What you need to know from ABARES’ Outlook 2018

National farm commodities forecaster, Agricultural Bureau of Resource Economics and Sciences (ABARES) has released its latest forecasts for the agricultural industry as part of today’s Outlook conference in Canberra.

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Poor global grain prices and a seasonally-stressed national grain harvest will wipe five per cent off the gross value of Australia’s farm production this financial year, but farmers are still expected to reap historically solid average incomes in 2017-18.

ABARES is tipping farm production to be worth $59 billion in 2017-18, then to recover in 2018-19 to $61b, and $63b (in current dollar values) by 2022.

The minor setback in the overall value of Australia’s farm sector did not dampen the enthusiasm of Agriculture Minister David Littleproud, who opened proceedings in his first Outlook conference in the portfolio.

Mr Littleproud said the future was optimistic with 1.2pc growth forecast for both the overall sector and exports, tipped to reach $63b and $50b by 2023, respectively.

“This shows we’re headed in the right direction,” Mr Littleproud said.

Read more here.

Here’s what is in store for individual commodities:

Hot global beef competition to flow back to the saleyard

Senior government agriculture economists appear to be putting more weight in international beef trade dynamics than other analysts, forecasting a 15 per cent fall in saleyard cattle prices this financial year as a flow-on of red hot competition in markets like Japan and the United States.

ABARES has the 2017-18 weighted average saleyard price of beef cattle at 455 cents per kilogram, which is slightly lower than many in the industry expected.

Read more here.

Global wheat market weak to 2023

The global wheat market is expected to remain subdued beyond 2023, with rising production in the Black Sea region set to push prices to near-record lows.

The world wheat indicator price is forecast to rise modestly by 6 per cent in 2018-19 to $234, up from US$221 last year.

In response to consecutive years of low prices, major export nations are forecast to curb production to 742 million tonnes, following a 1pc reduction in the area planted to wheat.

Read more here

Pay day for sheep farmers

Australian sheep farmers are cashing in on historic meat and wool prices, as average farm income for the sector hits a 20-year high of $170,000 this financial year.

Figures from ABARES released today show sheep producers received an estimated 35 per cent pay rise, on the back of 6pc rise in saleyard prices for lamb and a lucrative 15pc spike in wool prices.

The hero of sheep farmers’ pay rise is wool’s significant growth in prices.

Read more here.

Global growth signals upside for cotton growers

Global cotton prices are in for a bumpy ride in coming years, according to the ABARES 2018 Outlook report.

Good prices and favourable growing conditions have driven an increase in cotton supplies, spurring a forecast 2 per cent drop in Cotlook A index global indicator, taking it to US81 cents per pound in 2017–18 (the August to July marketing year).

However, increasing global demand for cotton driven by a growing global economy is expected to deliver a 5pc rise to 85 cents per pound in 2018-19.

Read about the full outlook here.

Nuts and fruit helping hort to soar

Fruit and nuts are set to drive Australian horticulture’s production value to $13.6 billion in 2022-23.

The healthy forecast comes from the ABARES Outlook 2018 report for the March quarter, released today.

Much of that optimism comes from a rise in exports of Australian nuts and fruit, particularly to the seemingly insatiable Chinese appetite.

Read more here.

Milk production on the rise

Using incomes, more people and the ongoing Westernisation of diets will continue to fuel demand for dairy products on a global stage, underpinning prospects for increased production in Australia.

Analysts with the ABARES say world dairy prices will average higher this financial year but growth in the volume of exportable supplies after that will see most prices fall marginally.

World supplies are expected to grow faster than demand as major exporting countries, including Australia, expand output.

Read the full outlook here.

Avos continue their cautious climb

The staggering growth of the Australian avocado industry has prompted many observers to ask if the avo bubble will ever burst.

According to the ABARES, while the sailing is currently smooth for the sector, there are some potential submerged obstacles that could be approaching.

A three-year wait time for nursery trees is a commonly referred-to figure within the industry but the mass plantings of recent years could soon create some nervous growers.

