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Economy

Australian farm exports wither under 'worst drought in 50 years'

Wheat shortage hits Indonesian noodle makers while bushfires rage in Queensland

Cattle stir up dust in a drought-affected paddock on the outskirts of Dubbo in New South Wales.   © Getty Images

SYDNEY -- The worst drought to ravage Australia in over half a century has undercut the nation's output of agricultural products and threatens to disrupt global markets that depend on Australian exports.

Australia's wheat shortage has already spilled over to Indonesia's noodle eaters. Because of a steep drop in Australian wheat imports, Australian Financial Review reported, Indonesian flour mills have turned to Black Sea nations and Argentina. Noodles made from such wheat are darker than the ones made from Australian product, which sparked a backlash from consumers.

Noodle makers resorted to using a bleaching agent and chemical additives to change the color of the product to resemble the Australian-made hue. The practice has fueled concerns about food safety.

Australia is on track to produce 33.8 million tons of grain of 12 varieties in terms of winter crop production during the fiscal year ending June 2020, the Department of Agriculture said last month. The volume is 16% below the 10-year average through the previous fiscal year.

The wheat volume is expected to be 22% below the 10-year average, with canola falling 29% below the benchmark. Growing conditions are particularly unfavorable for the states of New South Wales and Queensland, the agriculture department said.

Rainfall during the first nine months of the year dropped to levels unseen since 1965, according to official data. The drought has impeded the growth of pastures that would feed free-range livestock.

Australian livestock exports, such as beef or mutton, are expected to drop 14% during the year ending June 2020, the agriculture department said.

The Reserve Bank of Australia, the nation's central bank, estimates earnings among farmers were 24% lower in the first quarter of this year compared with the second quarter of 2018. Causes for the decline include the drought, and higher costs associated with water and feed.

"Drier-than average conditions are expected for large parts of the country over the next three months, which suggests further weakness in activity in the rural sector in coming quarters," the bank said in its latest monetary policy statement in August.

Australia exported about 9.84 million tons of wheat and flour during the 2018-2019 fiscal year, according to the U.S. Department of Agriculture, accounting for roughly 5% of global exports. Farming occupies 3% of Australia's gross domestic product. If the drought persists, it could dent the economy.

An increase in bushfires is another cause for concern -- especially ones that tend to occur around December in Sydney's home state of New South Wales. Over 100 bushfires have broken out so far this year in that state and Queensland.

Due to the drought and other factors, bushfire season has started earlier than usual in Australia's eastern seaboard, said the Bushfire and Natural Hazard Cooperative Research Centre, a state-run organization. High temperatures and strong winds elevate the risk, the center warned.

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