Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

Drought, fires create multi-year agriculture rebuild

By Cameron Micallef · January 31 2020
Reading:
egg

Invest

Drought, fires create multi-year agriculture rebuild

By Cameron Micallef
January 31 2020
Reading:
egg
Wild fire

Drought, fires create multi-year agriculture rebuild

author image
By Cameron Micallef · January 31 2020
Reading:
egg
Wild fire

Following the drought and bushfires, the Australian agriculture sector is facing an “extremely challenging” 2020, with production likely to remain low and farmgate revenue likely to diminish, an industry report has found.

According to Rabobank’s agribusiness outlook for 2020, the sector is facing a multi-year rebuild, meaning higher prices for agricultural commodities in the coming years.

The report’s lead author, Rabobank head of food and agribusiness research Tim Hunt, said “2019 was marred by drought, fire and flood”.  

“It was the driest year on record, compounding the drought already being experienced by the eastern states in the years prior,” Mr Hunt said.

“And while recent rainfall across drought-affected regions has brought some optimism, farmers will need continued rain to replenish soil moisture and break the drought.”

Advertisement
Advertisement

High agricultural commodity prices have gone some way to offsetting this pain, with firm global markets, a weak Australian dollar and reduced local supply contributing to a near-record year for farmgate prices.

“For the animal protein sector, Chinese imports will remain at elevated levels in the wake of China’s culling of livestock in response to African swine fever, with the rebuilding of their pig population to take several years,” Mr Hunt said, “while global markets for wool and dairy remain firm and the local market basis (wheat price) will be sustained by constrained domestic grain production.”

The report noted that even with higher prices, lower volumes produced will mean the agriculture sector will suffer.

“Physical constraints will also impede recovery. The beef herd and sheep flock will take years to rebuild from current lows, while refilling key storages in the southern Murray Darling Basin will likely take several favourable seasons,” Mr Hunt continued.

Financial constraints will also have an impact, the report said, with farmers likely to want to rebuild equity before investing to expand production once better seasonal conditions return.

Drought, fires create multi-year agriculture rebuild
Wild fire
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article
author image

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Nest Egg.

Read more

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.