Australia—Higher prices and bumper harvest to drive a record $54.7 billion of agriculture exports

The value of agriculture exports is forecast to jump 12% to a record $54.7 billion in 2021-22, after remaining broadly stagnant in recent years (Chart). Export growth is forecast for most major agriculture commodities. Grains farmers will benefit from a bumper local harvest and generally stable global demand for food products. Drought in large grain producing nations like Europe, Russia, Canada and the US has hit global output and sharply increased world prices, boosting export returns. ABARES expects ongoing global economic recovery to boost wool prices and demand for beef and veal exports, while the high cost of livestock feed in China should lift demand for dairy products.

The bumper export forecast is despite disruptions in trade to Australia's largest agricultural export market, China. Indeed, Australian exporters are proving adept at diversifying into new markets. For example, grains producers export to more than 100 countries around the world, while beef and veal is shipped to more than 70 countries. The free trade agreement with the UK, once brought in force, should contribute to enhancing the competitive positions for our meat and beef exporters, and further support diversification. But challenges persist for some commodities. Though Australian barley exports have found alternative markets, and export volumes have increased overall, prices remain below those available in the higher-value Chinese malt barley market.

Downside risks to the outlook include the potential for further trade disruptions, labour shortages in Australia amid limited access to farm workers, high international freight costs, and pests — in particular, the mouse plague — that could hamper production and exports.