australian grains outlook for 2013–14 and industry...

Australian grainsOutlook for 2013–14 and industry productivityBeth Deards, David Mobsby, Neil Thompson and Astrid Dahl

Research by the Australian Bureau of Agricultural and Resource Economics and Sciences

NovEmBER 2013

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Cataloguing data Deards, B, Mobsby, D, Thompson, N & Dahl, A 2013, Australian grains: outlook for 2013–14 and industry productivity, ABARES report prepared for the Grains Research and Development Corporation, Canberra, November.

ISBN 978-1-74323-157-9 (online) ISBN 978-1-74323-158-6 (printed) ABARES project 43010

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iiiABARESOutlook for 2013–14 and industry productivity

ContentsOverview 1

The world outlook 2

Australian crop production in 2013–14 4

Climatic and soil moisture conditions 6

Crop conditions and production forecasts by state 10

Grains industry productivity update 15

References 19

Figures

1 Australian winter crop production 10

2 Cropping industry total factor productivity 16

3 Average crop area sown, by GRDC region 16

Tables

1 Winter crop production, Australia 5

2 Australian crop production 14

3 Average annual cropping productivity growth by GRDC region 17

4 Average annual cropping productivity growth by period 17

Maps

1 Australian rainfall percentiles: 1 June to 31 August 2013 6

2 Australian maximum temperature anomalies, 28 August to 3 September 2013 7

3 Upper layer soil moisture, August 2013 8

4 Lower layer soil moisture, August 2013 9

1ABARESOutlook for 2013–14 and industry productivity

Overview

This publication summarises the forecasts presented in the September 2013 editions of ABARES Australian crop report and Agricultural commodities.

The world wheat indicator price (US no. 2 hard red winter, fob Gulf) is forecast to fall by around 10 per cent in 2013–14. While the world indicator price for wheat is forecast to decline, the extent of the decline is less than the expected falls in prices of other varieties of wheat on world markets. This reflects an expected smaller increase in world production of higher protein wheat varieties, including US hard red winter wheat. By contrast, production of lower protein wheat varieties, including Australian premium white wheat, is forecast to rise more substantially.

The world coarse grains indicator price (US corn, fob Gulf) is forecast to fall by 25 per cent in 2013–14 to US$235 a tonne, which mostly reflects a forecast large increase in US corn production, leading to a recovery in world coarse grains supplies. The world barley indicator price (French Rouen feed) is forecast to fall by 21 per cent to US$235 a tonne, due to a forecast increase in world barley production.

The world oilseeds indicator price (US soybeans, fob Gulf) is forecast to decline by 15 per cent in 2013–14 to US$510 a tonne, primarily driven by a forecast rise in production and stocks in the major soybean producing countries. The world canola indicator price (Europe rapeseed, fob Hamburg) is also forecast to fall, largely driven by expected higher production of canola and sunflower seed in the northern hemisphere.

Prospects for total winter crop production in Australia remain positive, despite variable growing conditions over winter. Production is forecast to increase in Victoria, South Australia and Western Australia but fall in New South Wales and Queensland.

Total winter crop production is forecast to increase by 7 per cent in 2013–14 to around 39.2 million tonnes. For the major winter crops, wheat production is forecast to rise by 11 per cent to 24.5 million tonnes and barley production is forecast to rise by 13 per cent to 7.7 million tonnes. In contrast, canola production is forecast to fall by 18 per cent to 3.3 million tonnes.

The total area planted to summer crops is forecast to rise by 3 per cent in 2013–14 to around 1.4 million hectares, assuming sufficient and timely rainfall is received in the summer cropping regions during the planting window.

Cropping specialists have achieved a greater level of long-term productivity growth than other broadacre industries. The productivity of cropping specialists has continued to grow over the past decade, but at a much lower rate. Reasons for this slowdown include: long periods of drought conditions; more farms operating in marginal areas with the structural shift from wool to cropping in the 1990s; and diminishing gains from past advances in technology farming methods, such as minimum till agriculture.

2 ABARESOutlook for 2013–14 and industry productivity

Wheat The world wheat indicator price (US no. 2 hard red winter, fob Gulf) is forecast to fall by around 10 per cent in 2013–14. While the world indicator price for wheat is forecast to decline, the extent of the decline is less than the expected falls in prices of other varieties of wheat on world markets. This reflects an expected smaller increase in world production of higher protein wheat varieties, including US hard red winter wheat. By contrast, production of lower protein wheat varieties, including France class 1, US soft red winter wheat and Australian premium white wheat, is forecast to rise more substantially.

