Positive outlook on the agriculture front

Stratford beef farmer Pete Cashman is happy to see higher prices for his product following several years of tough conditions. Photo: Liz Bell

GIPPSLAND’S agricultural producers continue to lead the region’s recovery as they bounce back from years of low productivity and head into more wet and warm conditions, with predictions of increasing demand and prices across most markets and prices.
Senior climatologist at the Bureau of Meteorology, Catherine Ganter, says the best is yet to come for Gippsland farmers, with the seasonal outlook for August to October showing much of east Gippsland (and Wellington Shire) is likely to be wetter than median, and temperatures warmer than median for Gippsland, right through to November.
Ms Ganter said the wet, warm conditions were influenced by a negative Indian Ocean Dipole event currently in the Indian Ocean.
While the global pandemic was initially expected to cause drastic price crashes for primary producers, the reverse has happened and Gippsland farmland and agricultural produce are at record levels.
According to Agriculture Victoria, the gross value of agricultural production across the state is expected to reach a record of more than $66 billion in 2020-21, driven by livestock prices remaining at high levels, and is an eight per cent increase from the drought-affected 2019–20 level.
In 2021-22 the value of livestock production is forecast to increase by four per cent to $32.2 billion, driven by increases in cattle (up $640 million), wool (up $390 million), and dairy products (up $166 million).
The value of livestock exports is forecast to increase by 11 per cent to just over $24 billion
in 2021–22.
Stratford beef farmer Pete Cashman says exports have been strong for much of the past two years, despite the Chinese rhetoric against Australian products.
He said that combined with high demand from re-stockers meant prices were through the roof, with cow and calf pairs worth upwards of $3700 — and more than $4000 in northern parts of the state.
“Yes, it’s great to see things changing, but we have had a few years of tough conditions, so it’s been a long time coming,” he said.
But Mr Chashman said he felt a “market correction” was likely in the near future because the prices were unsustainable.
Farmland prices in Wellington and East Gippsland shires have also hit record highs, recording some of the highest growth in median price per hectare across the state in 2020 because of supply shortage and water security, according to the Rural Bank’s Australian Farmland Values 2021 report.
The report uncovered extraordinary price hikes across the board from the middle of 2020, with prices predicted to continue to rise this year and into 2022, and outpacing the residential housing market.
It follows an incredible reversal of fortune for Gippsland farmers, after the median price per hectare in Gippsland decreased by 5.9 per cent in 2019 and is now averaging at more than $11,000 per hectare.
The Australian Bureau of Agricultural and Resource Economics and Sciences’ latest Insights report found farmers were becoming more resilient and adaptable.
ABARES executive director Dr Jared Greenville said seasonal conditions during the past 20 years had been pretty rough for Australian farmers, with lower average rainfall and higher average temperatures.
Mr Greenville said that after accounting for the effects of climate, productivity growth of about 28 per cent in broadacre farming had been achieved since 1989, and the cropping sector had experienced a huge gain of 68 per cent.
He said new technologies and practices meant farmers were able to grow crops under lower rainfall conditions than they could in the past.
Economic experts say total sector-wide farm net cash income is forecast to remain historically high in 2021-22 at $21 billion (down from $23.8 billion in 2020-21).
Rural Bank senior agricultural analyst, Michael Curtis, said cattle prices had been pushing further into record high territory since early 2020, with the benchmark Eastern Young Cattle Indicator reaching a peak of 1004 cents per kilogram in late July 2021, 57 per cent above the five-year average of 639 cents per kilogram.
He said Gippsland cattle producers had benefitted from being some of the main sellers into a high-priced market, with demand coming from northern re-stockers.
“We expect cattle prices to begin to ease in the second half of 2021 as supply starts to improve, but the fundamentals of below average supply and strong export demand should support a gradual easing of prices rather than a sharp correction,” he said.
Mr Curtis said Gippsland sheep producers had likewise benefitted from above average lamb and mutton prices.
“In 2021, the national sheep flock is expected to grow by 6.3 per cent to 68.1 million head, back above 2019 levels.”
Wool prices are predicted to rise as a result of a recovering global economy.
They are forecast to increase by 10 per cent and production by five per cent following increasing demand and an increase in both the number of sheep shorn and fleece weights because of improved seasonal conditions.
The Eastern States Trade Lamb Indicator is currently 25 per cent above the five-year average of 725c/kg, while mutton prices have held between 600-700c/kg for much of the year at 37 per cent above the five-year average of 510c/kg.
“We expect those prices to ease across the second half of the year, but remain in a high range, supported by strong re-stocker and export demand,” Mr Curtis said.
This year, Meat and Livestock Australia forecast sheep and lamb slaughter to be 6.1 million head and 20.3 million head respectively, despite last year many Victorian processors cutting numbers because of COVID-19 restrictions.
Improved conditions across most of Gippsland since late last year helped initiate rebuild flocks, and that is expected to continue.
The good news for the dairy sector is that Australian milk production is expected to increase by four per cent next year, reaching a number the industry hasn’t met in three years — nine billion litres.
This follows herd numbers falling to their lowest level on record in 2020, at 64 million head, after years of drought.
But according to the Rural Bank Australian Agriculture Outlook 2021 report, increasing milk
supply could mean prices may fall eventually.
By 2023, numbers are expected to be 75.4 million head.
The MLA says cattle producers are expected to experience the best spring in recent memory.
MLA market information manager Stephen Bignell said the outlook was encouraging for
eastern producers.
“With a favourable three-month weather outlook signalling a strong spring, average adult carcase weights are set to rise significantly, leading to higher weight gain,” Mr Bignell said.
Mr Bignell said globally, demand for Australia’s agricultural commodities continued to be strong and the market outlook was mostly positive.
Beef and veal exports are forecast to increase by 14 per cent to $9.2 billion, due to a 16 per cent increase in export volumes.
Beef export prices are not forecast to fall as much as saleyard prices, because they are far less affected by domestic restocking demand.
The value of wool exports is forecast to increase by 21 per cent to $3.1 billion, driven by both higher volumes and prices.
Exports of most other livestock products – including dairy products – are forecast to increase slightly in 2021-22, but the value of live exports is expected to remain unchanged.