Power Equipment Australasia

REPORT Australian Agri – looking back and the road ahead Australian agriculture has experienced both opportunities and challenges in 2023, according to the latest ANZ Agri Commodity Report. According to the report, 2023 has seen many ups and downs across industries in both an on and off season. This included the declaration of El Nino, impacting landscapes that were already dry through much of the season, and further impacting Australia’s graziers. ANZ Head of Agribusiness, Mark Bennett said: “For all of the ups and downs this year (2023), the question of where agri stands probably depends on location and industry.” “For all the recent lessons of destocking early to avoid expensive feeding through a drought, we’ve seen this strong supply play its part in the slide of sheep and cattle prices.” “That said, the late declaration has meant less to a lot of winter cropping regions, particularly in Victoria and southern NSW, that has seen the early part of harvest coming in really well, acknowledging that some are now managing interruptions caused by rain.” “In addition, grain prices while off highs, remain reasonable, so that all things equal, strong profitability remains possible. Importantly, the strong contrast between groups emphases the danger of reporting that things seem to be tracking at average.” “There are commonalities for all industry subsectors in both challenges and possibilities looking forward. For those that carry debt, the cost outlook and current reality is significantly higher than recent years.” “Labour availability has perhaps eased but remains an issue both on farms and through the supply chain. And cost of living pressures has translated to wage increases that will likely stick as inflation reduces.” “While it’s a reasonable suggestion that following some record output years and livestock rebuild, farm production and profitability normalises in the outlook period, this doesn’t spell a departure from the long-term opportunity that has been well documented.” “The trend of farm consolidation continues as well-placed farming enterprises invest for the future that remains underpinned by continuing strong demand for our well-regarded commodities - in a world where production is proving to be variable.” “We are not underestimating some of the present risk and challenge ahead, and just how difficult this can be to confront and navigate. Just as the consumer economy reaches into savings and reserves to get through tightening conditions, many farmers will also need to drawdown against reserves. “On balance, it seems the farming aggregate is indeed well placed and does have solid equity and reserves and a path forward. With a decent break or two, we could still see some summer rain in the north and there is no real reason to expect anything other than average through the 2024 growing season and beyond.” A new initiative has been launched to help build drought resilience for Australian farms and farming communities GRAINS: Australia will be looking at a national grain and oilseed harvest of just under 50 million tonnes while this would be a decline of around 33 percent on the previous year, it more accurately represents a return to near average levels. The forecast 2023/24 yield will be the closest to average since 2017/18, and one of the three closest to the average over the past 14 years. CATTLE: With higher Australian production numbers, exports are forecast to increase by 15 percent with the increased volume well placed to fill emerging opportunities internationally. SHEEP: High supply of lamb and mutton continues with yardings up 6 and 32 percent year on year respectively, and mutton slaughter up by almost 50 percent on last year (2022). WOOL: Supply of Australian wool continues be strong, with an estimated 71 million head to be shorn over the season ahead. DAIRY: The national milk production level is forecast to fall to 8.1 billion litres in 2022/23, the lowest level in 30 years. The issue of tight labour availability remains a major challenge. COTTON: Total cotton production for 2023/24 is also forecast to decline from the previous year, though by only eight percent, to 1.2 million tonnes. SUGAR: Current price outlook for sugar appears likely to remain strong for the next marketing season, having lifted considerably over the past two to three years. The high price of sugar globally could well become a factor in food inflation pressures. Source: ANZ AGRI INFOCUS COMMODITY INSIGHTS SUMMER 23/24 KEY INSIGHTS 20 | POWER EQUIPMENT AUSTRALASIA | MARCH - APRIL 2024

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