FarmOnline has hosted a live online forum where National Farmers' Federation economics and trade manager Charles McElhone answer your questions about what ABARE's Outlook forecasts will mean for the future of Australian agriculture.
Mr McElhone was online from 1-2pm (AEDT) to discuss the Outlook forecasts, as well as the debate on key rural issues that has taken place in Canberra.
See below for the transcript of the question and answer session.
Predictions up for discussion included ABARE's forecast that a resurgent export market will drive on-farm profitability over the next five years.
ABARE yesterday predicted that exports will jump more than $3 billion in the next four to five years, with farm exports expected to bring in about $29 billion in 2009-10 and 2010-11, before increasing more than 10 per cent to $32.2 billion in 2014-15.
Recovering economic conditions and a favourable season will underpin this growth, as Australia’s total commodity exports (including minerals, energy and agriculture) shoot up an expected 30 per cent by 2015.
Despite an increase in world supplies hampering the export potential of most grains, barley is expected to do well in 2010-11, as is rice, raw cotton, sugar, wine, live cattle and dairy products.
However, beef and veal exports will likely face pressure from herd rebuilding and stronger competition in overseas markets.
But ABARE's Outlook conference also heard yesterday that widespread rain in the past three months is expected to have only a small impact on farm incomes in 2009-10.
However, it may help in the following year ABARE’s agriculture branch manager, Bruce Bowen, said.
“Overall, broadacre farm financial performance is projected to decline in 2009-10, but not in all regions and industries,” Mr Bowen said.
“Average farm cash income is projected to fall from $76,000 in 2008-09 to $62,000 in 2009-10, mainly because of lower grain and beef cattle prices. Reduced farm cash incomes are expected for broadacre farms in New South Wales and Queensland because of reduced crop production and lower grain and beef cattle prices.”
Mr Bowen said it was a different situation in Victoria, South Australia and Tasmania where farm cash incomes are projected to rise because of increases in winter crop production in 2009 and higher prices for wool, sheep and lambs.
“Average farm cash income for dairy farms is projected to decline from $88,000 in 2008-09 to $50,000 in 2009-10, mainly because of lower manufacturing milk prices,” he said.
“Overall, broadacre and dairy farms had strong farm equity at 30 June 2009 and new farm investment has been strong in the past two years. Many farms, therefore, appear to have the financial capacity to take advantage of the improved seasonal conditions in much of eastern and northern Australia so far in 2010”.
Tony Eyres, executive director of Harvest Capital Partners, told delegates of the increasing interest in investment in agricultural production and farm land from institutional and strategic investors.
“Australia has a real comparative advantage as a destination for investing in agriculture because of a well established agricultural production history, efficient production of globally-traded agricultural commodities, strong export orientation, stable government, transparent markets and significantly proximately to key growth markets in Asia,” Mr Eyres said.
Mr Eyres added that the main impediment to corporate investment was lack of investment grade opportunities that offer the management capability, size and scale required by larger investors.
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