Agriculture outlook puts farmers in the sweet spot
Australian farmers are poised for a bumper start to the New Year as a mix of supply and demand factors continue to improve in their favour. Rural Bank’s Australian Agriculture Outlook 2022 has forecast a stronger and more favourable set of conditions that will extend the period of performance enjoyed by the sector over the previous six months.
The outlook says weather patterns such as La Niña will be one the biggest influences on the fortunes of farmers in the short term. As the recovery from COVID-19 continues, wetter conditions will deliver greater yields to meet rising global demand for Australian produce.
The report, which analyses the performance of six industries – cattle, cropping, dairy, horticulture, sheep and wool - forecasts increased demand for both export and domestic commodities as the recovery accelerates.
Cattle, winter crops and horticulture are among the key beneficiaries.
Wetter weather is the first and most important of four main themes to emerge alongside the pandemic rebound, supply chain disruptions and testing trade relations.
- Rural Bank’s forecasts have a 5.6 per cent rise in cattle herds while the national sheep flock could rise as much as four per cent.
- Growth in dairy is more subdued with a 1 to 2 per cent increase in production and a farmgate milk price at 6.2 per cent above the five-year average.
- Bumper yields including a 150 per cent increase in Hass avocado production and a record macadamia nut haul are among the highlights for fruit and nuts.
Alexandra Gartmann, Rural Bank CEO said: “Excellent seasonal conditions have been the primary factor underpinning the strength of the agricultural industry over the past two years and have helped the sector navigate the disruptions caused by COVID-19.
“As the rainfall outlook remains favourable for summer and a recovery from COVID-19 becomes more progressed, improved demand and confidence in the longevity of the recovery are the key factors supporting high commodity prices for many agricultural producers.
“This favourable environment is not without its challenges with increased production coming at a cost to quality in some sectors such as cropping and horticulture. Growers are adapting to labour shortages by lengthening harvest timeframes and becoming more efficient.
“The combination of strong production outlooks and factors supporting high commodity prices place Australian agriculture in an ideal position heading into the new year. Supply chain issues remain on the radar, however on balance, the forecast is overwhelmingly optimistic as participants continue to innovate and obstacles to trade fade into the background”, Ms Gartmann concluded.
Overall, Rural Bank’s Australian agriculture outlook 2022 report gives farmers the necessary insight and analysis to look forward to next year and to understand the key driving forces affecting agricultural markets.
To view the Australian agriculture outlook 2022 visit https://www.ruralbank.com.au/outlook