THE value of Australian horticulture this financial year is set to reach the second highest on record.
That's according to the federal government's Australian Bureau of Agricultural and Resource Economics and Sciences' (ABARES) March Quarter Agricultural Commodities Report.
It's given a forecast figure of $12 billion for 2021-22.
That's based on expectations that most fruit and vegetable production over summer and autumn will be plentiful, supported by favourable seasonal conditions and low water prices.
Its predictions for the year after are even more rosy with a figure of $12.5 billion reported, a rise of 4 per cent.
"This is despite horticultural production being expected to fall moderately due to a return to average seasonal conditions," the report said.
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"Production of most fresh produce will continue to remain at high levels overall, supported by high water storage levels and low water prices."
This year, ABARES provided forecasts for both a "faster recovery" scenario (the global economy continues an uneven recovery) and a "slower recovery" scenario (the global economy continues to recover but the pace is slower and more uneven than in the faster recovery scenario).
The report listed almonds, avocados, berries, citrus, macadamia nuts and table grapes as crops which should have increased production, driven by previously planted trees and vines coming into maturity.
Some positive movement on global markets would also benefit Australia's horticulture prospects.
ABARES said if stronger international demand and less supply chain disruptions were realised, as in the faster recovery scenario, the value of production for export focused industries will be higher.
"This is expected to lead to higher overall nominal value of horticultural production under the faster recovery scenario in later years," it said.
There are some significant variables within forecasts though, with labour availability being one of the biggest.
"There remains a risk that a more staggered return of working holiday makers could constrain labour supplies further than anticipated, resulting in a scenario whereby higher labour costs could place greater upward pressure on farmgate prices," it said.
Policies will have impacts
THE report noted the various policy changes which will contribute to an "improved outlook for labour availability", such as additional incentives to the Student and Working Holiday Maker visa, the introduction of the Pacific Australia Labour Mobility (PALM) scheme and the introduction of the Australian Agriculture Visa Program.
Added to the labour stress are looming changes to piece rates under the Horticulture Award which will guarantee at least the minimum hourly rate for the pieceworker's classification level plus, for a casual pieceworker, the 25pc casual loading.
The ABARES report painted the change as having the potential to improve staff shortages as the industry becomes more attractive for workers.
"The implication of the new minimum hourly wage guarantee for farm businesses is unknown, but they are expected to induce more worker screening by farm employers in the short term and labour-saving investments in the longer term," the report said.
"Higher pay guarantees should induce more potential applicants for farm work.
"Farm businesses better able to adapt to these new rules by increasing their chances of hiring or retaining higher productivity workers stand to benefit against their competition.
"Similarly, those businesses making current investments into workforce efficiency and labour-saving technologies would be in better positions to save on labour costs in the longer term."
Hort exports to lift
SOME positive signs for horticulture exports were given as well with ABARES predicting an 8pc increase in value to $2.9 billion for 2021-22.
"Favourable seasonal conditions supporting production and quality attributes are expected to increase exports of almonds, cherries, macadamia nuts, stone fruit, potatoes, and table grapes," it said.
"However, costs of air and sea freight and shortages of refrigerated containers are expected to continue to constrain exports."
A view of the following year puts that growth up an extra 7pc to $3.1 billion for 2022-23.
It hedged its bet here though suggesting that if labour costs and trade disruption issues persist, these could lead to slower growth in export value.
Avos and berries share need for export markets
AVOCADOS and berries may experience lower farmgate prices in the medium term due to rising production volumes, according to ABARES.
The report said these industries have been focusing on developing export markets to ease that potential drop.
"It is expected that higher exports in the faster recovery scenario will help to dampen price falls in the domestic market for those producers," the report said.
"However, disruptions to export logistics and slower international demand assumed in the slower recovery scenario would risk those prospects.
"In such a case, more supplies having to be traded in the domestic market would cause greater reductions in their farmgate prices.
"This would lead to falling profit margins that could contribute to greater industry consolidation."
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