THE gross value of Australia’s farm production is forecast to increase by 8 per cent to about $57.1 billion in the coming year.

The boom was thanks to increases in livestock value, as well as strong crop production, following favourable seasonal conditions and the lowering of the Australian dollar, according to Australian Bureau of Agricultural and Resource Economics chief commodity analyst Jammie Penm.

Mr Penm said while there were some “soft spots” such as international dairy and sugar prices, all in all, it was a solid outlook for the agriculture sector.

“Overrall we have a relatively lower Australian dollar, and because we export about 65 per cent of our farm production to overseas markets, the lowering has helped the value of our exports,” Mr Penm said.

The figures have been released in the September edition of the ABARES agricultural commodities report, which includes the latest outlook for Australia’s key agricultural commodities in 2015—16.

ABARES predicted coarse grains, live sheep and wool would be the best export earners while beef, wheat and live cattle earnings would fall.

“Higher prices are supporting the value of livestock production — especially for beef cattle, lamb and sheep,” Mr Penm said.

“This also relates to better seasonal conditions in the second half of this financial year because we expect that there will be herd and flock rebuilding that will push up farmgate prices.

“International demand for beef, lamb and mutton has been very strong so expect farmgate prices for livestock products to increase.”

Economic growth in some of Australia’s major trading partners remains a “mixed bag”.

The US economy is expected to grow considerably, from 2.5 per cent in 2015 to 3 per cent next year, while China is expected to contract from 6.5 per cent to 6.2 per cent.

ABARES said a fall in Chinese equity markets could weaken consumer spending and business confidence, leading to a more rapid slowdown in the economy than forecast.

Importantly, Australia’s key trading region — South-East Asia — is forecast to grow from 4.9 per cent to 5.3 per cent.

India, where Australia hopes to come to terms on a free-trade agreement in coming years, continues to boom unabated, with its fourth successive year of growth.

ABARES has tipped Indian economic growth to be 7.7 per cent in 2016 — the world’s leader by far.

Australian farmgate prices for dairy are forecast to decline, reflecting lower world dairy prices.

World dairy prices are forecast to average lower in 2015-16, reflecting reduced demand for major importing countries.

“Demand from China has not been very strong because they have plentiful stocks so imports have been weak,” Mr Penm said.

“Russia has extended its ban dairy imports for a number of countries, especially exports from the European Union, so some of the EU’s dairy exports have been diverted to other export markets, so that puts some downward pressure on world prices.

“We expect the short term situation for dairy products might not be that positive.”

Mr Penm said the El Nino weather patterns predicted for 2015-16 were proving more favourable than expected.

“Earlier in the year we had alerts on El Nino weather patterns but seasonal conditions have been relatively supportive compared with other El Nino years,” Mr Penm said.

“If these conditions continue, we can expect farm value to continue to improve.”

Crops

The world wheat indicator price is expected to average lower due to ample world wheat supplies, down 19 per cent to $US215 ($302) a tonne.

This is down from $US266 ($373) a tonne in 2014-15.

World wheat production was forecast to be largely unchanged in 2015-16 at 723 million tonnes, with lower production in the European Union, Canada and Argentina expected to be offset by increased production in Russia, Ukraine and Kazakhstan.

This year the volume of Australian wheat exports is expected to grow 6 per cent to 17.5 million tonnes.

The world course grains indicator price is forecast to fall 5 per cent to $US165 ($232) a tonne reflecting high carry-over stocks and near record forecast production for this financial year.

The report noted that movements in world wheat prices over the past six months had largely reflected changing conditions for the northern hemisphere wheat crop and related uncertainty about production quantity and quality.

The world oilseed indicator price is expected to fall by 9 per cent to an average of $US380 a tonne.

Sugar

World sugar consumption is forecast to increase by 2 per cent in 2015-16 to 184.7 million tonnes, largely reflecting forecast falls in the world sugar prices.

This has been bolstered by an expected increase in food processing in developing Asian countries such as China, India and Indonesia.

World sugar exports are forecast to rise 3 per cent over the next year to 61 million tonnes.

Australian sugar will experience the same boost, with production expected to increase 6 per cent to five million tonnes.

Livestock

Relatively strong export demand for Australian beef is expected to support domestic cattle prices in 2015-16.

Lamb prices are forecast to increase, reflecting lower supply and strong export demand.

The Australian Eastern Market Indicator for wool is expected to average higher, reflecting a fall in wool production and an assumed depreciation in the dollar.

Australian farmgate prices for dairy are forecast to decline, reflecting lower world dairy prices.

The Australian sheep flock is estimated to have shrunk by 2 per cent to 71.3 million head last year due to high saleyard prices and unfavourable seasonal conditions.

This is expected to recover by 1 per cent by the end of 2015-16, with numbers back up to 71.8 million head.

Horticulture

The gross value of Australian vegetable production is forecast to rise by 4 per cent to $3.9 billion in 2015-16.

Vegetable exports are expected to increase 3 per cent to $303 million, off the back of a 9 per cent rise last year.

Potatoes remained the most lucrative vegetable crop by a strong margin, with a gross value of $619.7 million.

The next most lucrative crop was tomatoes, worth $350.6 million.

Total vegetable exports (processed and fresh) amounted to $293 million in 2014-15, which was considerably less than the value of imported vegetables, which were valued at $942 million.

Dairy

World prices for whole milk powder are forecast to fall by 14 per cent to average US$2400/tonne ($3352).

Cheese prices are forecast to fall by 11 per cent to average $US3500/tonne ($4887).

Butter prices are forecast to fall 5 per cent to average US$3300/tonne ($4617).

Source:http://www.weeklytimesnow.com.au/agribusiness/australias-farm-production-forecast-to-hit-571-billion-this-year/story-fnkeqfxg-1227527227344