Fertiliser prices are expected to remain above the long-term average for some time to come, slowing an expected short- to medium-term recovery in average farm incomes, according to the National Australia Bank.

NAB agribusiness economist Frank Drum says there is still no certainty this season will deliver on its promise of better conditions.

"However, there are opportunities in many areas of agriculture," Mr Drum said.

"Demand is up for some of our major exports, such as meat and milk, as China and other countries move to a Western diet.

"Assuming a seasonal recovery, winter crop production is expected to be significantly higher than last year.

"Commodity prices are also forecast to remain strong or in some cases increase.

"This could result in higher average farm incomes."

But Mr Drum said the recovery is likely to be constrained by rising input prices, particularly when it comes to fertiliser, fuel and chemicals.

"Expanded grain production due to better seasonal conditions and a move to biofuels will push up demand for fertiliser and underpin prices," he said.

"International government policies will also have an impact."

Australia's largest supplier of nitrogen fertiliser is China, which recently imposed a 100pc export tax on fertiliser exports, while high global oil prices also have an indirect influence.