WHILE 2022 will be remembered as optimal combination of a kind season, and high prices, the outlook for Australian agricultural production is not as optimistic, according to Ray White Group chief economist Nerida Conisbee.
“We have never had such good farming conditions as we did in 2022,” Ms Conisbee said in the periodic Ray White Economics Update.
“While particularly good Australian weather conditions were the major driver, so too were poorer conditions elsewhere around the world.
“We were producing a lot, while others were producing far less.”
Australia’s bumper year played into post-COVID spending, and Russia’s invasion of Ukraine put a floor in global wheat values.
“This confluence of factors resulted in total agricultural production exceeding $90 billion and land values almost doubling in the past three years.
“Unfortunately the outlook is more uncertain.”
Australia’s two main agricultural products are wheat and beef, and they account for one third of all production by value last year.
“Wool, historically important for Australia, now doesn’t even make it into the top 10 commodities by value.
“Nursery cut flowers and turf became a higher value commodity with $3.4 billion of production in 2022, compared to $3.2B for wool.”
However, the top performer for growth in 2022 was wheat, with ABARES figures indicating the total value of wheat production increased by $3.3B in 2022, hitting an all time high of $13.1B.
Canola and cotton lint also saw large increases, more than doubling, and Ms Conisbee said wheat’s strong performance had a flow-on impact to farming communities and farm values, including the setting of new record house prices in many wheat-farming regions.
“While last year was a record year, this upcoming year is set to be far less stellar.”
ABARES has forecast the value of agricultural production will fall by 14 percent next year, with dryer conditions across Australia the main driver, and improved production outlooks offshore expected to impact values.
“There are also geopolitical issues at play that could make things more positive or negative.
Although wheat production is set to fall in Australia as weather conditions deteriorate, wheat prices are expected to rise.
“Putin abandoned the Ukrainian wheat deal which ensures safe passage of wheat from that country.
“A subsequent drone attack on a wheat storage silo in a Ukrainian port city led to global wheat prices rising to their highest level since February.”