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March 27, 2023

La Nina’s last hurrah as drier conditions expected

The record-breaking streak for Australian agriculture is set to continue in 2022-23 with the sector expected to reach $90 billion this financial year.

Executive Director of ABARES Dr Jared Greenville said record gross value of production is expected despite the floods across eastern Australia.

“Australia is benefitting from a third consecutive year of high rainfall, and it shows in the figures,” Dr Greenville said.

“Once again, we’re seeing record levels of production, driven by exceptional growing conditions and high commodity prices.

“The value of production when we include fisheries and forestry, is $96 billion.

“Agricultural exports are also forecast to set new records, reaching $75 billion in 2022–23. This is the first time we’ve seen our exports exceed $70 billion, which is a huge achievement.

“National winter crop production has driven much of these results, with the winter crop estimated at a new record of 67.3 million tonnes in 2022–23. This beats last year’s record by 4 million tonnes and is being driven by exceptional results out of Western Australia and South Australia.

“Production of wheat and canola are estimated to have reached new records, while we can expect the third highest barley production on record.

“High values of livestock production have also contributed to these record numbers, with producers increasing their production while also benefitting from historically high prices.

“This year will likely be the last hurrah for the La Nina rain system for a while, and we can expect drier seasonal conditions ahead. However, production will continue to be supported by good soil moisture and high water storage levels.

“While we expect production to be lower in 2023–24, at $81 billion it will still be the third highest on record.

“Australia has been very fortunate to have had wet years and high commodity prices. But we are expecting commodity prices to ease with competition stepping up in global markets.

“Recent high international prices have been driven by drought conditions in major exporters and disruptions from the war in Ukraine. But seasonal conditions are expected to improve in major producing regions which will see major exporters getting back on track in 2023–24.

“Over the medium term to 2027–28, seasonal conditions are expected to return to a more normal sequence and commodity prices are expected fall. The value of agriculture will remain strong, reaching $74.4 billion in real terms.

“However, should we see a shift back towards a drier climate sequence and global economic uncertainty carry on for longer, greater pressure will be placed on sector growth.

“But we’ve had three years to create a buffer and recover from the last drought, so many of our farmers will be well placed to ride out these domestic and international changes.”

The forecasts are being discussed at the ABARES Outlook 2023 Conference in Canberra, 7-8 March. The most recent Agricultural Commodities Report can be read here:
The Australian Crop Report can be read here: topics/agricultural-outlook/australian-crop-report.