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Strong ABARE export forecasts spur on Australian farmers

8 March 2007

AUSTRALIAN farmers are upbeat following positive reports this week of strong world commodity prices and the forecast by the Australian Bureau of Agricultural and Resource Economics (ABARE) to expect a surge in agriculture production and export values.

Holding steady for February, the Westpac-National Farmers’ Federation (NFF) Commodity Index, measuring the weighted world price of Australia's major agricultural commodities, also gave positive indications of solid market fundamentals supporting most commodities.

“ABARE's forecasts will lift the spirits of Australia's farmers, whose world commodity prices are now a substantial 7.8% above year ago levels, largely due to the strength of the world grain, dairy and wool markets,” NFF Vice-President, Charles Burke said.

At its annual Outlook conference this week, ABARE predicted that the value of agricultural exports would increase by 3.4% over 2007-08, taking export values to $27.2 billion. Their prediction took into account a projected increase in export earnings for most grains and oilseeds, cheese, lamb, beef and veal.

“Analysis indicates that grain farmers have been hit hardest by the drought with farm cash incomes the lowest they have been in 30 years. Unfortunately, around half of our producers are now facing the prospect of negative farm cash incomes.

“However, the ABARE outlook for agriculture will still go a long way in giving farmers confidence in forward planning and a much needed boost to meet the challenge of rebounding from such a poor season.”

Westpac's Senior Economist, Justin Smirk said: “ABARE's positive outlook is based on a number of factors all pointing in the same direction.”

“There is a robust global demand environment, historically low stocks (particularly for grains), rising demand from Asia and the rapid growth in industrial uses for agricultural commodities in particular bio-diesel and ethanol. It has been a long time since Australia farmers have faced such a positive global environment for their products.”

Compared with January 2007 levels, global prices in February lifted for Barley (0.2%), Canola (1.2%), Dairy (2.7%) and Wool (0.5%). Price falls were experienced for Cotton (-2.8%), Beef (-2.0%), and Sugar (-3.3%) while the price for Wheat remained unchanged. The overall weighted index decreased marginally by 0.4% during the month.

[ENDS]

The Westpac-NFF Index is weighted according to the value of Australian agricultural exports and includes only rural commodities – unlike other price indices that are overshadowed by oil, mineral and energy prices. It provides daily movements based on prices of Australia’s eight key farm exports – wheat, barley, beef, wool, cotton, sugar, dairy and canola – in both $US and $A.

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250

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