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Big dry cuts Australian rice, cotton

By Geoff Hiscock
CNN Asia Business Editor

Costello last week cut Australia's growth outlook for 2002-03, citing the impact of the drought
Costello last week cut Australia's growth outlook for 2002-03, citing the impact of the drought

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CANBERRA, Australia (CNN) -- Australia's long-running drought has forced more big cuts in farm output, with the national commodities forecaster ABARE downgrading rice and cotton crops.

ABARE executive director Dr Brian Fisher said on Monday that the main irrigated southern summer crops of cotton and rice would face major cuts because of the lack of water.

"The area sown to cotton is estimated to be down 45 percent from last season, while the rice area has been cut back by nearly 70 percent," Fisher said.

Much of Australia has been in the grip of a drought for the past 12 months, prompting the government last week to slice 0.75 percentage points from its economic growth forecast for 2002-03.

Citing a sharp drop in rural output plus global economic uncertainty, Australian Treasurer Peter Costello said last Wednesday that growth in the year to next June would fall to 3.0 percent, down from its 3.75 percent forecast six months earlier. (Full story)

The drought's impact is being reflected in rural exports, which fell 2.8 percent in the September quarter from the previous-quarter.

Bushfire season

Australia's devastating drought has brought an early start to the annual bushfire season
Australia's devastating drought has brought an early start to the annual bushfire season

Along with the cut in farm output, the hot, dry and windy conditions have seen the early onset of the summer bushfire season, with grazing land, livestock, farms and some houses destroyed by fires in recent weeks.

Rain fell along the eastern Australian coast at the weekend, but the falls were not enough to substantially alter the outlook, with thick dust storms continuing to blight inland areas. Much of the country's grazing and crop areas have not seen good rainfall for a year or more.

ABARE's Dr Fisher, releasing the latest Australian crop report on Monday, said the area sown to summer crops is forecast to drop by 41 percent in 2002-03, with the grain production forecast down 59 percent to 2 million tonnes.

He said this would make it the smallest summer crop since the last big drought of 1982-83.

The 2002 drought has already been described as the worst in a century for some parts of Australia.

According to the Australian Bureau of Meteorology's latest drought statement, almost half of Australia recorded October rainfalls within the lowest 10 percent of records, with much of New South Wales state registering record low totals.

Parts of Queensland and South Australia also had record low falls.

Dryland crops

Rice production is forecast to fall 70 percent to 380,000 tonnes and cottonseed 65 percent to 337,000 tonnes.

Fisher said the outlook for dryland crops such as sorghum and sunflowers also was not promising. Sorghum production is expected to be down 52 percent to 855,000 tonnes.

"The poor summer crop outlook follows on from a disappointing winter cropping season," Fisher said. "Total winter grain production is estimated at 16.2 million tonnes, down 21 million tonnes from last season and the lowest winter grain harvest since 1994-95."

Australia exports much of its output of the four main winter crops -- wheat, barley, canola and lupins. It supplies wheat and barley to the Middle East, Japan and China; canola mainly to Japan and lupins go mainly to India.

The one bright spot for farmers has been thus year's higher price for some commodities.

Latest figures from the Australian Bureau of Statistics show, for example, that while the volume of wheat exports fell 9 percent in October, its value rose by 5 percent, buoyed by a 14 percent increase in prices.



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