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Overview: Australian Agriculture 2022

Overview: Australian Agriculture 2022


Overview: Australian Agriculture 2022

Article by: Hari Yellina

The Australian agricultural industry is set for another fruitful year ahead, according to Rabobank’s premier annual Australian Agribusiness Outlook for 2022, titled “Making Hay While the Sun Shines,” with the aggregate value of agricultural production on track for the 4th successive year of growth in 2021/22. “Australia’s agriculture business is well positioned to meet the difficulties of 2022, thanks to its second year of great pricing and largely extraordinary production circumstances in 2021.” More crucially, it implies the industry can plan for when the sun isn’t shining as brightly in its favour,” according to the paper.

While there will be some pressure on farming margins in 2022 compared to 2021 – with some heat forecast to come from a range of commodity prices, a mixed production outlook, and supply chain challenges – another favourable year is expected for Australian agriculture, according to RaboResearch senior commodities analyst Cheryl Kalisch Gordon. Local macroeconomic conditions, according to the research, are also favourable of Australian agriculture: “In particular, we expect the Australian dollar to rise only a little during the year and remain close to its five-year average.”

‘Blue Moon’ Year

As a “once in a blue moon” year for Australia’s agricultural sector, 2021 saw extremely high prices due to global hardship, which coincided with favourable production circumstances in Australia. “Drought and poor weather in major planting regions around the world, strong stockpiling demand in the face of anticipated food shortages, and Covid-induced labour shortages harmed intensively-produced agriproducts and transportation,” Gordon said.

This brought rain to many agricultural areas throughout the world, but a silver lining for Australian agriculture. This year’s increase in commodity prices corresponded with favourable to extremely favourable Australian production conditions for the second year in a row. And even in commodities industries with smaller production, high price resulted in highly profitable situations.”

Supply Chain Outlook

While the outlook for 2022 is likewise encouraging, RaboBank expects “less evident prospects” for Australian agriculture in the coming year. “We begin 2022 with unprecedented pressure on the Australian food supply chain, with supply chain disruption and bottlenecks felt across the board – from access to inputs at the farm level to consumers getting food on supermarket shelves,” Gordon said. Supply chain effects are projected to last at least through the first quarter of this year. “As global supplies are replenished, storage levels are expanded, and demand tempers,” she said, “we also expect some of the heat to come out of prices for a variety of commodities in 2022.” “However, we expect prices to continue above the five-year average for the foreseeable future.”