Bumper Australian Cotton Harvest for 2021

Cotton production in Australia is set for a good year after heavy rains brought flooding to several growing areas. The moisture was much needed after issues with previous droughts. As a result, the industry’s expectations for production stand at around four million bales.

This year’s harvest is around four times that of last year and is set to be worth around 1.2 billion Australian dollars. The one possible downside is the problems with Chinese trade that are restricting cotton exports to what is normally a large market. Taking a closer look at Australia’s cotton growing, and this year’s crop in particular, gives us a greater insight into the situation.

Key points

  • This year’s Australian cotton harvest is around four times that of last year.
  • It is set to be worth around 1.2 billion Australian dollars.
  • Cotton exports have been affected by trade issues with China.
  • Producers are looking to alternative markets such as Vietnam, Bangladesh, Indonesia, Thailand, and South Korea.

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Cotton growing in Australia

Australian cotton production takes place in planting areas in northern New South Wales and southern Queensland. The growing season begins with crop plantings in September/October and ends with picking in March/April. The cotton industry has experienced some issues regarding environmental concerns including the heavy use of water where cotton is grown.

However, it has taken measures to address these concerns including improving water use efficiency by around 240% since the 1970s and introducing Integrated Pest Management strategies and the use of biotechnology.

More recently, in 2019, the Australian cotton industry suffered as a result of drought conditions. The negative results of this time have now been offset by the rains during 2020 and the early part of this year.

The positive effect of rains on this year’s cotton crop in Australia

The heavy rainfall means that the cotton crop in Australia is likely to increase by around 200-400%. That is an impressive yield. This means that most producers in the industry will celebrate exceptional crop production levels.

However, not all weather conditions have been positive. Central Queensland missed out on much of the heavy rainfall and some farmers have spoken about an early frost having a negative impact on part of their crop.

Even so, the news on Australian cotton crop production for 2021 is positive overall. However, the ongoing trade issues with China mean that producers need to seek out alternative export markets for their crop.

Issues with losing the Chinese market

As part of the ongoing dispute with China, Australian cotton exports to the country are subject to an import tariff quota of 894,000 tons which has a tariff of 1% attached. If the quota is exceeded the tariff increases to 40%. This makes the Chinese market commercially not viable given current cotton prices.

This is a major problem given that 800 million Australian dollars worth of cotton is normally exported from Australia to China each year. Given the loss of this market, producers are looking to alternative markets such as Vietnam, Bangladesh, Indonesia, Thailand, and South Korea.

Entering these markets is hard work as it requires displacing exports from cotton growers in countries such as the USA and Brazil. However, the effort is necessary given an estimated crop production of four million bales and a relatively stable price of around $550 a bale.

It remains to be seen whether Australian producers can successfully enter these alternative markets, but the situation looks relatively promising. This is good news for an industry that wants to make the most of a bumper cotton crop in Australia in 2021.

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