Amid 2020 challenges, Aussie farmers set to enjoy profitable year ahead

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Image Credit: Rabobank

While several agribusinesses worldwide are facing challenging harvests, the Australian food and agriculture sector remains resilient even when put against the backdrop of continuing trade tensions with China, COVID-19, and the La Niña weather system.

The good news for Aussie’s farmers comes from Rabobank’s Australia Agribusiness Outlook 2021 released Wednesday. According to the Netherland-based global agribusiness think tank, producers are up for a profitable year ahead thanks in part due to strong demand for F&A products.

With profits expected to roll in soon, Australian farmers will have more avenues to recover from coronavirus economic factors and the recent east coast drought. Additionally, recovery will reduce Australia’s reliance on China as a trading partner.

The La Niña phenomenon across Australia will benefit producers, who are already on the luckier end of the weather system compared to competitors offshore. Large parts of the US, Latin America, and easter Europe have “crimped the production prospects,” the report says.

Adertisement

Above-average rainfall in 2020 will positively affect winter crop harvest along with higher-than-usual moisture in 2021. “This is improving broad-acre farm incomes, boosting locally grown feed and underpinning better water allocations for irrigators.”

“In a current global environment marked by the pandemic, political tensions, and trade wars, demand for food and agri products has remained unexpectedly strong,” said Report lead author, Rabobank head of Food & Agribusiness Research Tim Hunt.

“And despite the punitive actions of China on Australian agriculture, high agricultural commodity prices, low-interest rates, and positive seasonal conditions are underpinning a positive outlook for most farmers in 2020/21.”

Amid political tensions, China has blocked Australian barley, wine, and timber exports into China, and informal impediments continue to constrain shipments of cotton and lobsters.

While there seems to be no end in sight for the ongoing trade sanctions, data suggests that Australian agricultural products are “still flowing through”, with $800 million worth of product still shipped to China in November 2020.