ABARES March 2023 Agricultural Commodities Report shows hort lifting to $16.3 billion

Today's release of the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Agricultural Commodities Report for the March quarter 2023 paints a generally positive forecast for horticulture, predicting it to reach a record production value of $16.3 billion in 2022-23.

Further on from that, it's given an even rosier outlook for 2023-24 with a 12 per cent rise predicted, taking it to an expected $18.2 billion in nominal terms.

One of the key factors discussed within the report is water, with ABARES pointing out the high water storage levels for many horticulture production areas has resulted in an easing of irrigation cost pressures and low water allocation prices.

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"However, fuel, freight and fertiliser prices have remained a burden for producers despite falling back from their peak in recent months," the report said.

Ironically, too much water in the form of flooding was cited as placing pressure on producers' bottom lines.

"Adding to these cost pressures were floods in southeast Queensland and northern New South Wales in the first half of 2022 followed by floods in northern Victoria and the Sunraysia and excessive rain in Tasmania in the second half of 2022," it said.

"These weather events disrupted production volumes of fruit and vegetables resulting in acute supply shocks."

Curiously, the ABARES report made no specific mention of the potato shortage due to wet weather.

THE report said fuel, freight and fertiliser costs were expected to fall in the second half of 2022-23 as the bumper summer harvest comes online.

"For example, the index of fertiliser import cost provided by the Australian Bureau of Statistics, shows on average that fertiliser import costs were more than 2.5 times higher in 2022 than the preceding 10-year average," it said.

"Similarly, global freight spot prices were estimated to be around 1.5 times higher in 2022 than the preceding 18 months, but have been declining since their peak in June 2022. Nevertheless, regional freight costs still remain high."

ABARES referred to a possible return to El Nino conditions which would mean lower rainfall and drier conditions, which in turn would mean less hampering of the supply chain in getting products to market.

"Water allocation prices are forecast to remain low as most dams in the eastern states are at or near full holding capacity, supporting production of fresh produce to remain at high levels overall," it said.

"With the ending of La Nina in 2023, it is expected that flooding events will be minimal over the year which will reduce supply chain disruptions that have driven up the prices of fruit and vegetables over 2022-23."

THE rise in fruit and nut exports was given as a significant driver for horticulture's healthy future.

"Boosted by growth in export markets, Australia is expected to take advantage of its position as a countercyclical supplier to northern hemisphere producers and geographical proximity to Southeast Asia," the ABARES report said.

According to ABARES, between the calendar years 2012 and 2021 the value of Australian horticulture exports grew 142pc nominally, driven overwhelmingly by improvements in the export value of tree nuts and fruit varieties.

"Healthy international prices and improved trade market access with key export destinations has incentivised large investments into the expansion of plantings of macadamia and almond nuts," it said.

"With approximately 50pc of macadamias and 70pc of almonds being exported it is expected that tree nut exports will continue to drive gains in total export growth over the outlook period."

In the Rural Bank's Insights February 2023, it says Australia's almond producers are expecting reduced yields for this season's crop due to wet weather.

"Global almond prices have also come under pressure over the last quarter on the back of significant global stocks," Rural Bank said.

"Export demand for almonds remains decent and is expected to strengthen over the coming month. This is driven by improved demand from China and the recent trade agreement with India coming into effect."

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