World total wheat production is forecast to increase by 6 per cent in 2013–14 to around 695 million tonnes. Wheat production is forecast to increase in most of the major growing regions in the northern hemisphere, particularly the Black Sea region (the Russian Federation, Ukraine and Kazakhstan) and the European region. The notable exception is the United States where production is forecast to fall.

World consumption of wheat is forecast to increase by 3 per cent in 2013–14 to 694 million tonnes. An expected increase in the availability of low quality wheat is forecast to result in a 6 per cent increase in the use of wheat for livestock feed, particularly in China where there is a large and growing livestock sector.

World wheat closing stocks are forecast to rise by less than 1 per cent in 2013–14 to 175 million tonnes. Closing stocks are forecast to increase in most countries that are major wheat producers, except the United States and India. The Indian Government is expected to keep trying to reduce its stock holdings by increasing purchasing subsidies for poor consumers and releasing reserves to exporters.

Coarse grains The world coarse grains indicator price (US corn, fob Gulf) is forecast to fall by 25 per cent in 2013–14 to US$235 a tonne. This mostly reflects a forecast large increase in US corn production, leading to a recovery in world coarse grains supplies. The world barley indicator price (French Rouen feed) is forecast to fall by 21 per cent (to US$235 a tonne) due to a forecast increase in world barley production.

World coarse grains production is forecast to increase by 10 per cent in 2013–14 to a record 1.25 billion tonnes. World corn production is forecast to increase by 11 per cent to a record 957 million tonnes, largely due to forecast higher production

The world outlook

The world outlook


in the United States. World barley production is forecast to increase by 10 per cent to 143 million tonnes, driven by estimated production increases in the European Union and the Russian Federation. If realised, this would be the highest level of production since 2009–10. Production increases are expected for all major exporting countries except Argentina.

World coarse grains consumption is forecast to rise by 6 per cent in 2013–14 to 1.22 billion tonnes, driven by an expected increase in the feed use of coarse grains. Total corn consumption is forecast to rise by 7 per cent to a record 931 million tonnes, while total barley consumption is forecast to rise by 6 per cent to 140 million tonnes.

Total feed use of coarse grains is forecast to rise by 8 per cent in 2013–14 to 718 million tonnes, which reflects the combined effects of forecast lower coarse grains prices and an expected expansion of livestock industries.

World coarse grains stocks are forecast to rise by 20 per cent in 2013–14 to 182 million tonnes, the highest level since 2009–10. Corn stocks are forecast to increase by 21 per cent to around 150 million tonnes, largely due to a sharp rise in US corn stocks, which are forecast to more than double to 46 million tonnes. World barley stocks are forecast to rise by 15 per cent to 23 million tonnes, increasing from the 30-year low of around 20 million tonnes in 2012–13.

OilseedsThe world oilseeds indicator price (US soybeans, fob Gulf) is forecast to decline by 15 per cent in 2013–14 to US$510 a tonne. The primary drivers of this expected decline are forecast higher production and rising stocks in the major soybean producing countries.

The world canola indicator price (Europe rapeseed, fob Hamburg) is forecast to fall by 17 per cent in 2013–14 to US$520 a tonne, largely driven by expected higher production of canola and sunflower seed in the northern hemisphere.

World oilseeds production is forecast to rise by 4 per cent in 2013–14 to a record 487 million tonnes. World production of soybeans and canola are forecast to be record highs, while sunflower seed production is forecast to be the second largest on record. The forecast for record soybean production is underpinned by an expected increase in production in the United States and the prospect of record production in Latin America.

World oilseeds crush is forecast to increase by 3 per cent in 2013–14 to 408 million tonnes. This rise is driven by a forecast 4 per cent increase in soybean crush, largely the result of higher crush in Argentina and China. Canola crush and sunflower crush are forecast to increase by 1 per cent and 7 per cent, respectively.

World oilseeds consumption is forecast to increase by 3 per cent in 2013–14 to a record 477 million tonnes, largely driven by rising demand for vegetable oils and protein meals.

World consumption of vegetable oils is forecast to increase by 5 per cent to 164 million tonnes, driven by increasing food consumption of vegetable oils, particularly by developing countries. World consumption of protein meals is forecast to increase by 2 per cent in 2013–14 to 271 million tonnes.

World closing stocks of oilseeds are forecast to rise by 16 per cent in 2013–14 to around 81 million tonnes, primarily driven by a forecast increase in soybean stocks to around 70 million tonnes. Canola stocks and sunflower seed stocks are also expected to rise.


