Australian broadacre farm incomes to drop in 2022-23 after record-breaking years

Cash income across all broadacre farms in Australia is set to decrease by 7 percent in the 12 months to the end of June 2023 following heavy rainfall and flooding in the country’s eastern states, according to the latest outlook report published by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).

Incomes on farms are set to drop in all Australian states except Western Australia and South Australia, thanks to a combination of adverse weather events, higher input prices and lower commodity prices than recent years, ABARES said.

However, farm incomes remain 46 percent above the 10-year average, reflecting a period of generally favorable climatic conditions across the country following several years of drought.

Winter crop production in Australia is estimated by ABARES to have hit 67.3 million tonnes in 2022-23, beating the previous year’s record by 4 million tonnes and is an upward revision of 8.4 percent from ABARES’ most recent forecast in December 2022.

Western Australia, South Australia, Victoria and Tasmania all recorded their largest winter crops on record, with Queensland recording its third-largest winter crop and New South Wales its fourth-best year on record. It is also set to be the country’s largest ever wheat crop, with 39.2 million tonnes produced across the country, as well as a record year for canola production at 8.3 million tonnes.

Below-average summer rainfall in the cropping regions of Queensland and northern NSW mean that ABARES has forecast the coming summer crop to be below last year’s record, although it will still be above average.

The gross value of agricultural production is set to hit a record high of A$90 billion ($60.6 billion; €56.7 billion) in 2022-23 before falling back to A$81 billion in 2023-24, with ABARES cautioning that a potential change in climatic conditions could mean this year’s figure is a high water-mark for the years ahead.

ABARES executive director Jared Greenville said in a statement: “Australia has been very fortunate to have had wet years and high commodity prices. But we are expecting commodity prices to ease with competition stepping up in global markets.

“Recent high international prices have been driven by drought conditions in major exporters and disruptions from the war in Ukraine. But seasonal conditions are expected to improve in major producing regions, which will see major exporters getting back on track in 2023-24.

“Over the medium term to 2027-28, seasonal conditions are expected to return to a more normal sequence and commodity prices are expected to fall. The value of agriculture will remain strong, reaching A$74.4 billion in real terms.

“However, should we see a shift back towards a drier climate sequence and global economic uncertainty carry on for longer, greater pressure will be placed on sector growth.”

Greenville said this year was likely to be the “last hurrah” for the La Niña rainfall system, with more normal rainfall patterns, and potentially drier spells, on the horizon.