Bumper year tipped for Aussie agriculture

Rural Bank's latest Australian Agriculture Outlook report says a stronger and more favourable set of conditions is expected to extend into 2022 with continued improvement in supply and demand.

The bank's report follows the Australian Bureau of Agricultural and Resource Economics and Sciences last week predicting a record year for Australian farmers thanks to strong growing conditions and high global prices.

ABARES forecast Australia's agricultural production will reach a record $78 billion in 2021/22, with the most valuable winter crop ever expected worth $22.3 billion.

The Rural Bank's outlook released on Tuesday analyses the performance of six industries - cattle, cropping, dairy, horticulture, sheep and wool - and predicting increased demand for both export and domestic commodities as the recovery accelerates.

"It's not often that we get such strong commodity prices and good production and also lower interest rates," Rural Bank's Andrew Smith said.

Cattle, winter crops and horticulture are among the key beneficiaries.

Australian beef production is expected to increase by 12 per cent in the first half of 2022 due to more cattle reaching ideal slaughter weights.

"We've seen a doubling in prices over the last three years ... so cattle producers with young cattle have seen cattle prices well above $2000 a head," Mr Smith said.

Rural Bank's forecasts have a 5.6 per cent rise in cattle herds while the national sheep flock could rise as much as four per cent.

Growth in dairy is more subdued with a 1 to 2 per cent increase in production and a farmgate milk price at 6.2 per cent above the five-year average.

Shoppers can enjoy cheaper grapes and avocados this festive season, with a 150 per cent rise in the number of Hass avocados produced.

"We've had some really strong production of Hass avocado in NSW and Queensland this year ... a lot of plantings that went in the last five years are starting to generate output," Mr Smith said.

Grape prices are also expected to be driven down thanks to production numbers being up for the 2021/22 season.

Wool growers enjoyed strong performance with the US importing 11 per cent more woollen household goods than the equivalent period last year, while cotton imports into the US also rose almost 35 per cent.

As the recovery from COVID-19 continues, the report says wetter conditions will deliver greater yields to meet rising global demand for Australian produce.

Mr Smith says wet weather in the eastern states has impacted the horticultural industry and grain growers, while supply chain issues and COVID-19 have presented challenges.

Better conditions with some trading partners has been a positive for farmers.

"It's been interesting to see the transition away from some of the dependence that we had on the China market ... and being able to open up some newer markets has been a real positive over the last 12 months," he told AAP.

Key factors supporting high commodity prices for many producers was improved demand and confidence in the longevity of the recovery from the COVID-19 pandemic, Mr Smith said, as the rainfall outlook remains favourable for summer and the recovery progresses.

"The combination of strong production outlooks and factors supporting high commodity prices place Australian agriculture in an ideal position heading into the new year," he said.

There are challenges despite this favourable environment however, with higher production "coming at a cost to quality" in some sectors such as cropping and horticulture, and growers are adapting to labour shortages by lengthening harvest time frames and becoming more efficient.

Australian Associated Press