Prospects for total winter crop production remain positive, despite variable growing conditions over winter and early spring. Production is forecast to increase in Victoria, South Australia and Western Australia but fall in New South Wales and Queensland.

Seasonal conditions have been very favourable in South Australia and total winter crop production in that state is forecast to increase by 34 per cent, which is an upward revision from ABARES June forecasts. In contrast, seasonal conditions over winter were dry over large areas of the Western Australian cropping zone, before an improvement in spring. Production in Western Australia is expected to be higher than the drought-affected production of last year. In Victoria, rainfall in autumn and winter was favourable for crop development and an increase in yields is expected. In New South Wales, above-average rainfall fell in June but the remainder of winter was dry. In Queensland, good autumn rainfall was favourable for crop development but winter was dry.

Total winter crop production is forecast to increase by 7 per cent in 2013–14 to around 39.2 million tonnes. This represents a downward revision of around 2 per cent as compared to ABARES June forecast. For the major winter crops, wheat production is forecast to rise by 11 per cent to 24.5 million tonnes and barley production is forecast to rise by 13 per cent to 7.7 million tonnes. In contrast, canola production is forecast to fall by 18 per cent to 3.3 million tonnes.

Given the hot and dry conditions experienced over winter in some areas, sufficient and timely spring rainfall will be critical to realising the forecast winter crop production.

In early spring, the summer cropping regions were dry. Sufficient and timely rainfall will be needed in the lead up to, and during, the planting window for summer crops. If this occurs, the total area planted to summer crops is forecast to rise by 3 per cent in 2013–14 to around 1.4 million hectares. This reflects a forecast 12 per cent increase in the area planted to grain sorghum to around 634 000 hectares. In contrast, the areas planted to cotton and rice are forecast to fall by 2 per cent to around 434 000 hectares and 11 per cent to around 100 000 hectares, respectively.

Assuming the forecast planted areas and average yields are achieved, total summer crop production is forecast to decline modestly to around 4.9 million tonnes.

Australian crop production in 2013–14

Australian crop production in 2013–14


TABLE 1 Winter crop production, Australia

NSW Vic. Qld SA WA Tas. Australia

kt kt kt kt kt kt kt

Wheat

2008–09 6 963 1 756 2 016 2 376 8 274 35 21 420

2009–10 5 350 2 995 1 346 4 001 8 114 27 21 834

2010–11 10 488 4 412 1 524 5 949 5 005 32 27 410

2011–12 8 473 3 943 1 886 4 525 11 045 32 29 905

2012–13 s 7 105 2 671 1 748 3 672 6 850 33 22 079

2013–14 f 7 215 2 950 1 698 5 242 7 330 32 24 467

Barley

2008–09 1 449 1 461 173 1 877 3 007 29 7 997

2009–10 1 236 1 865 113 2 068 2 554 29 7 865

2010–11 2 194 1 945 146 2 122 1 549 39 7 995

2011–12 1 425 2 005 191 1 816 2 761 23 8 221

2012–13 s 1 247 1 557 157 1 824 1 950 25 6 761

2013–14 f 1281 1 785 160 2 312 2 110 25 7 673

Canola

2008–09 228 233 2 204 1 175 2 1 844

2009–10 281 331 1 260 1 031 2 1 907

2010–11 805 476 2 359 715 1 2 359

2011–12 1 092 689 1 413 1 232 1 3 427

2012–13 s 1 465 777 0 406 1 408 0 4 056

2013–14 f 900 521 0 429 1 460 0 3 310

Total winter crop

2008–09 9 441 3 890 2 327 4 864 13 786 78 34 386

2009–10 7 789 5 892 1 618 7 036 12 944 72 35 352

2010–11 14 786 7 629 1 822 9 317 8 045 82 41 681

2011–12 11 955 7 348 2 330 7 368 16 599 65 45 666

2012–13 s 10 989 5 611 2 269 6 563 11 037 72 36 543

2013–14 f 10 424 6 013 2 176 8 781 11 750 66 39 210

f ABARES forecast. s ABARES estimate. Note: Total winter crop includes barley, canola, chickpeas, faba beans, field peas, lentils, linseed, lupins, oats, safflower, triticale and wheat. Total for Australia also includes small volumes in the Northern Territory and Australian Capital Territory.


Winter (June to August) 2013 rainfall ranged from average to extremely high across most cropping regions in New South Wales, Victoria and South Australia. Winter rainfall was below average to severely deficient over large parts of the cropping zone in Western Australia and Queensland, with below average to well below average rainfall in part of the north-west cropping region of New South Wales (Map 1).

