In a significant development for rural real estate values, a report released in early September by the Department of Agriculture, Fisheries, and Forestry[i] in Australia has projected that the country’s agricultural sector is poised to achieve its third-highest annual gross value on record in the 2023-24 fiscal year. The forecast indicates that the production value is expected to soar to $86 billion during this period.
Executive Director of the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), Dr Jared Greenville, said the news shows the farming sector remains despite challenging conditions.
“For agriculture, after a record $92 billion result in the 2022-23 financial year, the forecast 14% decrease will see value fall to $80 billion in 2023-24 because of drier domestic conditions and an expected fall in global commodity prices,” Dr Greenville said.
“As we come out of a higher rainfall La Niña period and move into a drier El Niño climate, it is expected that below-average rainfall and warmer temperatures will reduce Australian crop yields and production from the previous year’s record highs. Total crop production value is set to fall 20% in 2023-24 to $46 billion.
“National winter crop production is expected to be around 45.2 million tonnes, slightly below the 10-year average. Drier conditions are so far having the greatest impact on northern cropping areas, with prospects for the southern cropping regions holding up after better-than-expected winter rainfall.
“It is also expected that summer crop plantings will fall from last year but remain above average, due to lower rainfall forecast for spring and summer being buffered by high levels of water storages.
“Drier conditions will also mean livestock producers will need to send more animals to slaughter. As supply increases, saleyard prices for cattle and sheep are expected to fall; sheep prices are forecast to fall below their long-term average.
“At the same time, global meat prices are falling. These factors will mean despite higher production volumes, the value of livestock production is expected to fall by $1.6 billion to $34 billion in 2023–24.
“Production and prices outcomes will also weigh on export performance with the value of agricultural exports expected to decrease by 17% to $65 billion.
“Farmers are also facing elevated input costs across key inputs such as fertiliser, diesel and labour. High interest rates are also increasing the costs of debt repayments.
“Despite all the challenges, it is important to remember that falls are coming off the back of record years which have helped rebuild financial reserves and our agricultural sector remains resilient and competitive.”
Travis Wentriro, NSW Network Manager at Raine & Horne Group, said “The ABARES report is undoubtedly significant news for those in the rural real estate market. “The anticipated increase in agricultural production value to $86 billion reflects the continued strength of this sector despite facing various challenges.”
Travis continued, “Regarding rural property prices, it’s possible that some markets could experience some localised fluctuations, particularly in areas more dependent on specific agricultural sectors that may be more affected by reduced crop yields and production.
“However, the overall outlook for rural real estate values remains relatively stable, given the long-term resilience and competitiveness of the Australian agricultural sector.”
“That said, it’s essential for property owners, buyers, and investors to remain vigilant about regional dynamics and market trends to make well-informed decisions.
“Additionally, contacting your local Raine & Horne Rural agent for guidance on current local market conditions is highly recommended.”
For all your rural real estate sales and property management needs this spring, contact your local Raine & Horne Rural office.