Bright spots in agriculture amid market volatility
But there is reason for "cautious optimism" in the $90.7 billion sector as uncertain conditions create both threats and opportunities for the nation's producers, according to Bendigo Bank's mid-year agriculture outlook.
Cropping, horticulture and cattle were forecast to be on the up in the second half of 2025, while prices for sheep and wool would remain stable, the report released on Tuesday showed.
Aussie beef will continue to be on the menu in the US, where herd numbers are in decline due to drought and increased costs of agricultural inputs
"Demand for beef is set to remain firm as the US reduction in supply continues to favour Australian producers," Bendigo Bank executive Neil Burgess said.
Weather conditions have both helped and hindered production, as rainfall in NSW and Queensland improved soil moisture, boosted summer crop yields and gave winter sowing a strong start.
However, heavy rainfall and flooding in both states has damaged farm infrastructure and reduced livestock numbers in some regions.
At the same time, severe drought in parts of South Australia, Western Australia and Victoria has stifled production, upped the cost of feed and created a poor cropping outlook.
With varying long-term rainfall forecasts across the nation, weather will be key to performance in the final half of the year, the report said.
"The season so far underscores the growing unpredictability of Australia's agricultural climate, demanding resilience and adaptability across the sector from producers and the broader supply chain."
The environmental challenges have been exacerbated by uncertainty in global conditions, with tariff announcements from the US and China creating volatility in trade.
But those moves could improve the chances of a deal with the EU, which would be positive news for beef and lamb exports.
"Overall, the outlook for Australian agriculture is cautiously optimistic amidst the potential for improved seasonal conditions combined with rising consumer demand and lower interest rates," the report said.
"While the heightened uncertainty within the global trade environment remains a headwind for producers, processors and exporters alike, favourable trade terms and strong demand is expected to provide ongoing support."
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