June 2013 rainfall was at least average over most of Australia’s winter cropping regions, with the exception of Western Australia which received severely deficient rainfall. Much of eastern Australia received average rainfall during July 2013, with variable rainfall received in Western Australia. During August 2013, average rainfall was recorded in most cropping regions in Victoria, South Australia and Western Australia, while cropping regions in New South Wales and Queensland generally recorded below average to severely deficient falls.

MAP 1 Australian rainfall percentiles: 1 June to 31 August 2013 (winter growing season)

Note: Rainfall percentiles displayed for wheat–sheep zone only.Source: Bureau of Meteorology

South Australia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria

Australian CapitalTerritory

Tasmania

Severe de�ciency

Rainfall percentiles

Extremely lowWell below averageBelow averageAverageAbove averageWell above averageExtremely high

0–55–10

10–2020–3030–7070–8080–90

90–100

Climatic and soil moisture conditions



Well above average temperatures across widespread areas were recorded during late August and early September 2013 (Map 2). For the week ending 3 September 2013, maximum temperature anomalies of between 4 degrees and 10 degrees above average were recorded across the wheat–sheep zones of New South Wales, Queensland, Victoria and South Australia. These unseasonably warm temperatures have substantially reduced soil moisture levels in many regions and resulted in moisture stress in crops where soil moisture levels were already limited.

MAP 2 Australian maximum temperature anomalies, 28 August to 3 September 2013

Note: Maximum temperature anomalies displayed for wheat–sheep zone only.Source: Bureau of Meteorology

South Australia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria


Tasmania

Maximum temperatureanomalies (ºC)

1210

86420–2–4–6–8–10–12

Maps 3 and 4 show the relative levels of modelled upper layer (~0.2 metres) and lower layer (~0.2 to ~1.5 metres) soil moisture at the end of August 2013 for cropping zones across Australia. The soil moisture estimates are relative to the long-term record.

Moisture estimates from the long-term record are ranked in percentiles. The darkest green areas (90th to 100th percentile) indicate where the estimated soil moisture level for August 2013 falls into the 10 wettest months, relative to estimated soil moisture levels for that month averaged over a 100-year period. The darkest brown (zero to 10th percentile) indicates where the estimated soil moisture levels for August 2013 fell into the 10 driest months, relative to estimated soil moisture levels for that month averaged over a 100-year period.



Upper layer soil moisture responds quickly to seasonal conditions and will often show a pattern that reflects the rainfall and temperature events of the same month. Lower layer soil moisture is a larger, deeper store that is slower to respond and tends to reflect the accumulated effects of events that have occurred over longer periods of time.

Relative upper layer soil moisture at the end of August 2013 (Map 3) was predominantly below average throughout most of the cropping regions in New South Wales and Queensland, and in northern and central Western Australia. Relative upper layer soil moisture during August 2013 was average to above average in the southern cropping regions in Western Australia, and most cropping regions in South Australia and southern Victoria.

MAP 3 Upper layer soil moisture, August 2013

Note: Relative upper layer soil moisture displayed for wheat–sheep zone only.Source: ABARES; Bureau of Meteorology (Australian Water Availability Project); CSIRO

South Australia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria


Tasmania

Relative soil moisturepercentiles

0–1010–2020–3030–4040–5050–6060–7070–8080–9090–100

Relative soil moisture in the lower layer at the end of August 2013 (Map 4) was average to above average in many areas of the cropping zone in the eastern states (including South Australia). However, large areas of the cropping zone in Victoria and some areas of New South Wales, Queensland and South Australia were below average, meaning producers will be reliant on timely in-crop rainfall in these areas. In Western Australia, most of the cropping zone had below average lower layer soil moisture. Producers in these areas are generally more reliant on in-crop rainfall due to the sandy nature of the soils.



MAP 4 Lower layer soil moisture, August 2013

Note: Relative lower layer soil moisture displayed for wheat–sheep zone only.Source: ABARES; Bureau of Meteorology (Australian Water Availability Project); CSIRO

South Australia

NorthernTerritory

Western Australia

Queensland

New SouthWales

Victoria


Tasmania

Relative soil moisturepercentiles

0–1010–2020–3030–4040–5050–6060–7070–8080–9090–100


FIGURE 1 Australian winter crop production

Mt

Western Australia

f ABARES forecast.

South Australia

10

20

30

40

50

Queensland

VictoriaNew South Wales

2013–14f

2011–12

2009–10

2007–08

2005–06

2003–04

New South WalesIn July rainfall was average in the New South Wales cropping zone, but during August below to very much below average rainfall was received. Above average rainfall in June lifted total winter rainfall to average or above average in most regions but such a concentration of rainfall is not ideal for crop production. Sufficient and timely rainfall in spring will be needed to achieve prospective yields.

