Flood-ravaged Australia was facing up to $800 million in crop losses after a horror cyclone smashed through key banana and sugar farms, analysts say.
Flood-ravaged Australia was facing up to $800 million in crop losses after a horror cyclone smashed through key banana and sugar farms, threatening inflation and exports, analysts said.
The latest damage to the two key farming commodities brings the total crop losses in Queensland state, the heart of the nation's agriculture sector, to $1.4 billion due to natural disasters in the past six weeks.
The state was still reeling from a record flood that wiped out an estimated Aus$600 million in winter crops and also reduced coal exports by up to $2.5 billion, when Cyclone Yasi smashed into its far north Thursday.
"This has pretty much capped it off by hitting the top half of the state when the bottom half is still trying to deal with floods," said Queensland Farmers' Federation chief Dan Galligan.
Yasi, a category five storm, shredded canefields and felled banana trees as it pummelled the coast around Innisfail, just five years after major cyclone Larry wrought about $1 billion of damage to the region's crops.
About 20 percent of the region's sugar crop had been destroyed by Yasi, representing about Aus$500 million in lost production from which it would take farmers several years to recover, said the industry group Canegrowers.
"Those farmers must be seriously questioning whether they're going to stay in cane farming," Canegrower head Steve Greenwood said.
Australia is the world's third-largest sugar exporter, shipping about 85 percent of its product to Asian markets including Japan, China and Korea in exports worth about $2 billion annually.
Sugar prices, currently at an all-time high due to weather-related supply shortages, spiked as Yasi closed in late Wednesday and Greenwood said those farmers able to harvest would get exceptionally good returns.
Commonwealth Bank agribusiness analyst Luke Mathews said "prices will to a certain extent offset the lower production," but warned that $500 million was still likely to be sheared from sugar export earnings.
Bananas fared worse still, with Galligan warning that up to 85 percent of Australia's total crop had been destroyed by Yasi.
"They're still pulling figures together but certainly the benchmark we're going off is it's almost wiped out the same area that Cyclone Larry did, and that was measured at around $300 million," Galligan told AFP.
Mathews said total losses could be closer to 95 percent, saying analysts "cannot see how banana production has not been decimated".
"What we are extrapolating is a similar type situation (to) that (which) occurred in 2006 in Larry, which is a 400-500 percent increase in the retail price of bananas," he said.
That disaster added "around half a percentage point" to inflation, he said.
Australia's agricultural forecaster, ABARES, last month flagged a hit to agricultural production of "at least $500-600 million in 2010-11" due to widespread flooding in Queensland that killed more than 30 people.
Treasurer Wayne Swan has warned that inflation will spike in coming months as flood-related food shortages drive up prices, while Canberra is facing a Aus$5.6 billion clean-up bill from the deluge and a 0.5-point hit to growth.
Taxpayers will foot about a fifth of the cost through a one-off flood tax for higher-income earners, and Prime Minister Julia Gillard said the government would meet any additional costs from the cyclone through further budget cuts.
Meanwhile, coal production at a number of mines has been affected by flooded pits and difficulties in removing the water, while a lack of access to mine sites because of damaged roads and the rail network linking coal mines to ports has also hit output.
It is estimated that Queensland's coal exports between December 2010 and March 2011 could be around 15 million tonnes lower than previously anticipated. This represents a reduction in export earnings of around $2.5 billion.
It is anticipated that metallurgical coal prices negotiated for the June quarter 2011 will be settled at a significantly higher price, reflecting the tight market balance created by the floods in Queensland.