This Insights report describes the current state of Australian agriculture, with the aim of providing key information and statistics in one place. It covers eight key aspects of Australian agriculture: its role in the broader economy, trends in production, farm incomes, industry structure and productivity, climate change impacts and risk management, agricultural employment, sustainability and trade.
Agriculture’s place in Australia
Australian agriculture accounts for:
- 55% of Australian land use (426 million hectares, excluding timber production, in December 2023);
- 74% of water consumption (9,981 gigalitres used by agriculture in 2021–22)*;
- 13.6% of goods and services exports in 2022–23;
- 2.7% of value added (GDP) and 2.2% of employment in 2022–23 (Figure 1).
The mix of Australian agricultural activity is determined by climate, water availability, soil type and proximity to markets. Livestock grazing is widespread, occurring in most areas of Australia, while cropping and horticulture are generally concentrated in areas relatively close to the coast (Figure 2).
Figure 1 Selected contributions of agriculture
Note: ABARES has changed methods to calculate water consumption rather than water extractions of agriculture, forestry and fisheries. Water extractions are taken directly from a water source by a producer (e.g. irrigators diverting surface water from rivers or groundwater from aquifers). Water consumption captures water extractions as well as water use from all other sources (e.g. water service providers such as Murray Irrigation and other irrigation infrastructure operators).
*Includes agriculture, fisheries and forestry.
Figure 2 Agricultural production zones
Sources: Wheat-sheep zone – Australian Agricultural and Grazing Industries Survey, 2016, ABARES; Catchment scale land use of Australia – update December 2023, ABARES; ABS Agricultural Commodities, Australia, 2020–21 (cat 7121)
Agriculture accounts for over half of Australia’s land use so the sustainable management of this land is an important issue for both farm businesses and the general public. There are many sustainable land practices that have become standard for Australian farmers (Coelli 2021). For example:
- many broadacre cropping farms retain stubble (85% of farms), minimise tillage (68% of farms) and optimise the use of (and reduce reliance on) pesticides or fertiliser (65% of farms)
- many livestock farms are using a variety of grazing management systems such as cell, trip or rotational grazing (61% of farms) and setting a long-term groundcover requirement (61% of farms).
Australia has a diverse agricultural, fisheries and forestry sector, producing a range of crop and livestock products (Figure 3).
The breaking of a 3-year east-coast drought in 2020 has been followed by successive years of record-breaking production. Many agricultural regions transitioned from very poor to very good conditions within the span of a single season. This has been combined with very high commodity prices for almost all of Australia’s major agricultural products.
The gross value of agricultural, fisheries and forestry production has increased by 51% in the past 20 years in real terms (adjusted for consumer price inflation), from approximately $62.2 billion in 2003–04 to $94.3 billion in 2022–23. When including fisheries and forestry, the total value of agricultural, fisheries and forestry production has increased by 46% in real terms in the same 20 year period from approximately $68.5 billion in 2003–04 to $100.1 billion in 2022–23 (Figure 4)*.
Drivers of growth in the value of output over the past 20 years vary by sector.
- In cropping, producers have improved productivity by adopting new technologies and management practices leading to strong volume growth.
- In livestock, higher prices have been the main driver of growth, reflecting growing demand for protein in emerging countries and some temporary factors, such as drought in the United States and disease outbreaks such as African Swine Fever in meat importing countries.
Figure 3 Agriculture, fisheries and forestry value of production, by commodity, 2022–23
Source: ABARES
*(See Box 1.2 of the Agricultural Commodities Report for further information)
Figure 4 Agricultural, fisheries and forestry production, 2003–04 to 2022–23
Sources: ABARES; ABS International Trade in Goods and Services (cat. 5368); ABS Value of Agricultural Commodities Produced, Australia (cat. 7503)
Australian agriculture reached a record gross value of production in 2022–23 on the back of past reforms, investments in productivity and industry responses to domestic and global pressures. These factors placed the sector in a strong position to take advantage of historically high global commodity prices (Cameron & Greenville 2022).
Changes in Australian agriculture can be seen through compositional shifts in its output. Over the last 5 decades, production of horticultural commodities, meat, oilseeds and pulses have grown to account for much larger shares of production while wool and milk (the two largest livestock products) account for much less (Figure 5).
Figure 5 Agricultural production has changed, contributing to an overall increase in output
In the three years to 2019-20 Australia exported around 72% of the total value of agricultural, fisheries and forestry production. Export orientation of each industry can vary by commodity type. Wheat and beef, which are large sectors, are more export-focused than dairy, horticulture and pork (Figure 6).
