Farm production recently hit dizzying heights in Australia, with the total gross value of agricultural output reaching $62.8 billion in 2016-17.
The figure, published by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), was considerably higher than the country’s five-year average of $52.3 billion.
“Australian agriculture contributed 0.5 percentage points of the nation’s total 1.9 per cent growth.”
But farmers have steeled themselves for a more challenging 2017-18, after new ABARES projections showed a near double-digit decline in the industry’s gross production value.
The department said a significant decline in crop production would see output slump to approximately $58 billion by the end of the financial year – a drop of almost 9 per cent.
Why is agricultural production falling?
Peter Gooday, chief commodity analyst at ABARES, said mixed seasonal conditions across Australia are to blame for the slip in production.
“The fall in the total value of farm production is driven by a forecast decline of 39 per cent in total winter crop production, as yields fall from the record highs achieved last year,” he explained.
“This is around the 10-year average for winter crops to 2015-16, but there is substantial variation in crop prospects across the country.”
— ABARES (@ABARES) September 19, 2017
While farmers will no doubt be disappointed in the more subdued performance this year, the results come off the back of a record-breaking 12-month period.
If ABARES’ forecasts are accurate, the gross value of the sector’s production will still be nearly $6 billion higher than the five-year average.
Nevertheless, Mr Gooday said export earnings for crops will plummet 16 per cent to $23 billion, which is likely to have a significant impact on the livelihoods of many Australian farmers.
The future is bright for Australian agriculture.
This year’s agricultural output may be declining, but farming remains a key contributor to the nation’s economy.
Deputy Prime Minister and Agriculture Minister Barnaby Joyce recently revealed that farming was the fastest-growing industry of 2016-17, making it the largest contributor to GDP for the year.
“Australian agriculture contributed 0.5 percentage points of the nation’s total 1.9 per cent growth over the course of the year,” he added.
A recent report from ABARES also revealed that Australians continue to spend a sizable proportion of their household budgets on food, with domestic supplies particularly popular.
However, agriculture remains a risk-filled sector, with farmers at the mercy of natural disasters, technological disruption and other potential hazards to their business.
Contact MGA Insurance Brokers to discuss your farm insurance needs in order to protect your livelihood from unforeseen circumstances.