The value of Australia's farm production is forecast to hit a four-year low at $59 billion according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
The five per cent drop is due to the ongoing drought in large areas of south-eastern Australia and the ongoing China-US trade disputes disrupting world markets.
Since reaching its peak in 2016-17, the volume of farm production is forecast to have declined by 15 per cent, reach its lowest level since 2009-10. The 2019-20 farm production forecast is reflecting similar levels last recorded during the Millennium Drought.
What does this forecast mean for commodity prices?
Australian wheat production is forecast to increase by 10 per cent, to 19 million tonnes, from the previous year. This is mainly due to improved conditions in Victoria, central Queensland, southern NSW and parts of South Australia.
Australian wheat exports are forecast to increase from the previous year as a result of increased production and lower domestic demand following easing drought conditions in some areas.
Cotton prices are forecast to fall by 16 per cent due to increased global production and high stock levels.
While wool prices will drop by 26 per cent to 1435 cents/kg in 2019-20 due to uncertain global demand and increased superfine wool production.
Australian cattle process is forecast to rise by eight per cent due to higher global demand for beef and reduced supply of cattle in saleyards.
Sheep meat prices are set to rise historical highs to 12 per cent to 810 cents/kg in 2019-20 due to strong saleyard competition and lower Australian supplies.
Farmgate dairy prices are also forecast to rise by five per cent to 51 cents/L in 2019-20 due to the falling dollar and competition for milk. This is a three per cent rise on the previous year.
What about ag's $100 billion vision?
The National Farmers' Federation (NFF) have set a goal for Australian agriculture to become a $100 billion industry by 2030.
The most recent ABARES report are to be expected due to the unrelenting drought conditions according to NFF CEO Tony Mahar.
"Many livestock producers have destocked considerably, and grain producers are facing another year with low winter yields.
"The higher cost of inputs including water and grain is also biting," Mr Mahar said.
Mr Mahar said the forecasthighlighted why a national drought policy which charts a course for drought preparation was vital if agriculture was to achive it's potential
"It's a bold target and one that, as ABARES' figures reveal today, won't come easily.
"A modern all-of-Government drought policy must aim to create conditions where, when drought breaks, farmers are able to return to pre-drought production as quickly as possible," he said.