Despite the unfavourable rainfall patterns over winter, a favourable start to the season in central and southern New South Wales has allowed for good crop development with the prospect of above average yields in most parts of these regions. As temperatures increase, crops will be drawing significantly on subsoil moisture reserves, so sufficient rainfall will be needed in September before soil moisture reserves are exhausted.

Total winter crop production in New South Wales is forecast to fall by 5 per cent in 2013–14 to around 10.4 million tonnes, assuming sufficient spring rainfall is received to achieve prospective yields. The total area planted to winter crops is estimated to have fallen by 4 per cent to around 6 million hectares.

Crop conditions and production forecasts by state



Total wheat production is forecast to increase by 2 per cent in 2013–14 to around 7.2 million tonnes. The area planted to wheat is estimated to have increased by around 4 per cent to 3.9 million hectares, which is expected to more than offset the effect of a forecast decline in the average yield. Barley production is forecast to increase by 3 per cent in 2013–14 to around 1.3 million tonnes, reflecting an estimated increase in planted area. Canola production is forecast to decrease by 39 per cent in 2013–14 to 900 000 tonnes. The area planted to canola is estimated to have decreased by 39 per cent this season to around 600 000 hectares, reflecting insufficient rainfall during the planting window.

Following a very dry period during July and August, adequate spring rainfall will be needed for summer crop planting intentions to be realised. If these intentions are realised, the area planted to grain sorghum is forecast to increase by 40 per cent in 2013–14 to around 200 000 hectares, reflecting high feed grain prices and the availability of fallow land.

QueenslandAbove average autumn rainfall provided a positive opening to the 2013–14 winter cropping season in Queensland. Most planting intentions were realised and there has been good crop development. However, below to very much below average winter rainfall, particularly throughout August, has placed winter crops in Queensland in a delicate position at the start of spring. Additionally, a widespread frost event in late August is likely to have a negative effect on both cereal and pulse yields but the extent of the damage is difficult to quantify at this stage. Generally, crops that have moisture reserves will recover better than those already suffering from moisture stress. In south-west Queensland, extremely dry conditions persisted throughout the season severely affecting crop prospects. Sufficient and timely spring rainfall will be crucial for prospective yields to be realised.

Total winter crop production in Queensland is forecast to fall by 4 per cent in 2013–14 to around 2.2 million tonnes. The total area planted to winter crops in Queensland is estimated to have increased by around 2 per cent to around 1.3 million hectares.

Wheat production is forecast to fall by 3 per cent in 2013–14 to around 1.7 million tonnes. The area planted to wheat is estimated to have increased by 2 per cent in 2013–14 to around 970 000 hectares. Barley production is forecast to increase by 2 per cent in 2013–14 to around 160 000 tonnes, reflecting an estimated increase in planted area. The area planted to barley is estimated to have increased by 6 per cent to 90 000 hectares in response to high feed grain prices and a promising start to the season.

Below to very much below average winter rainfall, particularly throughout August, has depleted soil moisture levels in the summer cropping regions of Queensland, which is expected to limit the planting of grain sorghum. Sufficient spring rainfall will be needed to realise summer crop planting intentions. If these planting intentions are realised, the area planted to grain sorghum in Queensland is forecast to increase by 3 per cent in 2013–14 to around 432 000 hectares in response to favourable feed grain prices.



VictoriaIn Victoria, generally good rainfall in late autumn and early to mid winter across most of the major cropping regions has resulted in good crop development. However, relatively dry conditions in late winter, particularly in the Mallee, and above average temperatures across northern Victoria, may reduce yields if sufficient spring rainfall is not received.

Winter crop production in Victoria is forecast to rise by around 7 per cent in 2013–14 to around 6 million tonnes, assuming sufficient and timely rainfall over spring to achieve average yields.

Wheat production is forecast to increase by 10 per cent in 2013–14 to almost 3 million tonnes, largely reflecting an increase in the average yield from last season. Barley production is forecast to rise by 15 per cent in 2013–14 to around 1.8 million tonnes, reflecting a 6 per cent rise in planted area to around 915 000 hectares and an expected increase in average yield from last season. Canola production is forecast to fall by 33 per cent in 2013–14 to around 521 000 tonnes, largely reflecting a 34 per cent fall in planted area to around 380 000 hectares. However, the average yield is expected to improve from last season.

