Producers to Benefit from Positive Agricultural Outlook
05 February 2016
Australia’s agricultural sector is set for favourable conditions in the year ahead, underpinned by the low Australian dollar, demand from national and international markets and current commodity prices.
While 2015 delivered unsettled weather conditions and mixed fortunes for producers, Suncorp Bank Regional Agribusiness Manager, Stephen Corbett, encouraged producers to remain confident about agriculture in Australia and reinforced the importance of maintaining a long-term outlook.
“There’s no doubt parts of the agricultural industry have faced strong headwinds caused by unpredictable weather and volatile market conditions,” Mr Corbett said.
“Despite the constraints, Australia has maintained its global reputation as a leader in fresh produce, prime land and advanced production facilities. Local producers are in a strong position to benefit from this international profile.”
Figures released in the recent ABARES Agricultural Commodities report revealed the gross value of farm production is forecast to increase 8 per cent in 2015–16 to $57.6 billion. Additionally, increases in export prices for beef and veal, wool, wine, lamb, mutton and chickpeas are expected to offset predicted falls in prices for dairy products, wheat, barley and sugar.
Suncorp Bank Senior Economist, Darryl Conroy, said recent rains throughout parts of the state encouraged a timely confidence boost for the year ahead.
“While agricultural prices have been caught up in broader commodity declines, a growing international market continues to generate strong demand for protein and fibre,” Mr Conroy said.
“The world’s population is growing, wealth is increasing and Australia is well placed to supply high-quality agriculture, horticulture and aquaculture produce. Additionally, free trade agreements will be important developments in expanding Australia’s food production globally.”
Mr Corbett said his heart went out to the regions and industries impacted by recent weather events, especially communities affected by devastating fires and prolonged drought.
“Overall, Australia has competed well in most rural commodities, with the exception of dairy and sugar. Chickpea prices have reached record highs, and beef prices are expected to remain strong courtesy of historically low global beef supplies, a weakened Australian dollar and recent increase in US int erest rates,” Mr Corbett said.
“Restocking will now be a challenge for some beef farmers who destocked during the drier conditions and now face much higher prices.
“Unfortunately, recent rains in the Darling Downs and Maranoa caused substantial damage to cotton and early grain crops, and softened projected yields. Impacted farmers have shifted focus towards crops of mung beans and corn to take advantage of pre-existing sub soil moisture.
"Favourable market conditions in Southern NSW have created a renewed optimism across the region, especially for livestock and grain producers who both recorded solid results. The immediate concern for the area is the El Nino forecast for a hot dry summer.
“Low water allocations and price fluctuations also caused some concerns for summer cropping programs. However stable prices have delivered relief for rice, cotton and sorghum farmers.”
In an environment where change is a constant, Mr Corbett confirmed the benefits gained from the new Farm Management Deposits (FMD) scheme, available from 1 July, will assist farmers to better prepare for slower conditions.
“Risk mitigation is integral for all business operators, and FMDs are beneficial for farmers to help manage seasonal and commodity price fluctuations,” Mr Corbett said.
“Similarly, producers are encouraged to revisit business plans and make revisions to reflect changes in the external environment. This will help to identify and take advantage of opportunities, and prepare for challenges.”
About Suncorp: Suncorp Group includes leading general insurance, banking, life insurance and superannuation brands in Australia and New Zealand. The Group has 14,500 employees and relationships with nine million customers. Suncorp Group Limited is a Top 20 ASX-listed company with $94 billion in assets. Suncorp Bank is Australia’s leading regional bank servicing more than one million personal, SME and agribusiness customers.