Climate change has already cost every farm across Australia $30,000 each year in profit over the past two decades, according to the Australian Bureau of Agricultural and Resource Economics and Sciences, and profits could slashed in half by 2050 due to ongoing environmental changes.
However, ABARES’ latest Insights report also found that Australian farm productivity has increased, with broadacre farmers producing almost 30% more than in 1989, and the cropping sector has seen a huge gain of 68%.
ABARES executive director, Jared Greenville said farmers have made “some remarkable progress in adapting to these hotter and drier conditions”, which he said he said had been “pretty rough for Australian farmers”.
“New technologies and practices mean that farmers are able to grow crops under lower rainfall conditions than they could in the past.”
But the major finding was that the dwindling rainfall from 2001 to 2021 slashed profits by 23% on average – or $29,200 – compared to the preceding 50 years.
“Lower average rainfall and higher average temperatures have had a negative impact on farm productivity and profit.”
The study considers a range of climate scenarios for 2050 and simulates the potential effects on Australian farmers given current technology and prices. Results suggest that Western Australian cropping farmers may face more pressure than those in eastern Australia, that in-land or “marginal” farming regions could be more exposed to climate impacts, and that livestock farms may face more pressure under severe climate scenarios due to higher temperatures.
Average farm profits are between 2% and 50% lower under these future scenarios compared with the historical climate.
The 2020 State of the Climate report from the Bureau of Meterology and CSIRO found Australia’s climate has warmed on average by 1.4°C since 1910, with most of this occurring since 1950. There has also been a decline in April to October winter season rainfall in of 20% in south-western Australia since 1970, and of 12% in south-eastern Australia since 2000.
“Climate projections suggest that nationally farmers could experience reductions in average winter season rainfall from as little as 3% to as much as 30% by 2050 relative to pre-2000 levels,” Greenville said.
The proportion of Australian farmland devoted to cropping has increased dramatically over the last 30 years, albeit the trend has slowed, with signs of a decline in cropping activity driven predominantly by declines in parts of New South Wales and South Australia in recent years.
That reflects a shift away from cropping in marginal parts of the Australian cropping zone that reflects both the long-term shift in rainfall patterns and more recent increases in livestock prices, the report said.
“Despite the recent falls in cropping area, farm profit drought risk has continued to increase due to an increase in drought sensitivity within the livestock sector. This reflects an extended run of poor conditions in many livestock areas since 2015–16, which has reduced livestock herds and hay and grain stocks: increasing the drought risk faced by these farms in the short run,” the report said.
As farm profit drought risk has increased, farm household income drought risk has remained relatively stable over time largely because farm household financial stress is only weakly related to drought impacts and is driven more by factors such as farm size and off-farm income.
Greenville said that there is still a lot of variation in projected outcomes at present, due largely to uncertainty over future rainfall levels.
“This uncertainty over future rainfall is itself an important constraint on farmer adaptation,” he said.
“While farmers have made significant progress to date, further adaptation will be required to maintain our competitiveness, particularly if other nations are not impacted to the same extent.
“Investments being made now in research, development, climate data and information will all be crucial in preparing the sector for the future.”
