Agricultural overview

The gross value of agricultural production is forecast to fall by $16 billion to $78 billion in 2023–24 ($84 billion including fisheries and forestry production), still the third highest result on record. The fall in agricultural production is driven by lower crop production values ($12 billion lower). This mainly reflects lower crop production volumes due to reduced crop yields as a result of drier conditions from the ongoing El Niño and positive Indian Ocean Dipole event (Figure 1.1). In addition, prices for most agricultural commodities are forecast to fall – especially for livestock – reflecting drier conditions and global prices easing from recent highs.

Figure 1.1 Annual value, volume and price of agricultural production

While the value of total agricultural production is forecast to fall in 2023–24, farm input costs are expected to remain elevated (see Economic Overview). As a result, average broadacre farm cash incomes are forecast to fall strongly in 2023–24 (see Farm Performance).

The forecast for total agricultural production values in 2023–24 has been revised down by around $1.8 billion from the September 2023 Agricultural Commodities Report. Livestock values have been revised down by around $2.1 billion reflecting recent price data. This has been offset by a small upwards revision to crop production values ($0.3 billion higher) driven by slightly better than expected prices in recent months.

Lower crop production and prices to drive lower production values

In 2023–24, Australian crop production volumes are forecast to fall by 19% from record highs in 2022–23 as expected drier conditions reduce soil moisture and crop yields (see Seasonal Conditions). At the same time, domestic prices for most crops are expected to fall in 2023–24. Domestic crop prices largely follow global prices, which are expected to fall because of higher global crop production and lower price volatility compared to last year. As a result, the gross value of crop production is expected to fall by $12 billion to $46 billion in 2023–24 (Figure 1.2). Lower production and prices for a few key crops are driving the expected fall in production value (Figure 1.3):

• Wheat is driving around half of the decrease in value, falling by $6.8 billion.
• The values of canola ($2.9 billion lower) and barley ($1.2 billion lower) have also fallen. Pulses, sorghum, and cotton values are also all forecast to fall, down by $2.1 billion collectively.

Figure 1.2 Gross value of annual crop production

Figure 1.3 Expected change in crop values, 2022–23 to 2023–24

Higher horticulture, wine grapes and sugar production values in 2023–24 are expected to slightly offset the total fall in crop production values (Figure 1.3):

• Horticulture is expected to increase by around $800 million to reach a record $17 billion, reflecting higher production and increasing domestic fruit and vegetable consumption.
• Sugar production values are expected to rise by $400 million to $2.4 billion reflecting strong global prices.
• Wine grape values are expected to rise by around $100 million to $1 billion; drier conditions are expected to boost production by reducing diseases which affected the 2022–23 crop.

Lower prices driving down the value of livestock and livestock products

The gross value of livestock production is also expected to fall in 2023–24 as lower prices outweigh higher production volumes. Livestock production volumes are expected to rise as drier weather and resulting lower pasture availability increase livestock turn-off rates. Beef and veal production is forecast to rise by 26% and sheep meat production by 15%. A small increase in milk production is also expected despite lower dairy cow numbers, as improved pasture and fodder quality increase milk yields and drier conditions support better dairy cow health.

Figure 1.4 Gross value of annual livestock and livestock products production

Figure 1.5 Expected change in livestock and livestock product values, 2022–23 to 2023–24

Despite higher production volumes, the value of livestock production is expected to fall by
$4.2 billion to $32 billion in 2023–24 as high saleyard supply, low domestic restocking demand and growing global beef and sheep meat supply weigh on prices (Figure 1.4). Milk prices are also expected to fall as a high domestic supply of milk in China lowers Chinese demand for imports at the same time as world milk production increases. The forecast decrease in the value of livestock production is driven by (Figure 1.5):

• Beef and veal production values falling by $3 billion to $12.1 billion.
• Lamb and sheep meat production values falling by around $900 million to $3.7 billion.
• Milk and wool production values, both down slightly to $5.9 billion and $2.9 billion respectively.
• By contrast, pigs, poultry and eggs production values, are forecast to rise slightly to $6.8 billion reflecting robust demand for chicken meat.

Saleyard prices for cattle, sheep and lambs have fallen significantly over the last year; average national indicator prices show year-on-year prices to October 2023 have fallen for cattle (down 59%), lamb (down 40%) and mutton (down 75%) (Figure 1.6) (see Livestock Prices).

Low saleyard prices pose a significant challenge for farmers and have been driven by higher livestock turn-off and lower buyer demand in saleyards. Predominantly, this has been triggered by a sudden shift to drier seasonal conditions which has incentivised strong turn-off rates and reduced restocker demand after three consecutive La Niña years (see Seasonal Conditions). Additionally, constrained capacity at meat processing facilities, and falling global livestock prices because of higher supply, are both weighing on processor demand and saleyard prices.

While there has been some favourable rainfall in drier parts of the country in recent weeks, pasture availability remains below 2022–23 levels, and fodder continues to be in demand from both livestock producers and feedlots. In southern Australia, the availability of good quality pasture remains high, reducing fodder demand. Some of these pastures are being conserved as silage and hay, increasing supply and lowering prices.

While falling prices present challenging conditions, current drivers are consistent with historical cyclical patterns. In particular, sheep supply in saleyards is strongly affected by cyclical changes in seasonal conditions; the factors driving sheep and lamb prices down currently also occurred in 2012–13 when drier seasonal conditions following consecutive wet years led to a sharp decline in prices. Like today, low prices were driven by a high supply of sheep and reduced restocker demand.

Figure 1.6 Monthly average saleyard prices for cattle, lambs and sheep

Agricultural export values are forecast to fall by $11 billion from a record $78 billion to $67 billion in 2023–24 reflecting lower crop export values. The total value of agriculture, fisheries and forestry exports is forecast to be $72 billion, down from $83 billion in 2022–23. Despite the forecast fall, agricultural export values are still expected to be the second highest on record.

Crop export values are expected to fall by $11 billion in 2023–24 to $39 billion. Lower production and export volumes and easing global prices for grains and oilseeds are the main drivers (Figure 1.7). By contrast, livestock export values are expected to remain robust despite falling livestock prices as higher export volumes – reflecting higher livestock turn-off rates – offset lower prices.

Figure 1.7 Annual value, volume and price of agricultural exports

Global crop prices are expected to fall in 2023–24 from the highs of the last two years as global supply continues to improve. In particular, global coarse grains and oilseed supply is expected to increase with record production of corn and soybeans in 2023–24 from global exporters such as the United States, Brazil and Argentina.

Despite falling global crop prices overall, restricted supply for some commodities will likely see some prices remain elevated in 2023–24. For example, global rice prices are expected to remain elevated due to constrained exportable supply following India’s ban on non-basmati white rice exports which commenced earlier this year. Global sugar prices also remain high due to port congestion constraining Brazilian exports, subdued production from other key producers, and ongoing robust demand.

Australia is in a unique position to capitalise on key Asian export markets in 2023–24 given Australia’s proximity to the region. For example, economic growth and consumption are expected to remain resilient in southeast Asia, supporting demand for Australian agricultural exports. Rising consumption growth in China is also supporting demand for Australian agricultural exports. Additionally, Australia’s relatively low exchange rate – expected to average US65 cents in 2023–24 – should support the value of exports in the short term as most agricultural exports are contracted in US dollars. For exports contracted in Australian dollars, a longer-term lower Australian dollar would further increase the competitiveness of Australia's agricultural exports.