheep (down by nine per cent), beef, veal and live cattle (down by three per cent) and wool (down by 11 per cent).
By contrast, production values of milk (up by four per cent), pig meat, poultry meat and eggs (up by three per cent) are expected to rise.
Dairy production is declining, yet prices are rising says ABARES.
Cropping
Despite a dry start to the season, winter crop production in South Australia and Victoria is forecast to improve in 2025-26 under the expectation of average winter rainfall.
Even so, Australian winter crop production is forecasted to fall to 55.6 million tonnes, but still remains 13 per cent above the 10-year average to 2024-25.
Crop production volumes are expected to fall by four per cent in 2025-26.
Australian wheat production is forecast to fall by 10 per cent to 30.6 million tonnes, barley production is forecast to decline by three per cent to 12.8 million tonnes, and canola production is forecast to fall by six per cent to 5.7 million tonnes, yet still remaining 19 per cent above the 10-year average to 2024-25
In terms of crop production value, the forecasted decline reflects falls across grains, oilseeds, pulses and industrial crops driven by lower production, offset by price rises across almost all crops.
This shows in lower wheat value (down $1 billion) and lower canola (down $0.2 billion).
In contrast to other major crop commodities, horticulture value is expected to rise by four per cent, driven by both rising production and prices.
Horticulture production volumes are expected to increase in 2025-26, driven by a rise in bearing trees and increased probability of median rainfall across much of Australia, supporting crop yields.
Domestic horticultural prices are also forecast to rise in 2025-26 — the fruit consumer price index is expected to increase, while vegetable CPI is forecast to remain steady.
Prices for export-focused fruits such as oranges, mandarins and table grapes continue to rise, with strong demand from Asian markets.
