Australia’s farm production is tipped to fall seven per cent from record levels after dry weather in grain-growing regions affected crops.

After peaking at $63 billion in 2016-17 total production is likely to drop to $59 billion in 2017-18, according to the latest report by the federal government’s agriculture forecaster.

ABARES executive director Steve Hatfield-Dodds says the reduced prediction is mainly due to lower crop production and prices.

‘This follows an estimated 12 per cent increase in 2016-17 when our winter crops delivered exceptional yields and prices for livestock and wool were quite favourable,’ Dr Hatfield-Dodds said.

‘Despite the decline, gross value of farm production would still be higher than the average of $55 billion over the past five years.’

The forecast reduction is expected to lead to a decline of about three per cent in export earnings to $47 billion in 2017-18.

The value of wheat exports are predicted to fall 18 per cent, canola down by 52 per cent, barley less by 41 per cent, chickpeas to dip by 32 per cent and sugar to drop by 13 per cent.

But export earnings are forecast to increase for livestock products, as well as cotton and wine.

Dr Hatfield-Hobbs said increasing demand for sheep meat, wool and dairy would help drive up prices.

‘Beef and veal production is expected to increase by 12 per cent, wool by three per cent and lamb by two per cent in 2017-18, while milk is tipped to increase by almost three per cent, following a decline in 2016-17,’ he said.