Drier than normal conditions will shrink the agricultural sector value by 14 per cent in 2023-24

The end of the record-breaking La Nina years and the start of a dry spell will lower the overall value of the Australian agricultural sector but not all producers will be suffering.

Strong demand from China is forecast to increase wool prices.

Drier than normal conditions are expected to return to Australia after three record-breaking La Nina years and the overall value of the agriculture sector is forecast to contract in 2023-24.

An Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) report said farm production value was expected to shrink by 14 per cent to $79bn with the start of the drier El Nino weather pattern in the Pacific Ocean and/or a positive Indian Ocean dipole.

ABARES executive director Dr Jared Greenville said the fall in farm production value was to be expected after a record-breaking three years.

He said they were also expecting lower domestic production because of drier conditions and an easing of global prices to reduce export values by 17 per cent to $65bn in 2023-24, which it would still be the third highest result on record.

“Crop production in 2023-24 is forecast to fall by 34 per cent (to 44.9 million tonnes) from record production volume in 2022-23,” Dr Greenville said.

“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.”

Crop production in 2023-24 is forecast to fall by 34 per cent to 44.9 million tonnes.

Dr Greenville said the changing weather conditions would produce a mixed bag. Horticulture production was expected to increase by $1.5bn to reach a record $18bn, 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,” he said.

“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 $35bn 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 $175m in 2023-24.”

Drier than normal conditions are expected to return to Australia after three record-breaking La Nina years.

ABARES said the start of the winter cropping season in 2023–24 has been mixed.

Early autumn rainfall in some major cropping regions in southern Victoria, southern NSW, southern Queensland, South Australia and central cropping regions in Western Australia have replenished soil moisture levels and provided favourable planting conditions.

“However, autumn rainfall in northern and southern cropping regions in Western Australia, northern NSWs, northern Victoria and parts of southern and Central Queensland has been lower than average and soil moisture levels have remained low,” Dr Greenville said.

Winter crop production is expected to decline to 3 per cent below the 10-year average to 2022–23 of 46.4 million tonnes and yield prospects are forecast to be below average due to the expectation of below average rainfall for winter and spring.

Total summer crop production in 2022–23 is estimated to fall to 5.1 million tonnes, down 8 per cent from the record production achieved in 2021–22, but remaining 43 per cent above the 10-year average.

Originally published as Drier than normal conditions will shrink the agricultural sector value by 14 per cent in 2023-24