Horticulture boom on the back of wine grapes
Tuesday, 13 June 2017
Favourable climate conditions over the past year and a resurgent wine industry have led to a boom in horticulture prices in South Australia, according to the latest BankSA Rural Price Index.
The index reveals prices for horticulture products – including wine grapes, fruits and vegetables – soared by 22.9% over the past 12 months.
“Wine grapes are the largest horticultural crop in South Australia, and they’ve enjoyed a big 12 months thanks to good weather and the considerable price growth enjoyed by our wine producers over the past year,” said BankSA Regional Executive Manager Peter Panas.
“This increase in wine grape prices feeds into the broader resurgence of South Australia’s wine industry, and ends a long period of falling prices for the state’s wine where average prices fell 50% between 2008 and 2011.
“In addition to wine grapes, prices for South Australian fruits and vegetables are also up in the latest index, while positive growing conditions continue to increase yield and hence production of horticultural crops.
“Interestingly, prices for horticulture typically lag well behind those for grains and livestock in South Australia, however the past year has seen considerable growth in prices for this sector.”
The index also noted the major spring storms that lashed the state last year, which contributed to the surge in horticulture prices due to reduced supply.
“The spring storms that battered South Australia actually had the most significant single effect on the index,” Mr Panas said.
“They virtually wiped out the state’s potato crop and caused significant damage to berry crops and stone fruits. They also delayed many summer plantings, which further cut into the supply of horticulture products and put upwards pressure on prices.”
In terms of livestock prices over the past year, the index showed that South Australian cattle farmers enjoyed a 3.3% increase in prices, however grain producers saw prices drop 13.6%.
“The latest index confirms that the livestock and livestock products commodity group remains the biggest contributor to South Australia’s farm incomes, while the outlook for the state’s grains sector is positive, despite the recent drop in prices,” Mr Panas said.
“For many grain producers, it was again a case of higher production but lower prices, which producers can generally contend with so long as their output increases by more than prices fall.
“Significantly, production for the state’s major winter crops is expected to be above average in 2016-17 following a season of strong rainfall, with the Federal Government’s official farm forecaster ABARES expecting a 51% increase in wheat production in South Australia.
“Similarly, barley and canola production in South Australia in 2016-17 are expected to increase thanks to a sizeable lift in yield; barley production is tipped to be up by 60%, with canola production expected to rise by around 35%.”
Overall, Mr Panas said it had been a strong 12 months for South Australian farmers.
“Business conditions for South Australian farmers over the past 12 months have been reasonably strong, with the relative stability of the Australian dollar providing a solid platform for local producers,” he said.
The BankSA Rural Price Index has been tracking farm prices for South Australian farmers since 2000 and is a measure of prices received for grains, livestock and horticulture. It aggregates price movements across 17 products, which make up more than 80% of the state’s farm output, and informs South Australian farmers and farm industries how local farm product prices are faring.
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