Australia’s drought impacts Ag exports
Australian export earnings from agriculture are set to fall 4.5% over FY2019 and FY2020 as weaker production, stemming from the drought in eastern states, more than offsets the broad pickup in global prices.
Agriculture is Australia’s third largest export earner behind hard commodities and services. In particular, drought has weighed heavily on wheat production
and will likely cause a 22% fall in export earnings over FY2019. While wheat exports are expected to bounce back strongly over the next couple of years
as production returns to pre-drought levels, record Argentinean production provides some risk to the export outlook. The unseasonably dry conditions
are also expected to weigh on beef exports (down 11% over the next 18 months), along with cotton and wool receipts (down 30%). However, the Australian
Bureau of Agricultural and Resource Economics (ABARES) expects agricultural exports will recover over the medium term, expanding 3.3% p.a. to reach
A$55.5b by FY2024 (Chart).
Other topics covered in the March edition of World Risk Developments:
- China—New stimulus amid economic slowdown sees longer term risks
- Myanmar—Security risks erode export opportunities
- Russia—Potential new US sanctions mar the muted outlook
- Low income countries—Increased debt levels raise vulnerabilities
- Nigeria—Economic prospects remain dim despite a Buhari win