Dry conditions are expected to deal a significant blow to Australia’s winter crops, with production to plunge more than a third.

The latest quarterly outlook has been released by the agency responsible for agricultural science and economic research.

It predicts overall agricultural production will fall 14 per cent to $79 billion after three consecutive record years.

The agency’s Jared Greenville said it was a mixed start to the winter cropping season.

“The latest seasonal outlooks see an expectation of drier conditions as we move away from three years of exceptional La Nina weather patterns,” Dr Greenville said.

“Looking further ahead, it’s likely we will see either El Nino or a positive Indian Ocean Dipole in the coming months, which will reduce crop yields.”

Inflation is also eating into producers’ profits and affecting consumer demand.

A spike in mouse activity has had an impact as well, with growers undertaking more baiting.

The quarterly cropping outlook shows wheat production will fall 34 per cent, slightly below the 10-year average, with barley to fall 30 per cent and canola 41 per cent.

Summer crop production is also expected to fall from record highs, while remaining above the 10-year average.

It’s not the same story across all industries.

Horticulture is expected to increase $1.5 billion to a record $18 billion, driven by strong growth in nut production and increased demand for locally grown fruit and vegetables.

Dr Greenville said the wine industry would also rebound from a challenging year, with drier conditions reducing the risk of disease.

The results were mixed for the livestock sector, with slight increases in production across beef, sheep and milk but a drop in the value of livestock production because of lower prices.

“This is down to a number of factors, such as less demand for restocking, and like crops, we expect global production to pick up,” Dr Greenville said.

The agency expects strong growth for wool, with Chinese demand driving higher prices.

– AAP