SA farmers faring well in face of COVID and other challenges: BankSA

SA livestock producers have benefited from higher export prices, as African swine fever pushed up beef prices in global markets.

With most Australian-produced beef bound for overseas, the increasing export price has had a flow on effect in domestic markets. There have also been shortages of pork products both internationally and domestically, with prices also higher.

As COVID-19 affects global supply chains, demand is changing across sectors as consumption patterns alter, with restaurants and cafes closed in many countries, and more meals prepared at home. Social distancing patterns and lockdowns have also impacted food processing in many countries.

BankSA Agribusiness head Les Ryan said exports were likely to be affected by lower household incomes in the emerging middle class across key Asian markets.

"Coronavirus has had an impact on demand, and it will have an ongoing impact on markets, with export prices for some products likely to fall," he said.

"However, while we continue to enjoy a lower Australian dollar compared to six and 12 months ago, this will mitigate the impact for many SA farmers and boost their competitiveness at the same time."

Overall, the Rural Price Index across SA's three commodity groups rose slightly for crops and grains, recorded a slight fall for livestock and livestock products, and decreased for horticulture in the six months to March.

The ABARES February Crop Report found SA winter crop production for 2019-20 increased by 12 per cent compared to 2018-19, with wheat increasing by 8.5pc, barley by 21pc and canola by 15pc. Despite good production growth, the 2019-20 figures are still well below their 10-year average.

SA grows close to 25pc of the nation's barley and farmers have been encouraged by the growth in winter crops.

Despite China's decision to introduce an 80pc tariff on barley imported from Australia, Mr Ryan did not believe it would have a significant impact on the state's agricultural sector.

"While it may reduce demand for Australian barley on a national scale and cause market pricing adjustments, most of our barley exports originate in WA," he said.

"SA farmers are not as reliant on barley exports with their cropping programs generally being more diversified."

Despite the overall grains index decreasing since January due to the fall in world prices, drought conditions have resulted in a greater proportion of Australian wheat being consumed domestically.

The Rural Price Index also found the gap between the price SA farmers receive compared to what foreign buyers pay was reducing, which could be attributed to the lower Australian dollar.

From January to March, the price received by SA farmers for grains fell by 1.5pc, compared to an 8.9pc decrease in foreign prices paid.

The SA wine industry took a significant hit over the six months to March, with challenges including extreme heat, early frosts, wind around flowering time, bushfires and smoke taint.

The South Australian Wine Industry Association has anticipated a 50pc reduction in this year's yields in the Adelaide Hills and on Kangaroo Island, and up to 80pc in the Barossa and Clare valleys. The Riverland has fared better, with an estimated reduction of only 16pc.

Positive signs in the wine industry include a vintage spread across a longer timeframe, meaning fruit had time to ripen well, with hopes quality will be high.

The wine industry has also faced further challenges wrought by COVID-19, with social distancing enacted in production facilities, and tourism and travel restrictions forcing many cellar doors and restaurants to close.

Australian Grape and Wine Inc has estimated that up to 30pc of wineries could go out of business due to COVID-19, with the impact to be felt across the supply chain and the distribution network, causing flow-on effects to the restaurant and catering industries.

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