Australian agricultural exports have hit a record value of $50.7 billion, despite the ongoing drought and associated declines in production.
Figures released earlier this month by Rural Bank show increased growth across most agricultural sectors with the beef industry a clear front runner. Across the 2018 – 2019 financial year beef exports were up $1.9 billion in value with a total of $12.3 billion in overseas sales. Destocking has driven the number of live cattle exports up by 29.1 per cent, with a value increase of 29.8 per cent to $1.6 billion.
Sheep meat exports reached a new high with an export value of $4.3 billion on the back of stronger overseas demand and a shift in the amount of Australian produced sheep meat being exported. Valued at $393.7 million, the export value saw a 10% increase on the previous year, with a 7.2 per cent increase in trade volume. Interestingly, China is now Australia’s largest importer of lamb, over taking the Middle East / North Africa region.
Global uncertainty played on the wool market with a decline in export value of 4.1 per cent (down to $162.6 million), despite an export price increase of 14.8 per cent (to $13,205 / tonne). Australia continues its title as the world’s largest exporter of both wool and sheep meat.
China’s seemingly insatiable thirst for Australian read wine drove the value of exports up by 4.6 per cent to $131 million with an average export price of $3.64 / litre. While conditions may further stifle future export volumes, Chinese demand for Aussie wine is set to continue the upward price trend.
Reduced production took its toll on grain exports which were down by $2.89 billion in value (-27.9 per cent), a volume decrease of 39.9%, despite a rise to the export price of an average of 19.9%. With this season looking grim for grain growers in many parts of Australia, its likely that export values will remain low across the current financial year.
Trade Deal Impacts
An additional positive indicator for the sector is the recent signing of several international trade deals with significant potential for Australian exporters. Countries involved in the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) bought $11.2 billion of Australian agriculture exports in 2017-18. Tariffs on beef to Japan will reduce to 9 per cent over 15 years, putting Australia in a more competitive seat than the US, which is currently subject to a 38.5 per cent tariff.
Other recent deals include the Indonesia-Australia Comprehensive Economic Agreement which should improve trading conditions for the beef sector as well as grains, dairy products, honey, sugar cane, potatoes and citrus fruits. Indonesia is Australia’s 7th biggest agri-product importer, at a value of approximately $2.5 billion per year.
China remains as the top customer of Australian agricultural commodities, buying $10.79 billion, followed by the USA ($447 million), the UK ($398 million), Canada ($199 million) and Hong Kong ($139 million).
What’s the Outlook?
While the report provides good news for the Australian agriculture industry, its likely that the rise in growth could taper off in the coming years. Australian agricultural exports have increased year-on-year in value for the last nine consecutive years.
“Moving into 2019-20, some commodities will continue to be challenged by the impact of drought and global uncertainty,” said Will Rayner, Chief Operating Officer of Rural Bank.
“While demand for Australian agricultural exports remains positive, supply challenges, particularly for cattle, sheep and wool due to poor seasonal conditions, will limit production and therefore export volumes in 2019-20,” he said.
Sources: Rural Bank, The Australian
Image: “Australia. Fremantle. 1980” by pszz is licensed under CC BY-NC-SA 2.0