Latest ABARE review: price recovery continues, wool makes a comeback

Grain prices will remain healthy and wool will be back as a serious player, according to the Australian Bureau of Agricultural and Resource Economics.

In the latest review of the Australian grains industry, which was commissioned by the Grains Research and Development Corporation, ABARE officers Peter Connell and Steven Hooper say that projected higher prices are linked to lower world grain stocks.

That’s the good news for growers. Less bullish is the ABARE forecast that, in the absence of any serious climatic disturbances, prices in real terms for cereals are “projected to remain little changed over the medium term” (to 2005-06).

“For wheat, the estimated ASW 10 net pool return is forecast to increase to around $210/t over the next two seasons, measured in 2000-01 dollars, but then ease back by 2005-06 to around 1999-2000 levels of around $192/t,” Messrs Connell and Hooper say

No doubt, grains bolster farm income

The review shows very clearly how Australian farmers turned to the grains industry in the 1990s to improve their incomes.

For grains industry farms, the average area planted to grain increased by 51 per cent in the 10 years to 1999-2000 — most of this growth being in response to the profitability of graingrowing relative to other enterprises, and to productivity gains being made by farmers.

Today production of cereal grains, pulses and oilseeds accounts for about 24 per cent of the annual gross value of farm production in Australia — up a significant 5 per cent on the figure of a decade ago.

The question for grain industry planners and participants is: will this growth continue?

The rate of any transfer of resources from cropping back to wool is expected to be limited, according to the report.

Program 2.1.1

Contact: Mr Peter Connell 02 6272 2042; Ms Rhonda Treadwell 02 6272 2043