Boston, MA -- (SBWIRE) -- 08/05/2013 -- The Australian agriculture sector is recovering from a decade of subdued production growth due to extreme weather and a lack of investment. The industry is expected to remain buoyant in 2013/14, largely supported by export demand from Asia and higher prices for grains and oilseeds. In the longer term, we see major export growth opportunities in the sugar and livestock sectors. Although Australia will face stiff competition from Asian countries such as Thailand for sugar, and from the US and Brazil for meat, the country will remain a key player in those industries. As well as facing growing competition in its own region, Australia will very likely see high production costs and a vulnerability to extreme weather events.

Key Forecasts

- Beef production growth to 2016/17: 9.3% to 2.3mn tonnes. We expect Australia to remain a strong exporter of the meat over the long term despite growing competition from the US.
- Sugar production growth to 2016/17: 25.0% to 4.7mn tonnes. Industry consolidation will encourage economies of scale and boost output over the forecast period. Export opportunities to Asian countries will also support investment in the sector.
- Wheat production growth to 2016/17: -12.6% to 26.1mn tonnes. The decline will result from high base effects, as 2011/12 production was strong. Although export opportunities in Asia will generate incentives to increase production, resource constraints will limit growth.
- BMI universe agribusiness market value: US$24.4bn in 2013; down from US$27.5bn in 2012; growth expected to average 0.3% annually between 2012 and 2017.
- 2013 real GDP growth: 2.1%; down from 3.7% in 2012. Forecast to average 2.4% from 2013 to 2017.
- 2013 consumer price index: 1.9% average; up from 1.7% in 2012. Forecast to average 2.4% from 2013 to 2017.
- 2013 central bank policy rate (average): 2.25%; down from 3.00% in 2012. Forecast to average 2.20% from 2013 to 2017.

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Key Industry Developments

Following a wave of investment in Australia's sugar industry, 75% of Australian sugar milling capacity is now foreign-owned, compared with just 16% in 2010. These investments are a sign that Australia boasts a highly attractive sugar sector, characterised by a high efficiency and low costs. However, concern is growing among cane growers over the possible push by foreign-owned millers to bypass the traditional sugar marketing body Queensland Sugar Limited (QSL) in order to sell their own sugar directly. The growing bypassing of QSL and disagreement between farmers and millers could create hurdles to the supply of sugar cane to mills.

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