South AustraliaGrowing conditions in South Australia have been largely favourable across the major cropping regions. Temperatures and winter rainfall were generally above average, with some areas experiencing very much above average rainfall. The rainfall replenished lower layer soil moisture levels and aided crop development. At the beginning of spring, most crops were in good to very good condition.

Total winter crop production in South Australia is forecast to rise by 34 per cent in 2013–14 to 8.8 million tonnes, primarily driven by the prospect of well above average yields. Additionally, the planted area is estimated to have increased by 1 per cent to around 4 million hectares.

Wheat production is forecast to rise by 43 per cent in 2013–14 to around 5.2 million tonnes, reflecting an expected 35 per cent increase in the average yield. Additionally, the area planted to wheat is estimated to have increased by around 6 per cent to just below 2.3 million hectares. Barley production is forecast to increase by 27 per cent in 2013–14 to 2.3 million tonnes. If realised, this will be the highest level of production since 2005–06. Despite an estimated 4 per cent fall in the area planted this season, yields are forecast to increase by around 32 per cent leading to the forecast rise in production. Canola production is forecast to rise by 6 per cent in 2013–14 to 429 000 tonnes, which would be the highest level of production on record. The forecast rise in production is expected to be driven by a forecast 18 per cent increase in the average yield. However, low levels of soil moisture during the planting window led to an estimated 10 per cent fall in the area planted to canola.



Western AustraliaRainfall in the Western Australian grains belt was mixed for the six months to August 2013. Below average rainfall was received in the northern regions, while rainfall was average to very much above average for much of the southern region of the grains belt.

Many regions across the grains belt had record low rainfall in June, significantly reducing crop prospects, especially in the northern and central regions. However, rainfall received over July and August in the central regions eased soil moisture deficiencies and revived winter crop prospects in these regions. Nevertheless, sufficient and timely rainfall is still required.

Reflecting the pattern of seasonal conditions, prospects for the winter crop in early spring were mixed among regions. The northern regions were forecast to achieve below average yields, while the southern and central regions were forecast to achieve average to above average yields.

Total winter crop production in Western Australia is forecast to increase by 6 per cent in 2013–14 to around 11.8 million tonnes, following last year’s drought-affected season. The area planted to winter crops is estimated to have increased by 2 per cent to 7.8 million hectares.

Wheat production is forecast to increase by 7 per cent in 2013–14 to 7.3 million tonnes. Mixed conditions across the grains belt are forecast to result in an average yield of almost 1.5 tonnes a hectare, which is below the five-year average to 2012–13. The area planted to wheat is estimated to have risen by 3 per cent to just under 5 million hectares. Barley production is forecast to increase by 8 per cent in 2013–14 to 2.1 million tonnes, largely reflecting a forecast increase in yields. Canola production is forecast to increase by 4 per cent in 2013–14 to around 1.5 million tonnes, reflecting a 3 per cent increase in the planted area.



TAB

LE 2

Aus

tral

ian

crop

pro

duct

ion

A

rea

plan

ted

Yiel

dPr

oduc

tion

av

erag

e a

2011

–12

2012

–13

s20

13–1

4 f

aver

age

a20

11–1

2 20

12–1

3 s

2013

–14

fav

erag

e a

2011

–12

2012

–13

s20

13–1

4 f

’0

00

ha

’00

0 h

a’0

00

ha

’00

0 h

at/

hat/

hat/

hat/

hakt

ktkt

kt

Win

ter

crop

s

Whe

at

13 6

1213

902

13 2

4313

712

1.82.

151.6

71.7

824

530

29 9

05

22 0

7924

467

Barle

y 4

103

3 71

83

680

3 74

71.9

22.

211.8

42.

05

7 76

78

221

6 76

17

673

Cano

la

2 18

32

461

2 98

82

405

1.22

1.39

1.36

1.38

2 71

93

427

4 0

563

310

Chic

kpea

s

490

456

574

508

1.23

1.48

1.43

1.32

587

673

818

669

Faba

bea

ns

154

151

203

178

1.68

1.77

1.86

2.1

264

268

377

374

Fiel

d pe

as

286

249

281

256

1.16

1.38

1.14

1.47

330

342

319

376

Lent

ils

155

173

164

168

1.29

1.67

1.12

1.47

212

288

184

248

Lupi

ns

633

689

450

387

1.19

1.42

1.02

1.19

756

982

459

459

Oat

s b

789

731

668

773

1.47

1.73

1.57

1.55

1 15

21

262

1 0

481

196

Triti

cale

25

314

525

824

51.6

41.9

71.6

61.7

339

528

542

942

4

Sum

mer

cro

ps

Gra

in s

orgh

um

624

659

565

634

3.21

3.4

3.0

53.

