March 6, 2013

Australia aims for significant performance in 2012-13

In order to achieve US$39 billion in exports and US$51 billion in production, Australia's farmers, fishers and foresters are expected to perform well in 2012-13, but smarter practices and cooperation between industry and government will be vital to long term success.

Speaking at the launch of the 43rd Outlook Conference, Executive Director of ABARES Paul Morris said the figures showed Australia's agriculture, fishing and forestry sectors have resisted many of the challenges of a high dollar and natural disasters by being innovative and seizing opportunities presented by overseas markets.

Providing a detailed analysis of local and global economic prospects for Australia, Morris said 10 years of relatively poor seasons for Eastern Australia has been followed by two years of recovery, with 2011-12 being a particularly strong year across the whole of Australia.

"The returns this year are softer than the very impressive figures of 2011-12 which saw production hit US$54 billion and exports reach US$41 billion. However the forecast 2012-13 figures remain on a par with averages over the past decade in real terms," Morris said.

"Looking forward, moderate demand growth, the strength of the Australian dollar and increased competition from suppliers in other countries are expected to place pressure on our exports. The five-year outlook to 2017-18 anticipates a fall in the average value of farming, fishing and forestry production to around US$50 billion in real terms. Exports are also projected to ease to US$37 billion, which is almost 4% lower than levels seen over the past decade."

Morris' view of the world economy was shared by Rabobank Group chief economist Wim Boonstra. In his keynote international economic presentation he said the global economy will show a fragile recovery in the short-term at best, and had a number of impending challenges.

"More integration and solidarity is necessary for Europe. While the US has partly avoided the fiscal cliff, further budget battles are coming. As for China, the risk of a hard landing will increase if rebalancing is not tackled effectively," he said.

Looking beyond the medium term, Morris said Australian industry and governments will need to work together to drive growth. "Industry will have to focus on highlighting Australia's high-quality produce as a point of difference and invest strongly in research, development and innovation. Better use of technology will be needed to drive improved competitiveness."

Morris also emphasised the importance of government carefully balancing competing priorities. "The trade-off between economic development, the environment and community expectations has probably never been quite as stark as it is at present," Morris said.

"Scarce resources and global competition make this trade-off very real. The way that industry and policy makers respond will be central to the future of agriculture, fisheries and forestry in this country."