In real terms the value of agricultural exports has fluctuated between $44 billion and $80 billion since 2003–04 (Figure 7). In 2022–23 Australia agricultural, fisheries and forestry exports reached a record $80 billion. Grains, oilseeds and pulses have been the fastest-growing export segment, growing at an average annual rate of 11% in real value terms between 2003–04 and 2022–23, followed by other horticulture (excludes fruit and vegetables) (5%), and meat and live animals (3%).
Figure 6 Australian agriculture is export oriented
Source: ABARES, following method outlined in Cameron (2017)
Figure 7 Real value of agricultural, fisheries and forestry exports by destination, 2003–04 to 2022–23
Biosecurity is the management of risks to the economy, the environment and the community from pests and diseases entering, establishing, and spreading in the Australian landscape. There are two groups of pests and diseases of biosecurity significance: the ones that are not found in Australia (exotic) and those already established. Through the combined efforts of the Australian, state and territory governments, industries, landholders, and the community, Australia’s biosecurity system reduces the risk of exotic pest and disease incursions and the impact of those already established. In the absence of these efforts, pests and diseases could cause more harm to people, animals, plants, and the environment.
Freedom from many of the world’s major pests and diseases provides agricultural industries with a significant trade advantage and is important for maintaining access to valuable export markets, as well as maintaining productivity.
Insights into the value of Australia’s biosecurity system can be gained by looking at the potential economic impacts of individual pest and disease incursions at the national level.
The value of biosecurity measures to prevent the entry of exotic pests and diseases can be seen in the economic costs they could cause should they enter. For example
- A multi-state outbreak of foot-and-mouth disease (FMD) is estimated to cost $80 billion over 10 years ($2020-21) (ABARES 2022).
- African Swine Fever becoming endemic in Australia, following its incursion, is estimated to cost between $0.4 and $2.5 billion ($2018–19) (Slatyer et al. 2023).
- An incursion of Pierce’s disease (Xylella fastidiosa) could cost the Australia horticultural industries between $1.2 billion and $11.1 billion over 50 years ($2017–18) (Hafi et al. 2021).
The value of biosecurity measures to contain the spread of an exotic pest is seen in ABARES modelling of Varroa impacts, which, with recent revisions, showed that the potential economic cost of Varroa can be reduced from $5.2 billion to $3.8 billion over 30 years ($2021-22) through measures taken to contain the spread (Hafi et al. 2012).
The value of new initiatives for managing established pests and diseases can be seen in the economic cost they still cause despite ongoing management measures. In an average year established vertebrate pest animals and weeds are estimated to cost Australian agricultural producers at least $5.3 billion, with weeds contributing 82% of the total ($2020–21) (Hafi et al. 2023).
Labour is a key input to Australian agriculture. According to the latest Australian Bureau of Statistics (ABS) Labour Force Survey (ABS 2024), the Australian agricultural sector employed 257,000 people on average over the four quarters to November 2023, up 2.4% from the previous year but down 0.7% from a decade earlier. Broadacre farming is the largest employer by industry, followed by fruit and tree nut growing, dairy farming, and mushroom and vegetable growing (Figure 8).
Figure 8 Employment by agricultural industry, November 2023 and November 2013
However, the ABS Labour Force Survey only focuses on the Australian resident civilian population and does not count the significant number of overseas workers employed in the agricultural sector (Capel 2024).
Variation in total employment on farms throughout the year occurs almost entirely through changes in the use of casual and contract labour. The number of casual and contract workers employed on farms peaks in late summer and is at its lowest in late winter, reflecting the timing of relatively labour-intensive operations, such as planting and harvest. Horticultural farms tend to use relatively large amounts of casual and contract labour at key times of the year (Figure 9), while broadacre and dairy farms tend to use this kind of labour to a lesser extent and more consistently through the year.
Figure 9 Horticulture farm labour use, July 2019 to June 2023
Australian cropping farms received record farm cash incomes in 2022–23. Increased average income for cropping farms was driven by high prices for commodities such as wheat and high levels of production in some regions offsetting lower crop production in other regions.
Dairy farms also received record farm cash incomes in 2022–23, primarily due to record milk prices, but partly offset by lower production as wet seasonal conditions and flooding in parts of eastern Australia hampered grazing and fodder production systems.
Incomes for livestock farms fell in 2022–23, because of lower prices for beef cattle, sheep, wool and lambs. Despite the decline, average incomes were estimated to have been around the long-term average in 2022–23.
Changes in farm cash income were not evenly distributed across farms. Larger farms tend to be more profitable, invest more, and generate a higher rate of return on capital than smaller farms. Moreover, larger farms have more capacity to reduce their costs through scale, and a greater ability to invest in productivity-enhancing capital additions. Industry performance is therefore increasingly driven by the performance of the largest farms (ABARES 2023b).
