October 27, 2006

 

Australia's ABARE slashes 2006-07 crop output estimates
 

 

The 2006-07 Australian wheat crop was revised sharply lower Friday to 9.5 million tonnenes, a 62 percent drop from actual output of 25.1 million tonnenes last crop year ended Mar 31, according to the Australian Bureau of Agricultural & Resource Economics (ABARE) production forecast.

 

New crop barley output is estimated at 3.6 million tonnenes, down 64 percent from the last crop year. New crop canola output is estimated at 440,000 tonnenes, down 69 percent from the old crop.

 

The forecasts are issued as the annual harvest gathers pace.

 

Karen Schneider, ABARE's acting executive director, said most of Australia's winter crop lands are in the grip of a savage drought, which is having severe consequences for the farm sector, and flow-on impacts to the broader economy.

 

"Taking into account this latest revision to the farm sector forecasts and the flow-on effects on the rest of the Australian economy, the drought is estimated to reduce economic growth in Australia in 2006-07 by around 0.7 percentage points from what would otherwise have been achieved," she said in a statement.

 

Australia's official forecast for economic growth this fiscal year ending June 30, 2007, remains at 3.25 percent.

 

Australia's lower output would limit export availability of all crops.

 

With ongoing annual domestic demand for wheat of about 5.5 million tonnenes, export availability would tighten sharply.

 

ABARE reported the drought is causing pastures to deteriorate, forcing producers to sell livestock, in turn pushing prices down and sharply increasing slaughterings.

 

"Poor pasture growth and increasing prices for feed grains have resulted in farmers moving to reduce stock numbers in recent weeks as they attempt to preserve numbers of breeding stocks into next year," it said.

 

Beef production this fiscal year is forecast to rise to 2.16 million tonnenes from an actual 2.08 million tonnenes last fiscal year, about two thirds of which is exported.

 

Taking account of lower crop output and livestock earnings, the gross value of farm production of these commodities is expected to fall 35 percent or AUS$6.2 billion (US$4.7 billion) below the 2005-06 level, ABARE reported.

 

Abare also reported the rainfall outlook for summer crops does not look promising.