A revolution in Australian farming may be drawing to a close after 30 years thanks to soil degradation, ageing crop varieties and a shortage of farmworkers in rural areas, the country's farm economics office has warned.

The Australian Bureau of Agricultural and Resource Economics is in talks with farm leaders over the sector's performance after finding that the rate of long-term productivity growth slowed by nearly one-half over the decade.

While much of the decline, which is particularly notable in arable farms, can be put down to the drought which halved crop production in 2006-07, initial research had thrown up other problems.

One was a shortage of labour, a common issue in countries where better-paid city jobs lure workers from the countryside.

"There is also a viewpoint that there have been fewer substantial gains in crop varieties in recent years resulting in only marginal gains in yield," Abare said.

'Gains exhausted'

The bureau also noted that a one-off gain from ploughing up pastures for grains may also have run its course.

"One perspective is that the expansion of cropping enterprises into areas previously used for grazing was a large source of productivity growth in the 1990s when seasons were more favourable," Abare said.

"These gains have largely been exhausted because soil nutrient levels have decreased and fertilizer requirements are now higher."

The comments follow appears from bodies such as the UN's Food and Aid Organisation for an increase in investment in agriculture to support the higher yields needed to feed a growing world population.

Past the peak 

The improvements in Australian farm production since the late 1970s were achieved through an average annual drop of 0.5% in inputs, such as fertilizers and chemicals, while production grew by an average of 0.8% a year.

Abare has predicted Australia's total output of winter crops - which account for the bulk of national arable production - at 36.0m tonnes in 2009-10, more than 7m tonnes below the level in 2003-04.

The report also restated a forecast of 22.7m tonnes for Australia's 2009-10 wheat harvest, nearly double the levels achieved in the late 1980s.