The net value of farm production is forecast to fall by 7.6 per cent to $3.3 billion in 1999-2000 according to the latest issue of Australian Commodities Forecasts and Issues, released by the Australian Bureau of Agriculture and Resource Economics.
The decline reflects expectations that farm costs will rise faster than farm revenues in the year ahead.
The gross value of farm production is forecast to rise by 1.1 per cent to $28.2 billion while farm costs are forecast to increase by 2.4 per cent to $24.9 billion in 1999-2000 following a two per cent rise in 1998-99.
Farmers’ terms of trade, which reflect the changes in prices received and paid by the farmer, have continued to decline over the last decade.
With a base of 100 in 1987-88 the index of prices received (revenue) has increased to 102.6 in WA compared with the Australian average of 107.6 for the 1997-98 year.
The index of expenses has increased to 138.0, the highest increase in input costs of any state.
WA farmers’ terms of trade have been undermined to a point where, in 1997-98, farmers were netting 75 per cent of their earnings a decade ago.
Victoria was the most favourable state for farmers, although they are only earning around 90 per cent of that earned in 1987-88.
The decline in farm-gate prices for our agricultural products has also been a major factor in Australia’s terms of trade decline and current account deficit.
