October 13, 2006

 

Drought ruins most of Australia's Queensland wheat crop

 

 

Wheat production in Australia's Queensland state is expected to fall sharply in the face of a protracted drought, Brett de Hayr, chief executive of farmer lobby Agforce, said Friday (Oct 13). 

 

With some parts of the country facing a sixth consecutive year of drought, de Hayr estimated wheat production in the state would fall to 600,000 tonnes, down from an actual 1.4 million tonnes in the last crop year ended Mar 31.

 

"More than 60 percent of Queensland is drought declared and this is set to increase with the prediction of another El Nino event," he said in a statement.

 

Paradoxically, wheat lands in central Queensland have had their best growing season for 15 years, already bringing in most of a harvest estimated around 500,000 tonnes. The balance of the crop would be sourced from southern Queensland.

 

The situation in Queensland is mirrored elsewhere in Australia.

 

On Monday, national grower lobby Grains Council of Australia forecast the new crop output at 10 million tonnes, which if achieved would be just 40 percent of last year's national crop.

 

On Tuesday, Ron Greentree, one of Australia's biggest wheat producers, who retired in December as chairman of east coast logistics provider GrainCorp Ltd, forecast output in a range of 6 million to 8 million tonnes, saying growers are in denial about the poor condition of the crop.

 

Australia's annual domestic wheat demand has averaged about 5.5 million tonnes in recent years.

 

After domestic demand is met, the balance is available for export, usually making Australia a major global supplier.

 

De Hayr said a worldwide shortage of grain, which has pushed grain prices to decade highs, could start to impact food prices.

 

"If food prices do rise it will put further pressure on inflation which could lead to another interest rate rise," he said.