Figure 10 Average cash income per farm, by industry, Australia, 1999–2000 to 2022–23
In 2021–22, there were 87,800 agricultural businesses with an Estimated Value of Agricultural Operations (EVAO) of $40,000 or greater in Australia (ABS 2023a). Of these, there were an estimated 54,400 broadacre and dairy farm businesses with 62% classified as livestock farms, 30% cropping farms and 9% dairy industry farms. There has been a reduction in the number of farm businesses over time as average farm sizes have increased (Figure 11). There has also been a change in the mix of farm types, with the most substantial shifts being a rise in the number of cropping farms and reduction in dairy farms.
Figure 11 Number of broadacre and dairy farm businesses, 1979–80 to 2021–22
Productivity is a core measure of industry performance and a fundamental mechanism for boosting farm profitability and competitiveness. Australian broadacre farm productivity has averaged 1.0% average annual growth since 1977-78, however, in recent years, this growth appears to be slowing compared to the productivity gains achieved during the 1980s and 1990s — when structural adjustment and the adoption of labour-saving mechanisation was in full force (Figure 12). Broadacre productivity is also becoming increasingly volatile, as farmers face the headwinds of price fluctuations and increasingly unstable climate conditions.
Figure 12 Australian broadacre farm productivity, by pre and post 2000, 1977-78 to 2021-22
Achieving productivity growth will become increasingly difficult into the future as traditional channels for growth offer more marginal benefits. Farmers and policy makers will need to think creatively to identify and facilitate new sources of productivity growth and stay competitive.
There remains further scope for ongoing structural adjustment which has allowed the transfer of scarce land resources from low performance to high performance farms. This trend has in the past supported productivity growth and will be a key driver in future. Another key avenue for lifting productivity growth is R&D, which will be an increasingly important source of farm productivity. It is essential that the R&D system is robust, with good levels of investment, and a balance between private and public sector involvement. There must also be a stable balance between applied practical research and long term underlying developments. A strong R&D system will provide a foundation for farmers to innovate, adopt and apply the latest production techniques, and optimise their farm businesses. During 2022-23 total agricultural R&D funding was $2.32 billion, with 57% contributed from public funding and 43% by the private sector (ABARES 2024b).
Farmers have several avenues to lift their own farm productivity. Innovation and the adoption of technology is a core farm productivity driver and has proven potential for improving efficiency and producing more with less – for example, adoption of precision tractor equipment can optimise fertiliser, chemical and seed use, while saving labour inputs and increasing potential crop yields. Australian farms that innovate and adopt technology tend to achieve higher levels of productivity (Sauer & Moreddu 2020, Chancellor 2023). Smaller farms or those with lower financial capacity may still be able to innovate and benefit from new technology by hiring rather than purchasing, which Sheng and Chancellor (2019) found to be an important channel for productivity growth.
Australian agricultural producers manage significant variability, including a highly variable climate and volatile commodity prices. These factors generate substantial variation in farm output and incomes, greater than that experienced by farmers in most other countries and that experienced by business owners in other sectors of the Australian economy (Keogh 2012).
The effects of climate variability on farms are complex and can vary greatly across locations, farm types and sizes. On average, cropping farms face greater climate risk than livestock farms, whereas the risk associated with price variability is larger for livestock farms than cropping (Figure 13) Cropping farms are subject to large declines in production and revenue in drought years (due to reduced crop yields), while livestock farms can partially offset drought impacts in the short-term by increasing livestock sales (i.e., de-stocking, see Hughes et al. 2019). Exposure to climate variability and drought risk varies across Australia but is generally higher in drier in-land agricultural zones compared with high-rainfall coastal zones (Hughes et al. 2022a). Price variability can be managed by cropping farms better than livestock farms due to cropping farms having typically more diverse production and greater options for centralised marketing and storage.
Figure 13 Effect of climate and price variability on profit for Australian cropping and livestock
Australian farmers have a number of effective strategies for managing risks associated with short term fluctuations in climate, including maintaining relatively high levels of equity, liquid assets and borrowing capacity, using inputs conservatively, diversifying across enterprises and locations and earning off-farm income.
Many broadacre farms have substantial liquid assets relative to farm household income (farm cash income plus off-farm income). While larger farms hold higher average liquid assets per farm in absolute terms, small and medium farms hold higher average levels of liquid assets as a proportion of farm income.
Farm incomes are being adversely affected by longer term trends towards higher temperatures and lower winter rainfall. ABARES modelling (Hughes et al. 2022b) estimates that changes in seasonal conditions over the period 2001 to 2020 (relative to 1950 to 2000) have reduced annual average broadacre farm profits by 23%, or around $29,200 per farm. These impacts have been most pronounced in south-western and south-eastern Australia, with northern Australia and the coastal higher rainfall zones tending to be less affected (Figure 14).
