CANBERRA – Droughts and forest fires are among threats that may scupper Australia’s ambitions to bolster its farming sector into a A$100 billion (S$87 billion) powerhouse by the end of the decade.

The country just recorded its driest September, which is jeopardising the wheat harvest and forcing farmers to sell cattle.

This summer’s bushfire season promises to be worse than usual due to the El Nino weather pattern, while new pests, like the bee-killing varroa mite, are another hurdle.

The government forecasts that the production value of Australian agriculture will drop 14 per cent to A$80 billion in the year through June 2024 due to the drier weather and falling commodity prices.

In the longer term, climate change is adding to the challenges. Average rainfall has declined at least 15 per cent over the last half-century, while the bushfire season has become longer and more extreme.

While the A$100 billion goal – first announced in 2018 – might be possible by 2030, it would take a lot of factors like weather and commodity prices to line up, said Mr Michael Whitehead, executive director of agricultural insights at ANZ Group.

“When we got close to a A$100 billion last year, it was due to a perfect storm of circumstances,” he said. There is a “strong possibility” that won’t happen again for years, if not decades, he said.

The A$92 billion generated from agriculture in the year through June 2023 was a record, aided by the war in Ukraine boosting wheat prices. Cattle prices were also at historically high levels as farmers restocked their herds following a drought.

Agriculture accounted for 2.4 per cent of the 2021-22 GDP of Australia, one of the world’s biggest meat and grain exporters.

Policy to blame

Still, Australian farmers say it’s government policy that’s threatening the future of agriculture. “Right now, we’re facing an avalanche of bad ideas, that if seen through will see farmers walk off the land, and indeed see entire industries closed for no good reason,” National Farmers’ Federation President David Jochinke said at a conference in Canberra on Thursday.

Farmers are calling for the abandonment of plans to ban live sheep exports to the Middle East and the establishment of a dedicated visa pathway for agricultural workers. Other contentious issues include water buybacks in the Murray Darling Basin and environmental protection laws.

Agriculture Minister Murray Watt sought to defend government policies in a speech to the same conference, saying he was surprised by the federation’s position and that the government had taken actions to help farmers and improve access to foreign markets.

Climate change

Hundreds of growers and industry experts are gathering at the National Farmers Federation conference in Canberra from Thursday to discuss the challenges.

Mr Tony Mahar, chief executive of the industry body, said some downgrades to revenues should be expected over the next few years, with the livestock and grains sectors likely to be the hardest hit.

“We’re probably going to take a dip in the next year or so, given that prices have come off significantly and if we believe it’s going to be a hot and dry period, then that means production will come down as well,” Mr Mahar said.

Still, he said he remained optimistic that the industry would be able to meet, if not exceed, the 2030 production target. 

While climate change is threatening Australia’s agricultural revenue, the nation is still one of the biggest coal and natural gas exporters.

The election of Prime Minister Anthony Albanese’s Labor government last year had raised optimism that its reliance on fossil fuels would be lessened, but that has been dimmed by approvals to four coal projects since it took office.

Some farmers are more concerned with staying afloat than with the government’s lofty production goals.

Mr Justin Everitt, who grows wheat, canola, barley and lupins in northern New South Wales, said he was likely to produce 20 per cent less grain this year after his crops had started to rapidly dry since August.

“It’s nice to aim for big targets, but we need to make sure our farms are profitable first,” he said. BLOOMBERG