Farmers watch prices rise but still being left short
SOUTHERN Downs farmers missed out on an unprecedented spike in grain prices.
Australian's Bureau of Agricultural and Resource Economics and Sciences released figures for the third quarter of 2018 showing agricultural output across all sectors is down due to a the perilous drought.
However, this scarcity of grains, crops, feeder cattle, lamb and store pigs has pushed prices to record levels
The net result show Australian farmers are producing less but getting paid more.
It's at the point where the sum of our farmers made the same amount of money in the third quarter of 2018 as they did from June to September of 2017, when the rains were good and drought was yet to bite.
ABARES Executive Director, Dr Steve Hatfield-Dodds said production was forecast to remain unchanged at $60 billion in 2018-19, well above the 10-year average of $56 billion.
The international wheat price is up 9 per cent but Queensland's product is at a 10-year low.
Prices for course grain like maize and barley are up 12 per cent.
But few Southern Downs producers will get a taste of these prices because, for the most part, there has been no winter crops.
Darling Downs wheat producer and Agforce Grains President Wayne Newton said the local conditions are pretty grim.
"Basically it would depend if you have any sort of crop in the ground," he said.
"There were a few Darling Downs growers who had a late summer crop and they did benefit from the high price, but that is a small number of producer and a small output."
He categorised the drought as one of the worst in living memory.
"Across the region the area under crop is very small, it's been one of the smallest area of winter crop sow for 30-40 years."
From Dubbo to Mackay, you'd be hard pressed to find winter crops, however conditions in Western Australia are great.
Western farmers are on track for their best winter harvest in four year.
If you disregard freight costs, Southern Downs grain is at price parity with imports from west.
Mr Newton said a farmer in Warwick would pay the same for wheat and barley whether he buys it out of Perth or from his next-door neighbour.
But there is a market correction in the works
"Because the price is so extraordinary high, people will sell their herds to cut costs," Mr Newton said.
"That will means the demand will reduce."
Good summer rain might bring about a better local yield, which will further ease prices but Mr Newton there's a 50 per cent chance the skies will open up.
"If we have a problem, which is likely with the forecast El Niño and the lack of sub-soil moisture it could mean production remains low and we might have to rely on imported grain for an extended period."