The current financial year is looking like it will be a positive one for Australian farmers and agribusinesses, according to the latest data from Rabobank
Australian agriculture is likely to have another profitable year in 2021–2022, with the gross value of agricultural production expected to achieve its fourth consecutive year of growth.
According to agribusinesses specialist Rabobank’s 2022 Australian Agribusiness Outlook report, the country’s agricultural sector will follow its strong performance in 2020–21, which saw record-high agriculture commodity prices.
Described in the report as a ‘once in a blue moon’ year for the industry, 2021 also saw production volumes reach record or near-record levels in several commodities as the sector rebounded from severe droughts experienced from 2017–2019.
 |
|
Sheep and cow numbers are expected to increase
|
Given the current outlook for agriculture in the country, Rabobank says the growth means the sector is now poised to take on any challenges which may arise throughout 2022, such as predicted higher temperatures, supply chain challenges and rapidly changing commodity prices.
“This second straight year of increasing commodity prices coincided with again favourable to very-favourable Australian production conditions. And for those commodity sectors where production has been lower, high pricing still delivered strongly profitable positions,” Rabobank senior analyst Cheryl Kalisch Gordon says.
“[In 2021] there was a combination of drought and adverse weather in key cropping regions around the world, strong stockpiling demand in the face of potential food shortages along with COVID-induced labour shortages, which impacted intensively-produced agri-products and transport.
“This delivered clouds to agriculture sectors in many regions of the world and a silver lining for Australian agriculture.”
Despite the expected growth, supply chain pressure is also anticipated, especially early in the 2022 calendar year, as access to inputs at farm level and consumer access to food faces bottlenecks.
Commodity prices for major agricultural products, which reached record highs in December 2021, are expected to cool over the course of the year as global supply replenishes and demand tempers.
In the field, Rabobank’s outlook for production is mixed, yet has been boosted thanks to favourable growing conditions in late 2021 and early 2022.
“Very favourable seasonal conditions in 2021 – and in some cases record rainfall – have provided a beneficial start to 2022 for cropping and pasture prospects, due to good soil moisture,” Kalisch Gordon says.
“That said, at this point, we can’t expect a repeat of the record grain and oilseed harvest we’ve seen for the 2021–22 season.”
Year on year increases are anticipated for both cattle and sheep numbers while milk production will lift in the second half of the year.
On a global perspective, the report says some challenges will again be felt Down Under, most notably the surge of the Omicron variant and further potential variants that may arise.
Positively, the loss of China as a major trade partner has not been detrimental to the sector as Australia found alternative buyers in the tight global market.
“However, as markets unwind, we expect Australia may need to work harder on diversifying into alternative destinations,” Kalisch Gordon says.