Australia’s agricultural sector is expected to experience a modest decline in production value during the 2026–27 financial year, although the industry is still forecast to remain close to historically high levels.
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released new projections on September 1 this year, estimating that by this year and the next (2026–27) the gross value of Australia’s agricultural production will fall by 5% to A$99.4 billion (US$71.6 billion). A record has been followed by the forecast, and it indicates that it was A$104.6 billion (US$75.4 billion) in 2025–26 but would still represent the second-highest agricultural production value on record.
Lower crops and livestock production act as the main drivers of the anticipated decline, along with weaker prices for some animal products. Agricultural export earnings are also expected to decrease by 5% to A$76.3 billion (US$55.0 billion), reflecting reduced production volumes across key sectors.
Despite the overall decline, several important farming regions have seen improvements. The weather of this winter, which became wetter than what was expected previously, has increased soil moisture and strengthened prospects for crops across parts of southeastern Australia. South Australia, Victoria and southern New South Wales have particularly benefited from favourable growing conditions, helping offset weaker conditions elsewhere.
The forecast of the national winter crop production in Australia is expected to go up to 61 million tonnes in 2026–27. While the forecast shows a 12% decline from the previous season, it would still be the fourth-largest winter crop harvest that has been recorded thus far. The winter, which no one expected to be this strong, has also resulted in an improved outlook compared with earlier forecasts released during the year.
However, agricultural conditions continue to be uneven all throughout the country. Northern New South Wales and Queensland have faced less favourable weather, characterised by lower rainfall and limited soil moisture, which has negatively impacted planting and yield expectations. The developing El Niño conditions could also bring drier weather to some parts of Australia during spring, although the exact impact remains uncertain.
Major crops are expected to experience different kinds of outcomes. Wheat production is expected to decline by 17% to 29.9 million tonnes, mainly due to a reduction in the area planted. Canola production is also expected to fall by 5%, while cotton production is expected to decline slightly due to reduced water availability and a smaller planted area.
Summer crops face an even more difficult outlook. National summer crop production is forecast to fall by 25% to 3.4 million tonnes, with lower irrigation water availability and dry soil conditions. And this will no doubt end up affecting the planting decisions. Cotton and rice production are among the sectors expected to be particularly affected.
Farming profitability could face even greater pressure than before. Average broadacre farm business profit is forecast to decline by 39% to around A$133,000 per farm, as falling revenue combines with continuing high operating expenses. Fertiliser and other agricultural inputs remain an important concern for producers.
While the latest projections indicate a decline from the performance of last year’s record, Australia’s agricultural industry continues to demonstrate and show considerable resilience. Improved winter rainfall in key regions has prevented a sharper downturn, while production levels remain historically high. However, the months ahead will be closely watched as changing weather patterns, availability of water and costs which keep rising continue to shape the outlook and final outcome for one of the country’s most important economic sectors.
