The International Monetary Fund's commodity food price index of commonly traded soft commodities reversed a four decade trend to make a notable upward swing in farmers' favour during the past 10 years.
"Apart from peaks in grain prices, cotton is now at all-time highs, sugar is very strong and sheep meats have been very strong for the past two years," said Australian Farm Institute boss, Mick Keogh.
This compares with a long-term decline in the index of 40 typical farm commodities between the 1960s and 2000.
But while the price fundamentals augured well for agriculturally-rich Australia, Mr Keogh said the flow-on to farmers had been tripped up by a big jump in input costs.
Skilled labour had become more expensive and harder to secure in Australia because of losses to the mining sector, and fuel and fertiliser prices had boomed as the world demanded more food production.
Drought and water costs had also eroded farm earnings.
Exports have also been devalued by the Australian exchange rate as it almost doubled against the US dollar (from just US54.3 cents in late 1999) gradually eroding our farm export earning power and making imports cheaper.
Broadacre farm chemical costs were more competitive - helped by the cheaper imports from Asia and the expiry of Monsanto's sole rights to the glyphosate's licence - but specific chemical formulations were rising in cost.
Total chemical usage had also increased significantly in many farming areas as no-till farming has taken off and fungicides have become more widely employed.
