EXPORTS earnings are set to take a hit from the brutal drought in eastern Australia, the 2019 Agricultural Commodities report maintains.
According to the report, the value of farm production is projected to decrease 4% to $58bn this year.
ABARES chief commodity analyst Peter Gooday indicated the production falls could be substantial.
“Production falls are expected to impact export earnings, which are forecast to decline to $45bn in 2019–20 due to falling livestock exports, after an expected 6% decline in 2018–19 due to falling crop exports,” Mr Gooday said.
He had some good news, however, saying Western Australia’s success in crops acted as a significant buffer to the east’s poor crop turnout.
“Western Australia is forecast to have produced its second largest grain crop—nearly 60% of the Australian winter crop this year—which has helped make this the sixth-straight year of above average performance,” Mr Gooday said.
Improved commodity prices have lessened the blow of the not-so-fruitful year for eastern crops as grain, wheat and barley prices are expected to increase 11%, 5%, and 16%, respectively.
The Agricultural Report says the value of farm production is set to recover from the past year and estimates the value will increase 2% to $59bn in the 2019-20 year and further to $61bn by 2024.
Although farm profitability is to decrease in 2018-19, it is expected to remain high in comparison with the two previous years, just as the projected decline in average farm cash income for broadacre farms by 18% (to $173,000 per farm) will still exceed the 10-year average income of $140,000.
The whole of the export industry is expected to buffer the 2018-19 decline in livestock and crop export earnings as export prices are predicted to rise 4% and increase to in value by 47bn by 2023-24, according to Mr Gooday.