Drought hits crop forecast

A dry winter has hit farmers hard, with winter crop forecasts revised down, according to ABARE’s September Australian Crop Report released this morning.

Winter grain production in 2007-08 is now forecast to total 25.6 million tonnes, compared with 37 million tonnes forecast in June.

“This is 27% below the five-year average, but well above last year’s severely drought affected crop,” says Karen Schneider, ABARE’s acting executive director.

Most cropping regions of Australia recorded below to very much below average winter rainfall. The biggest decline in yield potential has occurred in New South Wales and South Australia, reflecting below to very much below average winter rainfall and virtually no September rainfall to date.

“Of the major winter grains, wheat production is forecast to be around 15.5 million tonnes in 2007-08, around 28% below the five-year average but well above the 9.8 million tonnes harvested last year,” Ms Schneider said.

Last night Prime Minister John Howard announced that farmers would get another $430 million in drought aid as part of federal cabinet’s new policy package. It includes $90 million for about 4000 drought-stricken farmers in Tasmania and Western Australia who previously have not received aid.

There are concerns that the reduced crops will put upward pressure on prices of wheat and other foodstuffs and flow through to higher inflation.

The ABARE report found that barley production in 2007-08 is forecast to reach about 5.9 million tonnes. Although this is a significant increase in production from 2006-07, it is well below the five year average.

The forecasts are dependent on receiving spring rainfall to stabilise yields at current estimates. Total summer crop area is forecast to increase by 36% to just over one million hectares in 2007-08. However, this is still 30% below the five-year average.