In its annual Australian Agriculture in Focus report, Rabobank says improved economic conditions are seeing increasing global demand for agricultural commodities, such as dairy and sheep meat, while the supply of many of these commodities is limited.

At the same time, global food commodity prices are returning to their pre-global financial trend status and beginning to climb again, the report says.

Rabobank's general manager food and agribusiness research and advisory, Justin Sherrard said, after going into freefall more than 12 months ago during the global financial crisis, world food commodity prices are once again on the rise.

While this is good news for Australian farmers and agribusinesses able to take advantage of the improved global environment.

However, he cautions that higher prices can be a mixed blessing for the agricultural industries.

"To benefit from higher commodity prices, farmers and agribusinesses need to manage any related increases in production and processing costs, and see higher prices passed down to consumers," he said.

"In 2007, higher food commodity prices did not necessarily translate to better returns ... because production and processing costs also increased."