Agriculture Industry Outlook for 2017-2018

Agriculture Industry Outlook for 2017-2018


The Australian economy relies heavily on its agricultural industry and with an uptick in performance over the past 12 months, the outlook for 2017 to 2018 is also looking good. In fact, the Australian Department of Agriculture and Water Resources (ABARES) has predicted that the gross value of farm production will increase by up to 17.3% over the next 12 months, resulting in a total gross value of the agriculture sector of $63.8 Billion.

Since the agricultural industry is composed of multiple sectors, let’s take a look at 11 of these sectors to see how each area will possibly contribute to the 17.3% predicted increase in gross production over the next year (sourced from Canstar).

Dairy industry: Currently, dairy farmers are doing it tough, producing the least amount of milk for 21 years. This has been due to a combination of wet weather, reduced markets and a significant price drop, however, over the next 12 months, the situation is predicted to improve, with an uptick in market growth and drier weather resulting in a 2% increase in production.

Beef industry: As the second largest exporter of beef in the world, the beef industry is Australia’s largest farming sector. Following 3 years of drought conditions, a recent spate of better weather is predicted to increase the size of herds by at least 3% over the next 12 months.

Wheat farming: With a history of strong growth and record harvests, the wheat industry is actually predicted to slow over the next 12 months, declining from a gross value of $34 Billion to $30 Billion with export earnings dropping by 9%.

Lamb production: Over the past few years, the lamb industry has seen record growth with herd sizes increasing to 73.6 million and predicted to hit 83.0 million by 2022. Over the next 12 months, however, a slight drop of around 3% is expected in exported lamb with a gradual increase to above normal levels within a few years.

Wool industry: Producing a quarter of the world’s wool, the gross value of this industry was estimated as $3 Billion in 2016. A 6% increase is predicted for the next 12 months, due to a higher consumer demand for wool products.

Sugar production: The Australian sugar industry has had a tumultuous time over the past few years with prices rising and falling, however an expected price rise this year has been seriously threatened by Cyclone Debbie (March 2017). Predictions for the sugar industry for 2017 to 2018 are as yet, unknown.

Cotton industry: Due to improved irrigation and favourable weather, the cotton industry is predicted to increase by 8.5% over the next 12 months to reach 1.1 million tonnes. This trend is expected to continue over the next few years.

Wine production: The Australian wine sector has shown good growth over the past few years and with an expected 3.3% decline in global wine production, a 5% increase in the value of Australian exports is predicted, rising to $2.5 Billion over the next 12 months.

Fruit & vegetables: Growth in the fruit and vegetable sector is predicted to continue its positive growth into 2018, rising from a value of $9.3 Billion to a predicted $9.8 Billion. Whilst nuts and flowers contribute around $1.9 Billion, most of this growth will come from fruit and vegetables.

Fertiliser: Due to a low global demand for fertiliser and the falling Aussie dollar, the fertiliser industry is expected to be under pressure over the next 12 months with prices predicted to rise in the local marketplace.

Oil & freight: Always volatile, the oil and freight industry continues to be unpredictable, mainly due to political instability on a global scale. Recovering from a 10% drop in early March of this year, however, the current cost per barrel of USD $56 is expected to rise to around USD $60 per barrel by 2018.

Many of these predictions, however, depend on the Australian weather and with a 1 in 2 chance of another El Nino occurring in the next 12 months, some sectors, such as wheat and grain, may not live up to their predicted growth levels for 2017 to 2018.

Conrad Carlile works closely with farmers and producers in the agricultural sector, providing tax and business strategies for wealth creation and future growth.  To get in touch with our team today – call us on 07 3871 1522 or complete our online enquiry form for more information.



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