Most of Australia’s winter grain growing regions are in the grip of a serious drought, and consequences for the farm sector, especially for broadacre winter grains and grazing livestock, are likely to be severe in terms of lost production and forced sales respectively, according to a new ABARE report.

The report, Australian Crop and Livestock Report 2006-07: drought update, reveals that the national wheat crop is now forecast to be 9.5 million tonnes in 2006-07, down 15.5 million tonnes from last season and the smallest harvest since the 9 million tonnes produced in 1994-95.

The national barley crop is forecast to be down 64 per cent from last year to 3.6 million tonnes and canola down 69 per cent to 440 000 tonnes.

The downward revisions in earnings from the selection of major crop and livestock commodities identified in the report will lead to forecast gross value of farm production of these commodities declining by 35 per cent or $6.2 billion on their value in 2005-06.

‘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,’ acting Executive Director Ms Karen Schneider explained.

The Australian weighted saleyard indicator price of beef cattle is forecast to fall by 13 per cent in 2006-07, reflecting higher turnoff for slaughter, combined with lower saleyard demand for store cattle. With the effect of lower prices outweighing that of higher turnoff the gross value of beef production is forecast to fall by 13 per cent in 2006-07 to $6.6 billion.

Reflecting the impact of increased slaughterings, the condition of stock being turned off and the decline in saleyard prices, the gross value of sheep meat produced is forecast to fall by 35 per cent to around $1.4 billion.

Australian Crop and Livestock Report 2006-07: drought update
http://www.abareconomics.com/publications_html/crops/crops_06/cr_drought_06.pdf