Posted on: February 12, 2025
What’s Shaping the Future of Australian Farming in 2025?
Do you run a cattle and beef, cropping, dairy, horticulture, wool property, or another type of agricultural operation? Then, this article is for you! We’ll be delving into what 2025 has in store for your sector.
Chances are, you may be grappling with significant climate challenges, from drought conditions in South Australia and Tasmania to favourable rainfall in Queensland and New South Wales, for example.
El Niño and the Southern Annular Mode (SAM) are among the factors driving these extremes. They’re reshaping production and resource availability. For farmers, this means you’ll continue to need to integrate climate resilience into your business strategies. No surprises there.
Key trends to watch include:
- Rising temperature
- Reduced cool-season rainfall
- More frequent extreme heat events
They’ll all put a strain on productivity and water resources, so planning for these challenges is a priority for ensuring long-term viability.
Navigating Economic and Trade Dynamics
The global trade environment remains a cornerstone of Australian agriculture, with easing freight rates and strengthening trade relationships offering some stability. Improved relations with China are benefiting key sectors such as wine, barley, and red meat, while a weaker Australian dollar boosts competitiveness in export markets. In January, the Aussie dollar hit a five-year low.
However, the landscape always has risks. Geopolitical uncertainties, including potential U.S. tariffs under the new administration, reinforce the importance of diversifying export markets.
Consider how you can wield proactive strategies to deal with these potential disruptions and navigate economic volatility with more confidence.
Commodity Outlooks Highlight Mixed Prospects
Across various agricultural commodities, 2025 presents a mixed bag of opportunities and challenges.
In the cattle industry, while the national herd is estimated to have decreased by 1.4% last year, bringing the total to 30.2 million head—a reduction of over 400,000 head—beef production is expected to reach record levels in 2025. That’s according to Meat & Livestock Australia (MLA). This increase is due to higher turn-off rates and improved carcass weights, supported by strong global demand, particularly from the US. Australian beef exports are projected to grow significantly, with a 41% increase expected by 2025, reaching approximately 1.7 million tonnes.
Similarly, above-average wheat and barley production is meeting robust global demand, though quality may vary regionally. Australia’s wheat production for the 2024/25 season is forecasted at 31.9 million tonnes, a 23% increase from the previous season and 20% above the 10-year average. Barley production is projected at 11.7 million tonnes, reflecting an 8% rise from 2023-24 and 3% above the 10-year average. However, heavy rainfall in late November 2024 has raised concerns about grain quality, particularly in southern NSW and Victoria. Initial estimates suggest that 2-3 million tonnes of wheat may be downgraded due to these weather impacts, potentially affecting export values despite strong demand globally.
The horticulture sector in 2025 is projected to reach a record gross value of $17.8 billion, up from $17.16 billion in 2024. That’s due to strong export demand for fruit, nuts, and vegetables (agriculture.gov.au). Almond exports alone are expected to surpass $1.3 billion, reflecting their growing global popularity (horticulture.com.au). However, challenges such as market saturation—evident in avocado oversupply—and high labour costs continue to pressure growers, particularly in expanding international markets.
The Australian wool industry is projected to remain in a holding pattern through 2025. Production is tipped to fall to its lowest level in over a century, to below 280 million kgs by mid-2025.
This downturn is attributed to subdued global demand, particularly from key markets such as China and Europe, due to ongoing economic challenges. Consequently, wool prices are anticipated to remain relatively stable, awaiting an uptick in consumer demand.
To navigate these challenges, the industry is focusing on strategies which include:
- Market diversification
- Expanding domestic processing
- Promoting wool’s sustainability credentials
Emerging Challenges and Opportunities
Sustainability is a focus in 2025. Mandatory emissions reporting began on January 1, 2025, and is reshaping agricultural operations, presenting both challenges and opportunities for farmers. You can find out more from the official government website.
Challenges for Australian Farmers
- Reporting Burden: While many farmers may not be directly required to report, they will likely need to share emissions data with larger companies in their supply chain
- Financial Strain: Smaller farms may face increased costs associated with measuring and managing their emissions, and
- Technical Complexity: Farmers will need to understand and implement tools like the Greenhouse Gas Accounting Framework (GAF) and the FarmPrint system to assess their emissions.
Opportunities and Incentives
- Proactive Preparation: Farmers can get ahead by understanding their emissions ‘number’ before it becomes a requirement
- Market Access: Those who can demonstrate lower emissions may have improved access to environmentally conscious markets and supply chains, and
- Financial Advantages: Banks like Rabobank and NAB are incorporating sustainability metrics into lending decisions, potentially offering better terms for low-emission farms.
Biosecurity is another hot topic. Recent outbreaks, such as the tomato brown rugose fruit virus, and varroa mite, have highlighted the need for vigilance to protect both domestic supply and export markets. Staying informed and proactive about biosecurity measures is critical for safeguarding your operations against emerging threats.
Positioning for Success in 2025
With 2025 shaping up to be a transformative year for Australian agriculture, adapting to change is on the sector’s agenda. Climate resilience, market diversification, technological adoption, and sustainability practices are more than buzzwords—they’re part of your robust strategy for the future.
As your broker or adviser, we’re here to guide you through these complexities. Whether it’s protecting your assets from climate risks, ensuring you’re covered for trade-related disruptions, or navigating emerging compliance needs, we can work with you to help safeguard your operations.