192

019

2 23

91

721

2 02

0

Cott

onse

ed c

401

600

442

434

2.72

2.82

3.17

3.23

1 0

761

694

1 40

31

400

Cott

on li

nt c

401

600

442

434

1.94

22.

272.

2876

81

198

1 0

0299

0

Rice

(pa

ddy)

6410

311

410

19.

518.

9110

.24

8.98

613

919

1 16

690

7

Corn

(mai

ze)

6770

8170

5.94

6.47

6.13

5.88

401

451

496

412

Sunfl

ower

37

4030

351.2

81.1

71.4

61.2

4647

44

42

a Fi

ve-y

ear

aver

age

to 2

012

–13.

b A

rea

harv

este

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Long-term growth in productivity is central to the continued viability of agricultural industries in Australia. Fundamentally, higher productivity enables farmers to produce more output using fewer resources. Productivity gains are therefore critical in maintaining the competitiveness of Australian agricultural industries in global commodity markets and provide a means by which farmers can increase their capacity to benefit from global opportunities, given limited resources.

Agricultural productivity reflects the efficiency with which inputs such as land, labour, capital, materials and services are used to produce outputs such as crops, livestock and wool. Growth in productivity can be thought of as an increase in outputs without a proportionate increase in input use, or equivalently as a reduction in input use without a proportionate drop in output. Such a change may reflect the adoption of new technologies or better organisation of production activities within or across farms.

ABARES estimates productivity growth for the broadacre and dairy industries in terms of total factor productivity (TFP) at the industry or state level, defined as the ratio of total market outputs to total market inputs. TFP captures the combined effect on productivity of changes in multiple inputs or outputs. As such, it is a useful indicator of changes in overall efficiency of agricultural production.

Productivity growth of cropping farmsProductivity of cropping specialists (including wheat and other cropping specialists) increased at an average rate of 1.5 per cent a year between 1977–78 and 2010–11, the highest of the broadacre industries (Figure 2, Table 3). Total outputs increased on average by 2.6 per cent a year, while total input use increased by 1 per cent a year on average. Mixed crop–livestock industry productivity grew at an average rate of 0.9 per cent a year between 1977–78 and 2010–11 through a reduction in both input use (1.8 per cent a year on average) and output (0.8 per cent a year on average). This reduction in inputs and outputs reflects shifts in the broadacre sector toward specialised crop or livestock production and away from mixed crop–livestock enterprises.

Grains industry productivity update



FIGURE 2 Cropping industry total factor productivity, 1977–78 to 2010–11

index

Crop specialistsAll broadacreMixed crop–livestock

50

100

150

200

250

Source: ABARES

2010–11

2006–07

2002–03

1998–99

1994–95

1990–91

1986–87

1982–83

1978–79

Long-term productivity gains have been achieved through the adoption of new technologies and management practices in the cropping industry (Hughes et al. 2011). This includes increased use of fertilisers, seed and crop chemicals, causing the materials share of all cropping inputs to more than double since 1977–78. Increased yields have also come from the introduction of low-till and no-till farming and the introduction of new crop varieties (Dunlop et al. 2004). A shift in the 1980s and 1990s toward much larger and more efficient sowing and harvesting equipment has been another key contributor to higher productivity (Nossal et al. 2009).

Increases in average farm size have facilitated productivity growth. The average area cropped per farm more than doubled over the last two decades, with the highest growth in area occurring in the western region (as defined by the Grains Research and Development Corporation [GRDC]) (Figure 3). Larger cropping farms tend to be more productive due to their greater capacity to adopt new technologies (Sheng et al. 2011), particularly advanced cropping technologies that are often only suitable for use on farms above a minimum size.

FIGURE 3 Average crop area sown, by GRDC region, 1988–89 to 2010–11

hectares

All cropping specialists

Western region

Northern regionSouthern region

500

1000

1500

2000

2500

3000

Note: Average crop area sown for all specialists includes those located outside GRDC agroecological regions.Source: AAGIS

2010–11

2007–08

2004–05

2001–02

1998–99

1995–96

1992–93

1989–90



Regional differencesProductivity growth rates for cropping specialist are similar across the three GRDC agroecological regions, in spite of significant differences in climate, soil fertility, farm scale and variety of crops (Table 3). Growth in both input use and productivity has contributed to strong output growth in the southern and western regions. In contrast, relatively low output growth in the northern region has been a result of productivity growth coupled with a decline in input use and lower input use. Mixed crop–livestock productivity growth in each region was primarily driven by a decline in input use, most significantly in the western and northern regions.

