Correction on the cards as La Nina retreats
The overall value of the agriculture sector is set to contract by 14% in 2023-24 due to drier than normal conditions after three La Nina years.
Executive Director of ABARES Dr Jared Greenville said the reduction was to be expected after the records broken in the past three years.
“The value of agricultural production will still reach $79 billion in 2023-24, which is an expected fall given the circumstances,” Dr Greenville said.
“We are expecting exports to follow suit, falling by 17% to $65 billion in 2023-24, which would be the third highest result on record.
“The latest seasonal outlooks see an expectation of drier conditions as we move away from three years of exceptional La Nina weather patterns.
“Looking further ahead, it’s likely we will see either El Nino or a positive Indian Ocean Dipole in the coming months, which will reduce crop yields.
“Crop production in 2023-24 is forecast to fall by 34 per cent from record production volume in 2022-23. At the same time, domestic prices for most crops are expected to fall in 2023-24.
“Prices both in Australia and overseas will also ease, as global production increases world supply.
“However, it’s not the same story across all industries. Horticulture production is expected to increase by $1.5 billion to reach a record $18 billion, reflecting strong growth in nut production and increasing domestic fruit and vegetable consumption.
“The wine industry will also rebound from a challenging 2022-23, as the expected drier conditions in 2023-24 should reduce the occurrence of disease which reduced the 2022-23 crop.
“The results are more mixed for the livestock sector. There will be slight increases in production across beef, sheep and milk, but a drop in the value of livestock production to $35 billion in 2023-24 because of lower prices.
“This is down to a number of factors, such as less demand for restocking, and like crops, we expect global production to pick up.
“We are also expecting a strong 2023-24 for the wool market. Strong demand for Australian from China is forecast to increase wool prices, with production values expected to rise by $175 million in 2023-24.”
You can read the June quarter Agricultural Commodities Report here: ABARES website.