AGRICULTURE has overtaken mining as the most important contributor to WA’s economy, according to a Bankwest business report.
The Bankwest Future of Business: Focus on Agriculture report, published as part of Bankwest’s Focus on Industry series, listed the agriculture sector as accounting for 2.4 per cent of gross State product last financial year.
It contributed 0.5pc to WA’s growth – more than any other industry sector, according to the report compiled from analysis of data provided by the Australian Bureau of Statistics, IBIS World and other reputable sources.
Gross value of WA agriculture last financial year, according to Bankwest, was $13.4b, a one-year increase of 18.1pc and a five-year increase of 39.4pc.
The State’s net income from agriculture last financial year was $3b, a 69.8pc annual increase and a massive 156.2pc increase over five years, it said.
Nationally, climate-aided farmers last financial year contributed a record $63.4b in revenue to Australia’s economy, a 15.6pc increase over the previous year.
Cropping remained the dominant agriculture revenue producer last financial year, accounting for 55.3pc, while strong livestock prices produced profits but without much change in production levels.
WA’s farmers led the nation in the year to June 30, producing 18 million tonnes of crops, a 27pc annual increase and more than any other State.
They will continue to lead NSW and South Australian counterparts – the two States closest to WA in agriculture production – this financial year, the report predicted.
Wheat clearly remained WA’s major crop with 10,000 kilotonnes produced last financial year, followed by barley at 4200kt, canola at 2200kt and oats at 750kt.
Nationally, there was strong revenue growth despite lower prices, with revenue from wheat production up 57.2pc, barley up 49.2pc and canola up 49pc.
Livestock revenue grew thanks to strong prices, with lamb best at 23.5pc revenue growth, wool revenue up 11.9pc and cattle revenue up 5.9pc.
Price rises are expected to offset a decline in crop production this financial year with malting and feed barley predicted by the report to benefit from the biggest rises.
It also predicted sheep and lamb prices could continue to rise steadily, but cattle prices may fall by up to 13.1pc.
The strong performance of the agriculture sector last financial year had attracted interest from corporate investors, which in turn will help improve its efficiency and returns on investment, the report pointed out.
“Falling commodity prices have brought a shift in focus from mining to agricultural investment,” the report said.
“Corporate agriculture and foreign investment has caused some farmers to invest in technology to drive cost savings and labour efficiencies,” it said.
“Innovations such as farm management software, satellite mapping systems, soil sensors, yield monitors and automated machinery are helping farmers remain cost competitive through productivity and production gains.
“Looking ahead, agriculture is set to attract greater corporate investment as the sector provides diversification against traditional asset classes,” the report said.
While corporates have taken a growing interest in the sector, 99pc of Australian agricultural businesses remain family owned and they hold 88pc of agricultural land.
“The experience in Canada and the United States suggests family businesses will remain just as relevant in agriculture,” the report said.
Just over three quarters of Australia’s agricultural revenue last financial year came from international buyers, with exports growing by 8.7pc to an estimated $48.7b.
Australia has also benefited from a 15.8pc decline in its trade weighted index during the five years to December 2017, making exports more competitive in international markets, the report pointed out.
This was likely to continue, it said, with Asia’s middle class projected to increase by 152.9pc by 2030 to 3.5 billion people and rising incomes driving increased demand for Australia’s premium quality agricultural products.
Bankwest general manager of business banking WA, Richard Bator, said growing WA’s share of international trade was crucial.
“Access to global markets outside of WA’s existing largest export destinations of Indonesia ($940.8m), China ($912.4m) and Vietnam ($833.5m) presents an unmissable growth opportunity,” Mr Bator said.
“Brokering free trade agreements (FTAs) with major countries importing Australian agriculture has the capacity to unlock more buyers for the industry.
“Recent FTAs with China, Korea and Japan have unlocked new revenue streams for parts of Australia’s agriculture sector.
“Promisingly FTAs are already being negotiated with Indonesia, the EU and the UK,” he said.
Mr Bator predicted technology would play a role in helping Australian farmers meet the challenge of supplying existing and new markets with quality food products at competitive prices.
“The future will be increasingly influenced by the role of agricultural technology and the greater adoption of drones, soil mapping software and driverless tractor technology,” he said.
“These advances will allow small to medium-sized farms to perform farming operations with lower risk.
“But as always, climate volatility and commodity prices will continue to have the greatest impact on farming bottom lines.”