TABLE 3 Average annual cropping productivity growth by GRDC region, 1977–78 to 2010–11 percentage

Cropping specialists Productivity growth Output growth Input growth

All 1.5 2.6 1

North 1.7 1.1 –0.5

South 1.6 3 1.4

West 1.5 3.7 2.2

Mixed crop–livestock

All 0.9 –0.8 –1.8

North 0.6 –1.1 –1.8

South 1 –0.5 –1.4

West 1.2 –1 –2.3

Note: Estimates for all growers include those located outside the GRDC agroecological regions. Source: AAGIS

Changing sources of growthDespite its strong performance relative to other broadacre industries, cropping industry productivity growth has slowed in recent years (Table 4). Growth for cropping specialists has declined from moderate to high levels in the 1980s and 1990s to an average of 0.3 per cent per annum over the last decade. Poorer climate conditions post-2000 in particular have had a significant effect on the cropping industry, reducing the output of cropping specialists by 13 per cent post-2000, relative to output for the period 1977–78 to 1999–2000 (Hughes et al. 2011).

TABLE 4 Average annual cropping productivity growth by period percentage

Cropping specialists Mixed crop–livestock

1977–78 to 1987–88 3.2 1.2

1988–89 to 1998–99 1.0 0.8

1999–2000 to 2010–11 0.3 –1.0

Source: AAGIS



Changes in relative commodity prices may also have been a factor in the observed productivity slowdown. The collapse of wool prices and the wool reserve price scheme in 1991, coupled with rising grain prices, saw many relatively marginal operations shift from wool production back to cropping as well as an expansion of cropping in marginal areas. Although the expansion of cropping activity may have increased productivity initially for a variety of reasons, grain growers have suggested that high productivity growth was not maintained on the new area being cropped, particularly in areas susceptible to drought (Jackson 2010).

Other possible contributors include diminishing gains from both past advances in technology and key market reforms of the 1980s and 1990s that spurred significant industry restructuring and productivity growth (Productivity Commission 2010). It has been argued that much of the benefit to cropping industries from key advances and structural adjustment in past decades may have been realised (Jackson 2010; Mullen et al. 2012; Nossal et al. 2009). Australian growers have a strong culture of innovation and technology uptake and so tend to operate relatively efficiently (Hughes et al. 2011; Mullen et al. 2012). As a result, there may be limited scope in the near term for gains through structural adjustment and further adoption of existing technologies and best practice.

Together, these factors suggest that returning to historical growth rates (such as those observed in the 1980s and 1990s) may be more challenging in the future, and may increasingly depend on new sources of productivity growth. In particular, on-farm innovation and advances in key technologies may become even more important to productivity in the future.


ABARES 2013, Agricultural commodities, September quarter 2013, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra, September.

ABARES 2013, Australian crop report, no. 167, Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra, September.

Dunlop, M, Turner, GM & Howden, SM 2004, Future sustainability of the Australian grains industry, consultancy report for the Grains Council of Australia and Grains Research and Development Corporation, CSIRO Sustainable Ecosystems, Canberra.

Hughes, N, Lawson, K, Davidson, A, Jackson, T & Sheng, Y 2011, Productivity pathways: climate adjusted production frontiers for the Australian broadacre cropping industry, ABARES research report 11.5, Canberra.

Jackson, T 2010, Harvesting productivity: ABARE–GRDC workshops on grains productivity growth, ABARE research report 10.6 for the Grains Research and Development Corporation, May, Canberra.

Mullen, J, Tester, M, Goddard, M, Goss, K, Carberry, P, Keating, B & Belotti, W 2012, Assessing the opportunities for achieving future productivity growth in Australian agriculture, Australian Farm Institute, Sydney.

Nossal, K, Zhao, S, Sheng, EY & Gunasekera, D 2009, ‘Productivity movements in Australian agriculture’, Australian commodities, vol. 16, no. 1, pp. 206–16.

Productivity Commission 2010, Annual report 2009–10, Productivity Commission, Canberra.

Sheng, Y, Zhao, S & Nossal, K 2011, ‘Productivity and farm size in Australian agriculture: reinvestigating the returns to scale’, ABARES conference paper 11.06, presented at the Australian Agricultural and Resource Economics Society 55th Annual Conference, Melbourne, 8–11 February.

References

daff.gov.au/abares

Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)

Postal address GPO Box 1563 Canberra ACT 2601

Switchboard +61 2 6272 2010

Facsimile +61 2 6272 2001

Email [email protected]

Web daff.gov.au/abares

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