Drought, trade rifts to hit Aussie farmers

ABARES expects the outlook for Australian farmers to be hit by the US-China trade war and drought.
ABARES expects the outlook for Australian farmers to be hit by the US-China trade war and drought.

The outlook for Australian farmers is expected to be clouded by US-China trade tensions and ongoing drought in the nation's eastern and southern regions.

The Australian Bureau of Agricultural and Resource Economics and Sciences on Tuesday released its commodities outlook for the September quarter.

It's a mixed picture for farmers grappling with ructions stemming from the superpowers' dispute and swathes of the country still in drought.

It found Washington's tussle with Beijing is providing some opportunities for producers to grow market share in China but the long-term impacts are expected to outweigh short-term gains.

Australia's export dependence on emerging Asian markets means farmers could be vulnerable to a downturn in income growth.

There's a risk consumers in those markets could switch away from Australia's high-value agrifood products to lower-cost alternatives.

US import tariffs on Chinese consumer goods including clothing present a "significant" risk for Australian wool and cotton exports if global supply chains are disrupted, the report found.

Farm production in 2019/20 is forecast to decline by five per cent to $59 billion, similar to levels last seen during the Millennium Drought.

Dry conditions across much of central and northern NSW and southern Queensland over consecutive years have reduced herds and flocks, which is beginning to impact the sector's capacity.

Much of those regions have not harvested a grain or fodder crop since 2017/18, while pasture production has been well below average since early 2018.

ABARES warns if south-eastern Australia's drought extends to 2020/21, national crop production and exports are likely to continue to decline

"Analysis of historical rainfall records indicates that three consecutive failed crops in New South Wales would be unprecedented," the report says.

But a break in the drought could see crop production turn around quickly, while livestock producers could benefit from a sharp increase in prices if pasture growth improves.

In seemingly good news for local producers, a devastating outbreak of African swine fever has increased Chinese demand for some Australian products.

Graziers experiencing drought and high feed prices can sell livestock into global markets at high prices because demand for Australian meat is at unprecedented levels.

Australian Associated Press