Farm Management

Tough decisions ahead for Australian grain growers

A new Rural Bank and Rural Finance report has presented Australian grain growers with a quandary, as they fire up their tractors ahead of sowing.

With a record 2016/17 harvest behind them and widespread summer rain, growers generally have reasonable soil moisture conditions for the season ahead.

However, this is tempered by Bureau of Meteorology forecasts predicting a twice the normal likelihood of an El Niño developing in 2017 and crop prices – particularly wheat and barley – remaining under pressure both domestically and internationally due to continuing strong levels of supply.

As always, growers are faced with the risk versus reward dilemma, as they settle on crop varieties, rotations, and inputs for the season.

The new Australian Crop Update, launched by specialist insights team Ag Answers, provides producers and industry with a concise analysis of the current national and world crop production estimates, seasonal conditions, prices, and demand for Australia’s cropping farms.

Simon Dundon, Head of Sales for Rural Bank and Rural Finance, said Australia’s most successful farms make decisions rigidly based on what was right for the bottom line. Citing new research commissioned by the bank, he said high performing farms run their businesses on fundamentals of keeping operating cost ratios down, farm business profit up, equity up, and financing costs down.

“Australia’s successful farmers know how to do what they do well – having honed production practices and systems – and use this expertise to drive high level financial performance,” he said.

“When weighing up the variables heading into the season, successful farmers will take into account all aspects of their business, including the up and downside for the season, and what risk the business can or should take.”

Mr Dundon said it is likely crop prices will remain steady until the picture for 2017 supply becomes clearer.

“While strong supply continues to have a significant impact on crop prices, we are expecting prices to stay within recent ranges as global supplies remain strong.

“Given we’ve seen record levels of global production and stocks in 2016/17 – particularly for wheat and course grains – a surge in crop prices in the 2017/18 season ahead seems highly unlikely,” Mr Dundon said.

The new report also revealed growers may respond to low wheat and barley prices by reducing the area planted, while the early forecast of drier than normal weather conditions is expected to affect yields.

“While Australian growers saw a bumper 2016/17 season with record production, lower production levels are expected for the 2017/18 season,” Mr Dundon added.

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