Cropping farm incomes climbed 28 per cent to an average $620,000 in 2021-22, on the back of a record $64 billion in exports, according to a leading agricultural economist.
Speaking at the recent Australian Grains Industry Conference (AGIC) in Melbourne, Dr Jared Greenville said the export record for all agricultural commodities was expected to be broken again in 2022-23, with a new benchmark of just over $65 billion.
Dr Greenville, who is the executive director of the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), told the conference that the grains industry’s export performance had been impressive over the past year, despite ongoing challenges.
“Australia has shipped a combined average of 3 million tonnes of wheat, barley and canola each month in the 12 months to March this year, equalling shipping records set following the then-record 2016-17 harvest,” he said.
Uncertain environment
While the overall outlook for the industry is positive, it is operating in an environment of “considerable uncertainty”, Dr Greenville said.
“The war in Ukraine is creating uncertainty in grain and energy markets.
“Meanwhile, countries are unilaterally implementing trade restrictions, which is adding to volatility. Those restrictions had lasting effects in terms of distortions to international markets but, importantly, had immediate negative impacts on global food security. At the same time, COVID-19, freight and logistics challenges and weather events continue to play a role.”
Dr Greenville said macroeconomic effects – particularly surrounding inflation and responses by central banks – would affect economic growth and household incomes in the short to medium term.
“Good seasons won’t last forever and, with more ‘usual’ seasonal conditions and prices returning from current peaks, sector production and value will fall,” he said.
Speaking at the same conference, the president of the Ukrainian Grain Association, Mykola Gorbachov, said his country’s grain production was expected to fall 35 per cent in 2022, following the Russian invasion.
Mr Gorbachov, who travelled from the war-torn Ukrainian capital Kyiv to address the conference, said he believed Ukraine’s grain growers remained “optimistic”, despite the dire physical and financial risks involved in producing crops.
“I am afraid, however, that many of our farmers will become bankrupt in the near future. Over the next three to five years, we will continue to reduce production, which means world prices will increase and buyers in poorer regions such as Africa will no longer have the opportunity to buy lower-priced Ukrainian grain,” he said.
“I believe the international community will find a way to open Ukrainian ports (currently closed due to the war), because that loss of cheaper grain could lead to a humanitarian crisis – with people from those African countries, for example, forced to migrate because of food shortages.”
Beneficial factors
The new federal Minister for Agriculture, Fisheries and Forestry, Senator Murray Watt, told the conference that Australia’s grains industry was benefiting from high prices, strong productivity and “a whole range of other beneficial factors”.
“While conditions are good overall, there are some significant challenges that the industry is dealing with,” Senator Watt said. “Natural disasters, particularly floods, have had a real impact in certain parts of the country.
“High input costs are also impacting growers and other members of the supply chain, with high fuel costs, fertiliser and other factors. There are also global issues that are affecting the industry, including climate change, the lingering effects of the COVID-19 pandemic, and Russia’s invasion of Ukraine. These are having a real impact on food prices and food security around the world.”
Senator Watt said the Federal Government had committed to spending $500 million out of its $15 billion National Reconstruction Fund to invest in value-adding in agricultural industries. “That’s something that I am keen to continue working on with the grains industry,” he said.
How do we give growers the tools, practices, techniques and relationships – up and down the value chain – that will empower their production?
Also at the conference, GRDC’s head of industry and government relations, Justin Crosby, said grains research would continue to focus on helping growers adapt to the changing environment and market conditions, among other work.
“The industry has new and emerging pressures placed upon it. The question is: how do we get ahead of those pressures? How do we continue to meet the values of the Australian community, while also empowering farmers to provide a product that the world wants and is willing to pay for?” Mr Crosby said.
“How do we give growers the tools, practices, techniques and relationships – up and down the value chain – that will empower their production?
“GRDC is currently developing its next five-year RD&E Plan, but at the same time we also need to look 20 to 30 years in advance and ask ‘what does that future look like? What are the drivers of demand? And what tools and knowledge will growers need in that period of time?’
Pointing to the growth of canola across the Australian farming system, Mr Crosby highlighted the importance of sustained R&D to create transformation.
“Transformation happens over a number of years. We need concentrated focus and effort on R&D so that we can discover new innovation and translate that into practices that can be used on the farm or up and down the value chain so that growers can meet the market’s needs.”
Record crops
Grain Trade Australia (GTA) chair Andrew Goyder said Australia produced a record crop of 66.5 million tonnes in 2021-22, following another large crop of 58.6 million tonnes in 2020-21. These outcomes compared to the 10-year average crop production of 46.2mt.
Exports were expected to be a record 43.4mt for the 2021-22 season, eight per cent above the previous export record of 40.2mt in 2020-21. “This has been an exceptional season of production and means the grain supply chain is working hard to move and export significantly more grain than ever before,” Mr Goyder said.
“The combination of the large crop and strong global prices, due largely to supply/demand and geopolitical issues, means the Australian grain industry value is forecast by ABARES at $25.4 billion for 2021-22, which is 33 per cent above the previous record in 2020-21.
“GTA believes the Australian grain industry has never been stronger and more solid than it is today.”