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Drought slices into Aust. farm exports
By Geoff Hiscock
SYDNEY, Australia (CNN) -- The long-running drought in Australia will trim farm production by 21 percent in 2002-03, the national commodity forecaster ABARE said Monday. ABARE executive director Dr Brian Fisher said the gross value of farm output would drop to Aust. $30.4 billion ($17.2 billion) in the year to next June. Earnings from farm exports would fall 13 percent to A$27.1 billion ($15.3 billion), he said. Fisher also slightly increased the forecast impact of the drought on Australia's economic growth rate, saying it would trim growth in 2002-03 by about 0.75 percentage points. That is up from the 0.7 percentage points envisaged by ABARE when it released its winter grain outlook at the end of October. (Full story) Much of Australia has been in the grip of a drought for the past 12 months, forcing farmers to slash the area they sow to crops and to trim their breeding herds of cattle and sheep. Some rain
Parts of eastern Australia had some rain in early December but this did little more than ease the acute bushfire threat. Farmers say that without follow-up rain in the next few weeks, the drought could be the worst on record for Australia. Two weeks ago, ABARE drastically downgraded its forecast for irrigated crops such as rice and cotton, saying the area sown to these two crops would likely be down 45 percent and almost 70 percent respectively on the previous season. (Full story) Fisher said Monday the drought would have a "significant" impact on economic growth through the direct and indirect linkages between agriculture and other industries. He said lower crop production would lead to lower export earnings for commodities such as wheat, barley, cotton and canola. Australia, which has been the world's No. 2 wheat exporter in recent years, is an important supplier of canola to Japan, and of wheat and barley to the Middle East, China and Japan. India is a big buyer of Australian lupins. ABARE has also predicted lower export earnings for beef and dairy products, largely because of lower prices on international markets. It said almost two-thirds of big Australian farms were suffering from drought conditions. Growth rateStill, even with the drought, Australia's economic growth rate is continuing to outstrip that of most of its OECD counterparts. Figures released last week by the Australian Bureau of Statistics show the economy grew a seasonally adjusted 0.9 percent in the September quarter, for an annualized growth rate of 3.7 percent from September 2001. (Full story) According to the ABS, economic growth in the September quarter was driven by consumer spending, business investment, inventory build-up and a buoyant construction industry. Further confirmation of that came with the release Monday of housing construction starts, showing they grew 9.3 percent to a record 46,000 new homes in the September quarter from the previous quarter. While the drought's economic and social impact is marked, particularly on inland towns and cities, economists note that the agricultural sector represents only 3 percent of the overall Australian economy. The value of mineral and energy exports in 2002-03, for example, is likely to rise 1.3 percent to A$56.2 billion ($31.7 billion), or twice that of farm sector exports.
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