Australian farm earnings are expected to remain strong for the rest of the 2013-2014 financial year.

The Australian Bureau of Agricultural and Resource Economics and Sciences is predicting the gross value of farm production will exceed $46 billion for the fourth year in a row.

Dairy earnings are forecast to rise 15 per cent, while wine sales will increase by 8 per cent.

But ABARES executive director Paul Morris says there will be a drop in export earnings for cotton, grain and canola producers.

"We're seeing much bigger production, particularly for coarse grains in the Black Sea region and also in the US as well, so those higher production levels are starting to put a bit of downward pressure on grain prices at the moment."

Mr Morris says the dairy sector is expected to achieve the biggest gains.

"Certainly in the dairy sector we are seeing prices internationally have recovered quite substantially from 12 months ago.

"That's off the back of some improvements in world economic growth, which is increasing demand for dairy products. We're seeing that increase in Asia, in particular, but also we're seeing improved economic growth in western Europe and the U. S and that's starting to feed through into better demand internationally for dairy products."

Mr Morris says improved prices for cattle and sheep meat are also expected, with beef and veal export earnings are tipped to increase by 6 per cent.

"We're seeing pretty good prospects on the export market for meat as well and that's really driving up export returns for producers and contributing to that reasonably positive outlook."

ABARES is forecasting the volume of livestock production to remain largely unchanged.

Lamb volumes are expected to decline, but will be offset by a modest increase in beef and veal production, which follows an increase of 3.5 per cent in 2012-2013.

"On the wool side of things, prices are remaining reasonably good there, perhaps easing slightly, but production is expected to remain pretty firm."

The price for wool is forecast to average about 1100 cents a kilogram, up 6 per cent on the 2012-2013 average.

Crop production is forecast to increase by 2.7 per cent in 2013-2014, after declining by 7.7 per cent in 2012-2013, but crop prices are tipped to fall.

Overall export earnings for crops will be down 8.1 per cent to $21.2 billion.

Canola export earnings face the biggest decline, down 33 per cent, after a huge crop last season, while wheat export earnings are expected to drop by just 4 per cent.

Earnings are also expected to be lower for barley (7 per cent), rice (11 per cent), cotton (16 per cent) and sugar (10 per cent).

Export returns for fisheries products are forecast to increase 6 per cent to $1.25 billion, while the value of forestry exports will also be up 6 per cent to $2.2 billion.

Mr Morris says the overall positive outlook continues a trend toward improving conditions for farming businesses.

"We certainly saw some really difficult times for producers over the 2000s decade, where we saw a pretty bad run of poor seasonal conditions.

"But over the last four years, we've really seen some good recovery in returns for producers.

"That's not universal. Some producers are doing it tough."

Mr Morris says the latest data also shows debt levels for Australian farmers are down.

"Those improvements in returns have resulted in farmers being able to stabilise their debt and actually lower it in some cases.

"Farmers have had some ability to actually start to pay off that debt and pull it down, so we're seeing that debt levels have levelled off a bit."

But he says farmers still have some way to go to get debt under control.

"So hopefully we get these continued good returns for a few years yet, then farmers will be able to manage that financial situation they're in."

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