Australia’s Agriculture Crisis: Wheat and Barley Harvests Plunge 33% – Experts Raise Alarm!

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Severe El Nino weather patterns threaten Australia’s agricultural sector, with a 70% chance of scorching droughts and plunging crop yields, spelling trouble for food producers across Asia and signalling potential disruptions to global supply chains.

Australia’s agriculture sector is bracing for a significant decline as winter crop production takes a hit. The country’s agricultural department has warned that wheat output is set to decrease by over 30%, primarily due to anticipated dry conditions caused by the El Nino weather pattern.

As the world’s second-largest wheat exporter, Australia heavily relies on the Asian market, including buyers from China, Indonesia, and Japan.

Wheat, Barley, and Canola Facing a Downward Spiral, Posing Challenges for the Business of Agriculture

According to the latest June crop report from the Department of Agriculture, Fisheries, and Forestry, Australia’s total winter crop production is projected to decline by 34% to reach 44.9 million tonnes during 2023-24. This figure is approximately 3% below the 10-year average recorded until 2022-23, which stood at 46.4 million tonnes.

The report highlights that wheat and barley production will experience a substantial drop of 34% and 30%, respectively, resulting in outputs of 26.2 million tonnes and 9.9 million tonnes. Both figures fall below the 10-year average. Canola is also expected to decline 41% to reach 4.9 million tonnes, although it will remain 15% higher than the decade average.

These developments in Australia’s agricultural sector have significant implications for the business landscape and highlight the challenges faced by the industry.

“In the past three years, Asian millers have enjoyed abundant Australian wheat supplies. However, they will need to seek alternative sources for the upcoming year,” commented a trader based in Singapore, representing an international trading company that supplies Australian wheat to Indonesian mills.

“While it may be premature, there are possibilities of sourcing wheat from Europe, the Black Sea region, and even the United States as substitutes for Australian wheat.”

El Nino’s Heatwave Threatens Asian Harvests: Australian Agriculture Braces for Dry Spell and Dwindling Yields

Australia’s Meteorological Agency reported a 70% likelihood of an El Nino weather pattern emerging this year, known for its association with hotter and drier conditions.

The El Nino phenomenon and the ensuing dry weather pose a significant threat to food producers in Asia, particularly impacting Australian wheat, palm oil, and rice production in Southeast Asia.

Although the area allocated to winter crops will decrease, it will remain historically high at 23.3 million hectares. Wheat and canola plantings are expected to decline by 2% and 11%, respectively. However, barley plantings are projected to increase by 4% to 4.3 million hectares due to their ability to withstand drier conditions.

The decrease in yields will exert pressure on the overall value of agricultural production, with a forecasted decline of 14% to A$79 billion ($52 billion) in the 2023-24 period. Nevertheless, according to the June report on agricultural commodities released by the same department, this remains the third-highest value on record.

Agricultural exports are also anticipated to experience a significant decline from record levels, dropping by 17% to A$65 billion in 2023-24 due to reduced production and global price fluctuations in grains and oilseeds.

In contrast, summer crop production, encompassing sorghum and cotton, is estimated to decrease by 8% to 5.1 million tonnes during the same timeframe but will remain well above the past decade’s average.

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