Read more here.

Other nations look to get in on Australia’s “clean green” hort export strategy

Australia might trade off its quality and “green” status but it’s a strategy its export competitors are increasingly copying.

A special report within today’s ABARES Outlook 2018 agricultural commodities report casts a spotlight on Australia’s comparative advantages for exporting fresh produce.

While it outlines that global demand has been growing strongly and is expected to continue, there are increasing moves by other southern hemisphere nations, and even China, to lift environmental farming status and produce quality, moves that could cause alarm for Aussie growers.

Read more here.

Blueberry production leaps ahead

The Australian blueberry industry has more than doubled its production in the past five years.

The impressive figure comes from ABARES’ Outlook 2018 agricultural commodities report for the March quarter.

The report puts the significant growth down, in part, to extensive plantings now coming online.

Australian production has leapt to 6800 tonnes, with a bigger goal on the horizon.

Read more here.

Pineapples facing import competition

The long-established pineapple industry faces a tough road ahead with imported processed fruit jostling for shelf space.

Pineapples are given a special mention within the ABARES’ Outlook 2018 agricultural commodities report for the March quarter, released today.

In 2015–16 the Australian pineapple industry reported having 1176 hectares of non-bearing area to contribute to future production (equivalent to 73 per cent of 2015–16 bearing area).

Read more here.

Tough year delivers big income rises for many districts

It won’t be remembered as the best year on record for farm earnings but, even after a 12 per cent slump, average incomes in 2017-18 are still likely to be the second highest.

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Poor global grain markets, a small crop and lower beef prices are largely responsible for Australian broadacre farm cash earnings slipping to an average $191,000 this financial year, down from last year’s record $212,600.

However, that’s still the second best result on the books at the Australian Bureau of Agricultural Resource Economics and Sciences (ABARES), and 32pc higher than the current 10-year average for farm earnings.

Agriculture’s national Outlook 2018 conference in Canberra has revealed vast areas of NSW, South Australia, Western Australia Northern Territory and even droughty Queensland will earn up to 75pc more than average (per farm) this financial year.

“So, while overall income in most states is down on last financial year, farm performance is still very strong,” said ABARES chief commodity analyst, Peter Gooday.

The national farm commodities forecaster is also tipping good news for farm sector exporters in the form of a sinking Australian exchange rate against the US dollar, and generally solid international growth to support export demand.

The dollar is expected to average US78 cents for 2017-18, but drift back to US76c next financial year and then down to US74c by 2020.

World economic growth has gathered steam and is tipped to strengthen to 3.7pc for the next two years, principally because of 4.7pc growth in emerging economies where more Australian farm commodities are selling.

While overall income in most states is down on last financial year, farm performance is still very strong– Peter Gooday, ABARES

Developing Asia’s share of Australia’s total farm exports has jumped from 52pc to 69pc in the past decade.

ABARES even profers US tax reforms in January could further fuel economic growth internationally in 2018 and 2019, as could low expansionary fiscal policies in some large economies.

However, its forecast may also be undermined by more protectionist trade trends, and Middle East and Korean peninsula tensions.

Back on the farm, the biggest winners have been in the sheep and wool sector where producers have had their best real term cash incomes in more than 20 years (up a third to average $170,000/farm), most notably in fine and superfine wool districts.

Buoyant wool and sheepmeat earnings also bolstered mixed farm returns where crops were savaged by last year’s moisture stressed conditions and moribund prices.

In general, however last season’s disappointing harvest will wipe 5pc off the gross value of Australia’s total farm production results this financial year.

ABARES tips farm production to be worth $59 billion.

It is expected to recover in 2018-19 to $61b, and keep rising to $63b (in current dollar values) by 2022.

Grain farmer cash earnings will drop from an average $426,500 in 2016–17 to $266,000 this financial, or about 5pc below the 10-year real term average.

The smaller crop and poor grain values will also contribute to a 4pc drop in farm export earnings to $47b this financial year, but still better than 2016-17’s $45b and also likely to bounce towards $50b by 2022–23.

