Tough decisions as growers balance budgets and plan for next season as drop in production forecast

Australia’s agriculture industry is bracing for a downturn in production as increasing global supply and drier conditions affect farmers.

Total agricultural production is forecast to fall by 17 per cent to $78 billion in 2023-24.

The prediction is $16b lower than last year’s result, but would still be the third-highest result on record.

The results are also driven by lower crop production values.

Crop production is expected to fall by $12b in 2023-24, with the winter crop total forecast to fall from record highs to 46.1 million tonnes, slightly below the 10-year average.

A national report found improvements in the southern cropping areas were expected to more than offset downgrades in northern regions.

WA Grains Group president and Coorow farmer Alistair Falconer said farmers were likely to have some “interesting discussions” over Christmas dinner this year as they assessed their budgets after a below-average harvest for many growers.

“It will be interesting going into next year to see what crops go in as canola prices are not very exciting and wheat is priced OK,” Mr Falconer said.

“Input costs are historically quite high and harvest results have not been as high as we would have liked, so the income is not there for a lot of people this year.”

He said the costs of fertiliser, labour, fuel, machinery, repairs and parts had all gone up in line with inflation, but the price of grain had not.

“That will impact people’s decisions and I don’t expect as much new machinery purchases,” Mr Falconer said.

“We’ll have to wait and see how the opening of the season goes but as canola prices are, I’m not sure how it will affect plantings next year.”

Livestock production will also decline after price falls.

The Australian Bureau of Agricultural and Resource Economics and Sciences found falling livestock prices would lead to significant declines in incomes for beef and sheep farms.

The value of production for livestock and products is expected to fall by 12 per cent to $31.9b in 2023-24.

Livestock exports will also be down slightly, falling by one per cent.

“Falling production values and incomes are also linked to declining global prices that are reflective of higher global supply,” ABARES executive David Galeano said.

“The past three years, agriculture has seen record-breaking crop production because of higher rainfall.

“As we enter the El Nino period, we expect to see the national crop production fall from these record highs.”

Drier conditions and lower prices are expected to lead to strong falls in income for the average broadacre farm after three years of high returns.

The average farm cash income for broadacre farms is forecast to drop by 64 per cent to $113,000 in 2023-24.