Figure 14 Effect of recent (2001 to 2020) seasonal conditions on farm profit
While there is still much uncertainty over the long run impacts of climate change on Australian agriculture, climate model projections provide some insight into the range of climate futures, and adaptation pressures, farmers may face. ABARES has undertaken modelling to estimate the potential effects of deteriorating climate conditions on farm profitability under climate scenarios accounting for a 1.4°C and a 2°C increase in global mean surface temperature by 2065 (Hughes & Gooday 2021).
Projected impacts in the beef and sheep sectors under the 1.4°C scenario remain modest relative to climate driven decreases in profit experienced in the last two decades. However, negative impacts on livestock sector profits become much more significant under the 2°C scenario.
Cropping farms in Western Australia are more heavily impacted than those cropping in other regions under both future climate scenarios, mainly due to the more substantial projected declines in winter rainfall and the resulting effects on crop yield.
Globally, agriculture has a large environmental footprint. The sector accounts for around 50% of global land use, 73% of global deforestation, 70% of global water use and 34% of global greenhouse gas emissions (OECD 2023a).
Governments, investors and consumers are responding to this by increasing demand for sustainability credentials in global food systems (KPMG 2022; WEF 2023). For example, the European Union (EU) has implemented the transitional phase of a carbon border adjustment mechanism applied to emissions-intensive imports (currently excluding agricultural products). Some governments, including Australia, are also considering mandatory adoption of reporting standards for business, relating to climate risk and other sustainability criteria (CCA 2022; WEF 2023).
Australia’s major agricultural industries have anticipated these trends and developed sustainability frameworks, including annual updates from the Australian Beef Sustainability Framework and the ongoing development of the Australian Agriculture Sustainability Framework. Going forward, there is concern about the development of fragmented reporting landscapes and inconsistent sustainability criteria across markets, which has the potential to restrict trade and market access if unresolved (WEF 2023).
Sources of Australia's agricultural emissions
Australia’s farm sector emissions fluctuate each year, based on seasonal conditions. Since 2005, agriculture contributed between 12% and 17% of national greenhouse gas emissions (DCCEEW 2023a). Almost 80% of Australia’s agricultural emissions are methane, deriving mainly from cattle and sheep industries. Despite annual fluctuations, Australia’s aggregate agricultural emissions have fallen over time, largely reflecting a shift in commodity mix, from sheep to cropping.
Figure 15 Australia’s agricultural emissions by commodity
Australia's comparative emissions intensity
On many criteria, Australia’s agricultural industries demonstrate enviable sustainability credentials when compared internationally. For example, the average emissions intensity of Australian cattle and grains producers is estimated to be below the global average and lower than most major producers, and likewise for cattle and sheep.
Figure 16 Average emissions intensities, 2012–2021
Note: major producing countries for each commodity are shown, but international data availability limits the scope of countries displayed. For sheep and cattle, high and low estimates reflect assumptions for animal manure/urine deposits and application on fields.
Emissions reduction pathways
As the rest of the Australian economy decarbonises, agriculture's share of emissions is expected to increase from 17% in 2022 to over 25% in 2035 (DCCEEW 2023b). While it is recognised that the complexity and diversity of agricultural systems, within Australia and globally, makes the development and implementation of abatement technologies more challenging for agriculture (IPCC 2022; McKinsey & Company 2020), over time this rising share of national emissions will increase pressure on the sector to change production systems and invest to reduce emissions.
Figure 17 Australian emissions projections
While low-cost measures to reduce emissions exist, such as herd management and planting trees on farms (AgriFutures 2022), substantial reductions in agricultural emissions will require the development of products to reduce methane production from ruminant livestock (Black et al. 2021). Some technologies are currently being trialled in several countries, including Australia. However, cost remains an obstacle to widespread adoption, and future pathways for agriculture must recognise global food security, least cost approaches to decarbonisation and the need to enhance productivity and efficiency in global agri-food markets.
Farm support policies and emissions
Removing existing agricultural support policies, which distort global agricultural markets and impede productivity growth in the sector, is one practical way to improve sustainability outcomes. Currently around $630 billion a year is transferred globally in trade and production distorting agricultural support such as subsidies and tariffs (OECD 2023b). Removing this support can reduce the greenhouse gas emissions associated with food production by shifting production into more efficient products and countries, thereby contributing to improved agricultural productivity and less food waste (Fell et al. 2022; Cao et al. 2023). Doing so will also improve global food security, household welfare and economic growth. Australia is already doing its part, with very low levels of support to farmers. But ongoing effort in multilateral frameworks is required to achieve global benefits.
Figure 18 Impact of removing subsidies and trade barriers
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ABARES Insights: Snapshot of Australian Agriculture 2018
ABARES Insights: Snapshot of Australian Agriculture 2020
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