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Grim agriculture outlook: ABARE

THE Australian Bureau of Agricultural and Resource Economics has forecast the net value of farm production to fall a massive 63 per cent to $3.7 billion in 2002-03.

In its September quarter Australian Commodities the bureau suggests the fall is due to a 16 per cent fall in the gross value of farm production to $32.2 billion, while farm costs are forecast to increase by just under 1 per cent to $28.5 million.

All because of a sharp fall in winter crop production and lower prices for most livestock products, ABARE says.

The Australian winter crop is forecast to decline to 22.2 million tonnes, the lowest since 1994-95 and 15 million tonnes below last season’s crop.

The drought throughout much of the Australian wheatbelt, including WA, has wiped more than $2 billion off ABARE’s June forecast.

As a result, farm expenditure patterns are also to change.

“Spending on fodder and feed grains will be higher owing to increased supplementary feeding of livestock and to sharply higher prices for hay and feed grains,” the report says.

But expenditure on machinery and pasture fertiliser is expected to be lower.

“The big lift in farm incomes during 2001-02 brought a sharp rise in new investment in tractors and farm machinery across all broadacre cropping and livestock industries,” the report says.

“However, demand for farm machinery has fallen in recent months and is expected to remain weak for the reminder of 2002-03, reflecting the impact of drought and lower farm incomes.”

Although the agriculture sector now comprises less than 3 per cent of gross domestic production in Australia, ABARE expects it to have profound effects on the wider economy through direct and indirect linkages.

“The drought is estimated to reduce the rate of economic growth in Australia in 2002-03 by around 0.5 per cent, or around $3.8 billion,” the report says.

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