ABARES says Australian farm production earnings and exports are effectively “returning to trend”, before likely delivering steady growth for the next five years.

Executive director, Dr Steve Hatfield-Dodds, said the gross value of farm production grew 2pc annually for the past six years, buoyed significantly by the whopper 2016-17 harvest.

Global demand for sheepmeat, lamb, wool and dairy commodities had also helped.

Fast export growth in these sectors meant livestock’s contribution to the gross value of farm earnings has lifted from 41pc to almost half in the past five years.

The beef industry will also see a average farm incomes drop from $150,600/farm to $132,000 in 2017–18, but that’s still about 60pc per cent above the 10-year average to 2016–17.

Beef export prices are also forecast to remain high in historical terms and support farm profitability

With this flat outlook for grain prices, growth in the value of agricultural production and exports will come mainly from increased volume, underpinned by rising demand as incomes and populations in importing countries grow– Dr Steve Hatfield-Dodds, ABARES

Nationally, dairy farm cash income is forecast to rebound from an average of $89,600 to $137,000 farm, largely because of better prices and production in Victoria, South Australia and Tasmania.

ABARES’ Dr Hatfield-Dodds, said price projections for the next five years were influenced by two key drivers – continuing high grain stocks overseas restraining prices, and intensifying competition in Australia’s beef export markets as the US beef cycle moved to a phase of increased production.

Global crop production was trending down from the very high levels of 2016–17, but unless there were any production setbacks prices would remain under pressure for five years.

“With this flat outlook for prices, growth in the value of agricultural production and exports will come mainly from increased volume, underpinned by rising demand as incomes and populations in importing countries grow,” he said.

Steady increases are forecast to follow, with the gross value of farm production to increase by an average of around 1.2 per cent per year to reach nearly $63 billion in 2022–23.

ABARES finds ag shuns technology investment unless it’s simple, practical

Agriculture may have much to gain from the fast evolving digital technology age, but farmers won’t get too excited about advances in information and communications technology (ICT) unless they see an immediate profitable advantage.

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Even if they are attracted to the technology, chances are they won’t have adequate connectivity to operate it effectively on much of their farm.

That’s the sort of sobering feedback emerging from a nationwide survey of farmers by the Australian Bureau of Resource Economics and Sciences (ABARES).

It estimates ITC gear makes up a paltry three per cent of the total asset value of plant and equipment on Australian farms – or less than 0.2pc of an average farmer’s total capital investment, including land.

It found the most expensive commitment farmers were likely to make to ITC assets was global positioning system (GPS) technology in a tractor or header on a grain growing property.

Grain growers led the pack when it came to using ITC or agtech innovations, spending about $33,000 on technology assets, but primarily only where it involved auto-steer technology.

“If they can see an immediate advantage in technology which will be quick to adapt to their farm and won’t require much learning, farmers are more likely to use it,” said ABARES’ chief commodity analyst, Peter Gooday.

There may be a role for industry and technology providers to work more closely in delivering education and information to give farmers the confidence and skills to adopt ITC– Peter Gooday, ABARES

He told this week’s Outlook 2018 conference, while GPS-guided tractors were a good example of what was being adopted, GPS-powered variable rate fertiliser or seeding gear was far less popular.

Mr Gooday said cost was not an obvious deterrent in investing in new technology, but confidence in being able to make full use of the gear or data was an important factor.

So, too, was connectivity, or lack of it.

About 45 per cent of broadacre farmers had no internet coverage on much of their farms, while in general on  Australian farms only half of the land area has access to mobile phone data or wi-fi.

The survey of 2200 farmers found while 90pc had computers (up form 30pc back in 1998), larger farms were more likely to use ITC to assist their daily operations, if they could “connect” and if they were confident about having the skills needed.

Livestock producers and vegetable farmers invested the least in technology assets, although dairy farms and other more intensive livestock operations were likely to be using it for electronic identification, feed ration allocations and to track stock.

The highest proportion of farmers without a farm computer were vegetable producers.

