Australian wool men expect tough year

By Boyd Champness

AUSTRALIAN farmers can expect little improvement in prices and demand from overseas markets this year, according to official Federal Government forecasts.

The Australian Bureau of Agricultural and Resource Economics (ABARE) – the Government body responsible for predicting the future prospects of Australian commodities – last week delivered a subdued outlook for the farm sector.

In the coming year, livestock, beef and crop producers are likely to hold their ground but woolgrowers can expect another tough year with overseas demand remaining weak.

Wool prices, which have been disastrously low for the past three years, are tipped to increase by just eight cents to A$5.28/kg (£2.05/kg or US$1.52/lb) in 1999-2000.

In the following financial year, the price is tipped to rise by a further eight cents again, according to a report in The Age newspaper.

This is a far cry from the heady days of the 1980s, when woolgrowers could expect a minimum of A$8.70/kg thanks to a Government guaranteed floor price. Prices have dipped as low as A$4.65/kg in recent months – a five-year low.

The growing number of farmers abandoning the wool industry could drop Australias production next year to its lowest level since the early 1950s, according to the Stock and Land.

ABARE and the Australian Wool Production Forecasting Committee both believe production could fall as low as 605m kg greasy for 1999-2000.

If proved correct, the new production figure will represent a 42% decline in the wool clip over the past 11 years as woolgrowers switch to other, more profitable pursuits, such as grain and prime lambs.

The new forecast represents a fall of 31m kg on this years 636m kg estimate and a 50m kg fall on the 1997-98 production of 655m kg.

The predicted decline comes as no surprise to woolgrowers who have seen their industry self-destruct over the past decade.

In the past seven years the Australian sheep flock has been cut by 30% and almost a quarter of all woolgrowers have abandoned the industry.

Sheep numbers in March 2000 are forecast to be about 115 million, the lowest since 1952. The losses have occurred despite 31 inquiries into the wool industry since 1961. And 1999 has the ignominy of hosting the 31st inquiry.

In its forecast for the beef industry, ABARE said increasing exports to Japan and the United States should push the price for Australian cattle to an average of A$2.03/kg (79p/kg or 58US¢/lb) in 1999-2000.

Beef exports are tipped to increase to A$2.8 billion in the next financial year. In the medium term, demand from Asia is expected to increase slightly, offering a decline in exports to the USA.

Demand for Australian beef from Japan over the same period is expected to be “subdued” while the South American market is tipped to recover strongly, according to the ABARE report in The Age.

Lamb prices will improve by 8% to $1.85/kg as a result of a decrease in the number of sheep-meat farmers.

Lamb exports, however, are predicted to fall by 7% to 71,000 tonnes in 1999-2000. Mutton exports are also tipped to fall over the next five years as Australian farmers diversify into more profitable agricultural practices.

Wheat prices are expected to rise by about A$10/t to A$185/t (£72/t or US$117/ton) in 1999-2000. Little change in this price is expected before 2003-04.

Wheat exports are not forecast to exceed the 18.3 million tonnes shipped in 1996-97 before 2004. The total area under crop in Australia is projected to reach a peak of 11.9 million hectares in 2003-04

The production of barley is expected to decline in the next financial year, but should improve between 2001-04 as Asian markets start to shake off the last of their economic woes.

Australian dairy exports, which have boomed over the past decade, are tipped to reach a record A$2.18 billion this financial year before declining over the next five years.

The net value of Australian farm production is expected to increase from A$3.46 billion in 1998-99 to A$3.59 in 1999-2000.

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