As damaging as COVID-19 has been for Australian agriculture, the drought continues to have a bigger impact on farm economic output, according to new data released by ABARES.
Australia’s agricultural commodity forecaster said the sector’s biggest challenge would be recovery from drought, but coronavirus impacts would cause prices to fall.
The ABARES June commodities report indicated farm production values would be $61 billion, the third year above $60 billion.
Chief analyst Peter Gooday said widespread rain had helped the grains industry increase in value by 15 per cent to $30.8 billion.
For livestock, the rebound from drought looked different, with better conditions expected to encourage herd and flock rebuilding.
“We’re expecting livestock slaughter to fall and the value of livestock production to come down by about 10 per cent to just above $30 billion which ends a very strong run of growth for livestock, but after three years of drought we do need some rebuilding,” he said.
Red meat prices a bright point
Meanwhile, Mr Gooday said livestock prices went against the trend for most other commodities due to offshore factors including African swine fever still driving high protein demand in Asia.
“At home, we are also seeing good demand from re-stockers expecting to keep saleyard prices high,” he said.
“Saleyard cattle value is forecast to increase in price by four per cent and saleyard mutton up one per cent.”
Oil prices impacting other commodities
Mr Gooday said wool, sugar and oilseeds were all being flagged as industries that could expect to continue to take price hits due to low global oil prices.
“In wool, you get a demand impact because synthetic fibres are a lot more attractive than natural fibres,” he said.
“There is a similar thing happening for sugar and oilseeds with Brazil canegrowers pushing cane into sugar production with ethanol demand low.”
“That will be pushing the price of sugar down pretty significantly,” he said.
Mr Gooday said people were also substituting out of vegetable oils as the price of oil falls.