Farm output down after exceptional year

Federal minister David Littleproud says n farmers will benefit from rising food demand.The head of the federal government’s commodity forecasting bureau is unconcerned is putting all its eggs in one basket when it comes to farm exports to Asian countries.

“It’s a very large basket and we can’t afford to ignore it,” n Bureau of Agricultural and Resource Economics and Sciences Steve Hatfield-Dodds told a conference in Canberra on Tuesday.

Even so, he does not see Asia as a single basket, with dozens of niche markets in China alone.

The bureau’s latest commodities review, presented at its annual two-day conference, gives n farmers some good news.

It says a strengthening world economy will lift household incomes and support food demand growth.

This will especially be the case in regions important to ‘s agricultural trade, such as the emerging countries of Asia.

The bureau expects economic growth in China, India and in some south-east Asian countries will be underpinned by low-interest rates and expansion budget policy.

n agriculture and food producers are already benefiting from rising food demand in Asia.

“Over the 10-years to 2016/17 the share of ‘s total farm exports shipped to Asia increased from 52 per cent to 69 per cent,” the ABARES says.

“Prospects for ongoing export growth to Asia are favourable.”

KPMG partner Doug Ferguson told the conference in Canberra that while doesn’t necessarily want to have all its eggs in one basket, the “demographics and the wealth generation coming out of Asia is undeniable”.

“‘s agricultural future is now well and truly connected to Asian markets and will remain so for many decades, if not forever,” he said.

While the bureau is predicting a five per cent drop in farm production this financial year to $59 billion, this comes after what it calls an “exceptional” performance in 2016/17.

It does expect steady growth over the next five years.

“It shows we are heading in the right direction despite a forecast decline this year, which is probably to be expected after astonishing 2016/17,” Agriculture Minister David Littleproud told the conference.

The forecaster expects n economic growth of 2.5 per cent in the 2017/18 financial year, growing to three per cent in the next, driven by stronger business investment.

However, a downside risk to the outlook is uncertainty around household consumption.

“Ongoing weak income growth and high household debt could slow household consumption,” it says.

In its calculations, the bureau assumes the n dollar will ease from an average of 78 US cents in 2017/18 to 76 US cents in 2018/19.

It also expects the terms of trade will decline gradually due to falling prices for iron ore and metallurgical coal in response to increased global supply and weaker Chinese demand.

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