Aussie Agriculture in for Growth

Article by: Hari Yellina (Orchard Tech)

According to agricultural banking group Rabobank, Australia’s agriculture is expected to expand for the fourth year in a row, with supply chain concerns, COVID-19, and inflation among the year’s challenges. Moreover, according to the bank’s annual Agribusiness Outlook study, record high agricultural commodity prices and yields position Australia’s agriculture sector well for 2022. Australia’s agriculture business is well positioned to take on the challenges of 2022, the research said, citing the country’s second year of great pricing and largely exceptional production circumstances in 2021.

Dr. Cheryl Kalisch Gordon of RaboResearch believes that, compared to the previous year, farming margins will be under pressure in the coming year, with some commodity prices projected to fall. Despite a varied production outlook and hurdles, the senior commodities expert predicted that Australian agriculture would have another good year. Dr. Kalisch Gordon does not expect a repeat of the record grain and oilseed harvest for the 21/22 season, but he does predict an increase in cattle and sheep slaughter once some producers have restocked.

Milk output is expected to improve as well, but only in the second half of the year, according to the report, while cotton production in 2022 is expected to increase by 85% over last year. According to the analysis, local macroeconomic conditions are still favourable for Australian agriculture, with the Australian dollar predicted to grow relatively modestly this year. Dr Kalisch Gordon described 2021 as a “once in a blue moon” year for Australia’s agriculture sector, with extremely high prices stemming from “global misery,” while high prices corresponded with favourable production conditions in Australia.

There was a combination of drought and adverse weather in key cropping regions around the world, strong stockpiling demand in the face of potential food shortages along with COVID-induced labour shortages which impacted intensively-produced agri products and transport. While the outlook for 2022 is also positive, the bank expects the year ahead will bring “less pronounced opportunities” for Australian agriculture. COVID will continue to impact the agricultural sector, as will “the pervasive challenge of inflation, which continues on one of the steepest rises in 30 years”. Some of the other challenges ahead included still-high farm input prices and ongoing labour shortages.