Robots and automation of modern dairy food plant at Bega Cheese, NSW

Robots and automation of modern dairy food plant at Bega Cheese, NSW

By Sarina Locke ABC


The economies of Asia may be strong, and the rising price of food might be bright, but farmers’ returns are set to fall.

That’s the sober assessment of the economists at the National Outlook conference in Canberra hosted by ABARES.

So what of the global economic outlook, and forecast for grain, dairy and beef?

Paul Morris, executive director of ABARES, told the audience the strong Australian dollar and competition from Brazilian and Indian beef, and greater grain production, will dampen returns for Australian farmers.

World wheat prices are forecast to fall by 12 per cent this coming year with a big lift in world wheat production, although the price will stay above the five-year average. Similarly for coarse grain, like barley, the price could also fall 12 per cent.

Record production of oilseeds, like soybeans, in Latin America is going to dampen prices by 9 per cent. As the US recovers from drought, farmers there will also sow more soybeans. How quickly the US economy will recover is another story.

Rabobank’s chief economist Wim Boonstra says both the US and the European economies have a bumpy ride to recover ahead.

“Economic fundamentals are relatively strong. But the differences between the countries are huge. The impact on the rest of Europe from the Greek crisis has been immense, it’s a textbook case of economic mismanagement.”

Mr Boonstra says despite food price rises over the long term, farmers are not seeing increased returns. He says improving productivity is one answer.

His home country, the Netherlands, is a powerhouse of agricultural exports, ranked third in the world, and three times the value of Australia’s, with massive flower, horticulture, pork and dairy exports.

Dairy farmers globally have been struggling with low prices, but world prices are forecast to rise by 4.5 per cent this coming year.

Beef prices are set to fall 7 per cent this year, and 3 per cent next year to 295c a kilo dressed carcass.

The Beef industry needs to continue cultivating new markets as our biggest market Japan is will take more US beef over Australian..

ABARES chief economist Trish Gleeson says the US is back in the game.

“The US has been clawing back the share of beef imports that they lost during the BSE outbreak in the United States,” he said.

“Now with a loosening of trade restrictions 90 per cent of US beef will be eligible for the Japanese markets, and that will have quite an impact on our exports to that market while the dollar remains high.”