Farm export earnings are forecast to fall this financial year because of the strength of the Australian dollar, the government's commodity forecaster says.
The value of farm exports is forecast to fall by 2.5 per cent to $31.1 billion in 2009-10, following a significant rise of 16 per cent to $31.9 billion in 2008-09, the Australian Bureau of Agriculture and Resource Economics (ABARE) said.
"Although winter crop production is forecast to increase in 2009-10, an assumed higher average of the Australian dollar is expected to lead to lower farm export earnings in the short-term," ABARE's deputy executive director Terry Sheales said in releasing the September quarter commodities report.
In preparing its forecasts the Aussie dollar is assumed to average around $US0.83 in 2009-10 compared with an average $US0.75 in the previous financial year.
ABARE says the dollar has a tendency to appreciate strongly in the beginning phase of world economy recovery.
"Therefore, there is a distinct possibility the Australian dollar could remain at its current level ($US0.86) or even appreciate further against the US dollar in the short term," it said.
Export earnings for barley, chickpeas, lupins, oats, peas, rice, sorghum, raw cotton and sugar are all forecast to rise this financial year, ABARE said.
However, these are more than offset by lower earnings for wheat, canola, wine, livestock and livestock products.
Total earnings from commodity exports are forecast to fall by 20 per cent to $158 billion in 2009-10, following an estimated rise of 32 per cent to $197 billion in 2008-09.
Energy and minerals export earnings are forecast to fall by 23 per cent to $123 billion in 2009-10, mainly as a result of lower contract prices for bulk commodities, including coal and iron ore.
This estimate is about $1 billion lower than forecast in June.
"At a forecast of $123 billion, minerals and energy export earnings in 2009/10 will be the second highest on record," Dr Sheales said.
The value of energy exports is forecast to fall by 36 per cent to about $50 billion, while earnings for metals and minerals are forecast to decline by 12 per cent to about $74 billion.
Mine production is forecast to increase by 4.6 per cent, underpinned by expected higher production of iron ore, gold, copper, liquefied natural gas and uranium.
AAP