July 6, 2011
Australia's grain farmers turn cautious on early crop
Australia's grain farmers, forecast to produce a close to record wheat crop in 2011-12, are becoming less optimistic about a bumper harvest as soils around the country start to dry out because of low rainfall.
Last week, the Australian government's chief commodities forecaster predicted a 26.2 million tonne crop could be produced this season, just short of last year's record 26.3 million tonne harvest.
Johnston planted 1,500 acres with durum wheat, used to produce pasta, three weeks ago. The crop is emerging and his fields are green.
While subsoil moisture remains good, the top soil is drying out fast, causing crops to struggle as they emerge.
"We're really not sure about the outcome - we will have a better idea in a few months but at this point I'm not that optimistic unless we get winter rain," Johnston said.
Apart from wheat, Johnston also grows barley and runs a cattle feedlot on his 3,700-acre property.
Johnston has been farming for more than 40 years but says he is the most pessimistic about the future that he has ever been.
"Costs keep going up for things like fuel and fertilizer but our problem is we're price-takers and the returns seem to be getting less and less," Johnston said.
"We have turnover of more than AUD1 million a year but the fact is we don't see much profit out of that even though we're in probably in the most productive grain area in Australia," he said.
Johnston added that his farm's fuel bill was over AUD80,000 a year which he had little control over, while fertiliser costs were also rising due to more nitrogen being used in mining as an explosive ingredient. Nitrogen is a key plant fertiliser.
"We've just been through 10 years of drought and floods so farmers are wanting to repay debt," said Neil Sands, a farm equipment dealer at Gunnedah.
"They're not willing to spend money on new equipment, so business is very slow," said the former farmer, who sold his property to his neighbour as part of an on-going consolidation of Australia's farm sector, as farmers seek to lower costs through economies of scale by increasing the size of properties.
Instead, farmers are busy in their workshops repairing existing equipment such as harvesters, which can cost more than AUD1 million, as they watch new wheat crops emerge from the ground across the rich Liverpool Plains farming district in northern New South Wales.
Further south in the state's central west, crop conditions have improved to some degree.
"We had 11 mm of rain overnight that will help the crop along," said Neil Cooper, a wheat farmer in Condoblin, about 480 km south of Gunnedah.
The farmer said that there had been substantial rain over the last couple of months although there's been some significant dry weather in the top half of New South Wales and southern Queensland state. In southern New South Wales, most of the crop has been planted but in the north of the state, Cooper said a lot of "the guys are certainly hanging out for more rain to just soften up that top soil".
Australia's top eastern grain growing regions are likely to see average rainfall during the critical wheat growing period from July to September but the grain areas of Western Australia could see below average rain, the weather bureau has said.
The weather bureau said in its national rainfall outlook on June 23 that the chances of receiving above median rainfall during the July-September period are between 30-40 % in the key growing areas of Western Australia but most of New South Wales and Victoria states expect average rain.
This season's crop shows similar promise to last year and could be of better quality if there is less rain at harvest time, reducing yields but lifting protein levels, increasing the supply of higher quality grain in a global market that would welcome a better standard of wheat. In New South Wales, more than 10 million tonnes of grain were harvested in 2010-11, but nearly 50% was downgraded to feed or general purpose as a wet harvest lowered quality.
