Australian Farm Business Profits Expected to Rise Despite Challenges

Strategic Insights -

Rising livestock prices, better seasonal conditions in southern Australia, and strong global red meat orders have pushed forecasts for Australia's total farmgate production value to a record high of almost $95 billion this financial year. However, farmers' input costs are expected to increase due to a low Australian dollar and high fertilizer prices. Despite these challenges, the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) predicts a rise in average farm business profit to $163,000 this financial year, with the national commodity forecaster anticipating a significant boost in slaughter lamb values and cattle prices.

Key Takeaways:

  • Average farm business profits are expected to rise to $163,000 this financial year, up from previous forecasts.
  • The ABARES predicts a record high total farmgate production value of almost $95 billion this financial year, driven by rising livestock prices and better seasonal conditions.
  • Strong global red meat orders and domestic restocking activity are expected to boost slaughter lamb values by about $600m and cattle by $200m.
  • The National Australia Bank Rural Commodities Index reflects the buoyant livestock demand, up 9% in year-on-year terms to its highest level since November 2022.
  • Rural commodity prices in Australian dollar terms lifted 1.7% in July, driven by rising beef, lamb, and fruit values.
  • The ABARES notes that while total crop volumes will rise slightly in 2025-26, the grain crop's value is likely to decline due to lower domestic and global prices.
  • Australian farmers' overall terms of trade are expected to improve by 2.6%, driven by stronger export demand and higher prices for livestock and animal products.

Statistics:

  • The total farmgate production value is expected to reach a record high of almost $95 billion this financial year.
  • The average farm business profit is predicted to increase to $163,000 this financial year.
  • Slaughter lamb values are expected to rise by about $600m, while cattle prices are predicted to increase by $200m.
  • The National Australia Bank Rural Commodities Index has risen 9% in year-on-year terms to its highest level since November 2022.
  • Rural commodity prices in Australian dollar terms lifted 1.7% in July.
  • The ABARES predicts a 2.6% improvement in Australian farmers' overall terms of trade this financial year.

Sources:

  • "Farm profits tipped to rise" (2023) by Andrew Marshall (no publication date mentioned)
  • Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)
  • National Australia Bank (NAB)
  • Rural Commodities Index (published by the National Australia Bank)