Mr Gooday said based on gains made in the cropping sector, farmers appeared more likely to get involved if their agronomists or other advisors were part of the ride.

“There may be a role for industry and technology providers to work more closely in delivering education and information to give farmers the confidence and skills to adopt ITC,” he said.

The need for an obvious practical, cost saving advantage was also critical – a point addressed by Tom Rayner, with new South Austalian satellite technology company, Myriota, which uses basic, low cost “internet of things” devices to connect farmers with metering equipment in remote parts of their farm.

Trials by Myriota proved so popular with farmers they were reluctant to give the devices back.

A 22 millimetre by 90mm card provides “the electronics” which links a farmer’s smartphone or office computer to water tanks and troughs, flow meters, soil moisture probes, via a series of low cost ($1.5 million) satellites the size of wine bottles orbiting earth.

About 70pc of Australia’s land mass has no internet coverage,” – Tom Rayner, Myriota

The 24-byte, low-power signals transmitted from the field are likely to each cost producers about $50 to buy and $5 a month to maintain when they are commercialised this year.

“About 70pc of Australia’s land mass has no internet coverage,” said Mr Rayner, the business development executive with Myriota, a privatised technology business spun out of the University of South Australia.

He said while some form of internet connectivity was essential for farms, producers did not necessarily need to have the broadband capacity to watch Netflix on 75pc of their property.

However, narrow band applications could provide big productivity gains at low cost.

One farmer whose farm bores were monitored by Myriota’s technology last year had been able to check his watering points from his mobile phone while on holiday in a bar in Bali.

It was the easiest bore run he’d ever done.

Coorong communities rally behind Basin Plan as Productivity Commission announces Murray inquiry

Communities at the Murray mouth are urging politicians and upstream counterparts to keep course with the Murray-Darling Basin Plan, as locals remain concerned about the ecological future of the Coorong.

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This comes after the Federal Government announced a new Productivity Commission inquiry into the effectiveness of the Murray-Darling Basin Plan, which is due for reporting by the year’s end.

Mayor of the Coorong District Council, Neville Jaensch, said some remain concerned about the future of environmental flows down to the bottom of the system.

“We believe it is still significantly a federal issue, but our local people want the Murray-Darling Basin Plan delivered on time and in full,” he said.

Memories of the Millennium Drought as environmental issues remain

Coorong fisherman, Gary Hera-Singh, has ridden every bump faced at the lower end of the river — including that of the drought some 15 years ago that saw water levels drop.

“During the Millennium Drought, if you fell overboard in the south lagoon, you would not sink,” he said.

Despite good flow leading a revival of some species of fish due to environmental watering, Mr Hera-Singh said overall it had been a struggle without enough flow.

“From historical levels, it has just been a reflection of the degradation of habitat,” he said.

“With the high flows and strong recruitment over the last five years, we have seen a significant turnaround in particularly common commercial species.

“But overall, all of the fishing is done in the north of the Coorong.

Having watched the future of the Murray-Darling Basin Plan make headlines for the wrong reasons, Mr Hera-Singh said action was needed if any issues with environmental flow into the Coorong were to be fixed.

“At the end of the day, if you have not got enough water upstream to pass downstream, and if over-allocation and over-extraction issues are not addressed, then there is not enough water for downstream.”

Ecologists have also voiced the necessity for full delivery of the agreement to keep birds in the area, saying the protection of habitats was somewhat forgotten in the formulation of the Basin Plan.

Associate Professor at the University of Adelaide, David Paton, said with bird habitats deteriorating in the area, the estimated environmental water in the Basin Plan was likely to be insufficient.

“We have got international obligations under RAMSAR and migratory bird agreements to actually provide quality habitat,” Mr Paton said.

“I think it is going to be very hard to provide that within this region. The quantity of water that is to be returned … if it is ever returned, only a portion of that gets to this region.

“The quantity of water will certainly improve the salinities and not give a high risk of having the high salinities again, but it is not going to deliver a healthy Coorong in the long term.”

