Rising global food prices could mean two things for the Australian farmer - higher production cost and a significant boost on possible incomes, which according to Reserve Bank of Australia (RBA) assistant governor Philip Lowe should spur growth in the agricultural sector over the near term.

Lowe reported on Thursday that the country's global domestic product (GDP) jumped by as much as 10 percent n 2010-2011 financial year, thanks mostly to the unusual higher volume of rainfall that the farming sector had seen in the past year.

"This combination of generally high prices and high output has provided a substantial boost to aggregate income of the farming sector over the past financial year," the RBA official added while noting that farming figures are expected to exceed the performance that Australia's farmers have turned in from the last 20 years.

Speaking before the Australian Agriculture Roundtable Conference held in Melbourne today, Lowe predicted that the country's agricultural sector will witness increasing profits, at least over the mid-term, as demands for its farm products also surge in light of soaring global food consumption.

He also highlighted the country's incredible ability to meet both domestic and international demands despite the difficulties faced by the agricultural sector in the dying months of 2010, a spectre that was sustained in the first quarter of 2011.

Brushing aside the ill effects of the current global economic situation, Lowe stressed that the generally unsettling situation would largely mitigated by the development in the agricultural sector, at least in Australia."

"The development of Asia and the steady rise in incomes of the many hundreds of millions who live on the Asia continent ... (bring about benefits to Australian farming) that have led to an improvement in outlook for the mining sector," the RBA official was quoted by the Australian Associated Press (AAP) as saying.

He is quick to remind though that the benefits have their corresponding downsides as local farmers are poised to see considerable increases on their production expenses, which he admitted "have been a significant constraint on profitability."

Yet for the most part, the outlook for local farmers is rosy, Lowe said, whose prospects he added will be further boosted by demands coming from emerging and developing nations that consistently upgraded their purchasing power.