Destocking pushes ag export values to record highs

Destocking pushes ag export values to record highs

Cropping
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We've hit a record for ag exports but it is a bittersweet milestone, as much of the gains have been made due to destocking.

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Will Rayner, Rural Bank chief operating officer with Rural Bank, says ag exports from Australia have hit a record high.

Will Rayner, Rural Bank chief operating officer with Rural Bank, says ag exports from Australia have hit a record high.

AUSTRALIA is set to hit a record in terms of agricultural exports according to a Rural Bank report, but it is a bittersweet milestone as much of the added income has come from destocking within the livestock sector.

And the Australian Bureau of Agricultural and Resources Economics and Sciences (ABARES) is forecasting a contraction in agricultural exports, saying in 2019-20 it is expecting an 11 per cent drop to $44.1 billion.

Rural Bank said the cattle industry experienced the largest increase in export value, up to $12.3 billion, but added much of this was due to destocking.

The number of live cattle exports increased by 29.1 per cent in 2018/19 largely due to drought impacted producers selling their stock.

Horticulture was another big growth sector, with the nut industry cracking the $1 billion mark for exports off the back of the ongoing boom for the almond sector.

Other growth commodities in 2018/19 were cotton (+$418 million), sheep (+$393.7 million), wine (+$130.6 million), dairy (+$110 million) and sugar (+$27.9 million).

However the drought and the ongoing focus on the domestic market meant grain exports were down while wool could not continue the momentum of the past few years.

Western Australia was the exception on this front, with a 37.3pc increase on the back of one of the west's biggest production years on record.

Dairy has now recovered most of the losses of the dairy crisis of three years ago, posting a second consecutive year of export gains following improved prices, which have offset lower production.

Rural Bank chief operating officer Will Rayner said drought was likely to be a big influence on ag exports for the upcoming marketing year.

"Moving into 2019/20, some commodities will continue to be challenged by the impacts of drought and global economic uncertainty.

"While demand for Australian agricultural exports remains positive, supply challenges, particularly for cattle, sheep and wool due to poor seasonal conditions, will limit production and therefore export volumes in 2019/20."

The livestock sector is expected to take a while to recover from the poor season.

Nathan Pitts, of ABARES, said in 2018-19 the sheep flock was estimated to have fallen to its lowest level since 1904-05 due to prolonged drought conditions and a longer term trend in land use towards cropping.

He said the flock has declined sharply despite high sheep meat and wool prices providing a strong incentive to build flocks.

High prices are likely to continue in 2019-20, however, any expansion of the flock will be constrained by a small breeding flock, the high cost of restocker animals and forecast dry conditions in spring.

On the wheat front Amelia Brown, ABARES, said domestic feed grian prices had been high, meaning wheat usually exported to global markets has been shipped from Western Australia and South Australia to Australia's eastern states.

These shipments are likely to continue in 2019-20 as drought conditions persist in northern New South Wales and southern Queensland, where the majority of intensive livestock industries are located.

She said shipments are likely to be less than 2018-19 as conditions have improved in central Queensland, southern New South Wales and Victoria.

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