Basin Plan future remains unknown as new inquiry announced

Since allegations of water theft and misconduct in the Murray-Darling Basin first aired on Four Corners in 2017, a number of reviews have been commissioned including a state-based Royal Commission in South Australia.

Most recently, the Productivity Commission announced an inquiry on Wednesday aiming to assess the overall effectiveness of the Basin Plan.

What happens next with the agreement remains uncertain, following a federal senate vote to disallow a move aimed to slash the amount of water to be returned to the environment from irrigation.

This proposed amendment was pushed to ease the pressure on struggling communities upstream, with its disallowance causing New South Wales to consider pulling out of the agreement.

However Mr Jaensch said advancements in technology and efficiencies could also take responsibility for the struggles faced.

“We have found that within the last 40 years, rural employment has dropped off dramatically everywhere,” he said.

“We are concerned obviously when people talk about the economic impact of environmental water being retained or used.

“Yes employment is important, but you have to have water there for people and the environment.”

Queensland’s wet weather breaks dozens of records as rain still falls

Pouring rain has smashed daily records as it saturated Queensland’s north and west over the past week.

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The flooding has isolated towns and damaged infrastructure, while also bringing some much-needed relief.

But the wet weather isn’t over yet.

Where did it fall?

A low moved from north Queensland to the west over the past week.

Bureau of Meteorology (BOM) meteorologist David Crock said there have been some “excellent” totals.

“Through the north-west in the past few days, this tropical low has dumped a lot of rain,” Mr Crock said.

“We’ve seen widespread falls of 150-200 millimetres, up as high as 400mm in some isolated pockets.”

Further south towards Winton and Longreach in the central west, totals have been around 80-150mm.

Records smashed

The heavy rain in has smashed six daily rainfall records, while 30 of the bureau’s rain gauges broke March records.

  • Near Mount Isa, Carsland topped 298mm last Saturday, smashing a daily rainfall record set in 1957.
  • Bluewater, north of Townsville, received 358mm last Thursday, beating the previous daily record of 314mm set in 2002.
  • North of Townsville, Rollingstone recorded 336mm of rain in the past week and the Yabulu nickel refinery received 367mm.
  • Last Thursday Mount Margaret topped 305mm, beating the previous record of 294mm.
  • Trepell Airport, south of Cloncurry, received 171.8mm on Sunday more than double the previous March record of 75.8mm and beating the daily rainfall record of 96.4mm.

It’s not over yet

The system that brought the rain is moving further north-west near the Northern Territory border.

Flood warnings are current for 19 rivers while there is major flooding along the Flinders River.

Flooded roads mean supermarket supplies and diesel are in short supply in Mount Isa.

Supermarkets have flown in fresh fruit, vegetables and meat into the town.

Several trucks are stranded at Longreach, Julia Creek and McKinlay, waiting for the roads to open.

BOM Queensland manager Bruce Gunn said the wet weather was not over yet.

“We are seeing widespread flooding in a number of large inland rivers, and these are expected to remain in flood warnings for days and even weeks as floodwaters move through these systems,” Mr Gunn said.

“The focus for the heaviest falls has now shifted back to the coast where a flood watch was issued yesterday for coastal catchments from Ingham to Cairns, and extending as far north as Cooktown.”

Cyclone-ready

State Emergency Services Minister Craig Crawford said authorities were prepared for a potential cyclone to affect Queensland in the next week.

BOM is monitoring a low pressure system in the Gulf for signs of it developing into a cyclone.

Mr Crawford said if it formed, there could be some significant falls, which would have consequences.

“It’s very, very difficult to know how long some of these areas are going to be cut off [for] and if we might have other areas cut off as well,” he said.

“It’s going to be a day-by-day process.

“We don’t know what the next seven days are going to produce … we’re looking at significant rainfalls everywhere from Cairns, Townsville, and even further up into the gulf over the next three to four days.”

Sources include: ABC Rural, The Land, The Weekly Times, Stock and Land, Stock Journal, Bloomberg, Farm Online, Queensland Country Life

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