Forecasters have once again tipped Australia’s winter crop production to reach record levels this year – but some groups are predicting the country’s crop sector may soon be reaching its ceiling.
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Despite strong harvest conditions, some are predicting Australia’s grain sector to plateau having reached ‘peak acreage’
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Two seasons of optimal weather conditions Down Under and a strong demand for Aussie grain driven by poor weather forecasts in northern hemisphere grain markets has the Australian grain industry on track to boast one of its largest ever production volumes this winter.
However, such demand for Australian grain has led to some within the industry to ponder whether or not grain production has reached its peak.
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ANZ head of food, beverage and agribusiness insights, Michael Whitehead, says the industry may have reached a point of ‘peak acreage’, meaning the current grain cropping area is unlikely to rise much further in the future.
Whitehead argues that across much of the past decade, cropping acreage in Australia has plateaued when traditionally, it has generally been on an upward trend.
“While there was some volatility caused by drought during that period, cropping acreage would appear to have peaked in a band between 20 to 23 million hectares,” Whitehead says.
“Looking ahead, particularly over the next ten years, the experience of the past decade would suggest that Australia’s main agri sectors are likely to remain at this level for the medium term and possibly longer.
“Importantly, in contrast to the plateauing of Australian crop acreage, crop production levels show little signs of slowing in their overall growth.”
Figures released by ANZ in the September edition of its Grains Insight Paper suggests the ramifications of peak grain acreage are widespread, and will be exacerbated if global grain demand remains consistent.
Following the anticipated record levels of production this year, industry professionals have warned about potential challenges which may arise over the coming winter harvests, suggesting the sheer volume of grains and oilseeds will require a ‘major concentration’ of machinery and labour.
These could also create an upward pressure on land prices and farm infrastructure, and create more demand for new biotechnologies to increase cropping yields and water infrastructure.
ANZ says while the total grain area may have plateaued, yield production growth is still increasing and will be paramount to the agriculture industry reaching the government’s $100 billion sector goal.
“The outlook for production increases is strong. Over the coming decade it would seem quite feasible that overall cropping production could lift by at least a further 20 per cent,” the report says.
ANZ also notes that the changes come alongside a significant shift in the types of crops grown, with wheat dropping from being about 80 per cent of Australia’s total crop production in the 1960s to being around 50 per cent today.
The bank says there may be a further reduction in the market share of the country’s largest crops – wheat, along with barley and canola – the latter of which has increased 24 per cent for area planted this year to reach the third highest on record, according to the Australian Bureau of Agricultural and Resource Economics (ABARES).
Instead, grain growers will turn toward the production of pulses such as chickpeas, lentils and beans which have seen increases in popularity both domestically and internationally driven by the plant-based protein market.