Chal­lenges of un­pre­dictabil­ity

AgLife - - Front Page - With Mick Phe­lan – Michael Phe­lan is Im­pact Fer­tilis­ers western Vic­to­ria area sales man­ager.

Farm­ing

is for­ever throw­ing up a new set of chal­lenges, and as all farm­ers will tell you, no one sea­son is ever the same.

Af­ter a dry and un­cer­tain start this year we had some good rain, it got a lit­tle wet­ter, then it was ‘whoa nelly!’

Now grow­ers are deal­ing with wet pad­docks and edg­ing their way through the last of fungi­cide sprays as well as de­cid­ing how to ap­proach the hay sea­son be­fore har­vest gets un­der­way – all the while watch­ing com­mod­ity prices creep lower and hop­ing that a late frost stays away.

De­spite many ar­eas suf­fer­ing from wa­ter­logged and lodged crops, all fore­cast­ing bod­ies are still tip­ping bumper yields, with cur­rent es­ti­mates of a na­tional wheat crop of about 28-mil­lion tonnes, as high as 31-mil­lion tonnes, and a to­tal har­vest of be­tween 46 and 48-mil­lion tonnes when in­clud­ing bar­ley, canola and pulses. To put this into per­spec­tive, Aus­tralia’s av­er­age wheat pro­duc­tion is about 24-mil­lion tonnes and the big­gest ever was slightly be­low 30-mil­lion tonnes in 2011-12.

The big­gest to­tal win­ter crop was in the same sea­son, com­ing in just shy of 46-mil­lion tonnes.

With yields set to be high and prices for ce­re­als at very low lev­els his­tor­i­cally, grow­ers in western Vic­to­ria are in­vest­ing in on-farm stor­age to help man­age the lo­gis­ti­cal and mar­ket­ing chal­lenges that will be placed upon them in the com­ing months and year ahead.

As a re­sult, silo man­u­fac­tur­ers are busier than a stump full of ants and look­ing for a grain bag to buy has drawn com­par­i­son with look­ing for a po­lar bear in a snow storm.

Grow­ers are ex­pect­ing they will have to hold onto a por­tion of their crop in the hope that a spike in prices will come at some point into next year or be­yond.

The rea­sons why there is a fo­cus on on-farm stor­age rather than ware­hous­ing are many and var­ied. But they in­clude avoid­ing the monthly stor­age costs of bulk han­dlers along with the turn­around time and avail­abil­ity of trucks while try­ing to keep up with the header dur­ing the peak of har­vest.

All are valid rea­sons and stor­ing grain on farm is of­ten very prof­itable. It is worth cast­ing an eye be­yond har­vest how­ever, and con­sid­er­ing what the dy­nam­ics of the market might look like af­ter har­vest is all wrapped up.

With large amounts of grain on farm, it is likely to put a lot of pres­sure on do­mes­tic mar­kets with the stock­feed market only able to han­dle so much, and the con­tainer and de­liv­ered port mar­kets, al­though for­ever ex­pand­ing, are also only able to of­fer lim­ited op­por­tu­ni­ties.

This is par­tic­u­larly the case in a year where there is likely to be an abun­dance of low-qual­ity grain. It is also worth not­ing on-farm stor­age has be­come some­what of an art in re­cent years.

Grow­ers who spe­cialise in this area, as well as in­vest­ing big dol­lars in their stor­ages, have spent a lot of time groom­ing re­la­tion­ships with prospec­tive buy­ers ei­ther them­selves, or through their mar­keters, with the aim of be­ing on a buyer’s speed dial when the deal is ready to be done.

Al­though con­sid­ered ex­pen­sive at times, ware­hous­ing grain has its own ad­van­tages. Qual­ity of grain de­liv­ered is main­tained through­out.

De­pend­ing on the site there are ar­guably more mar­ket­ing op­tions and market con­sis­tency, and pay­ment terms of most ma­jor buy­ers are short with some as quick as seven days end of week.

Most bulk han­dlers will also have a pe­riod of gen­er­ally two to three months be­fore monthly stor­age fees kick in, giv­ing grow­ers a chance to gather their thoughts and po­ten­tially off­load grain be­fore monthly charges take ef­fect.

Other in­cen­tives to de­liver grain into the sys­tem are sure to come out of the wood­work as pre-har­vest site meet­ings take place in the com­ing weeks.

Whichever way you look at it, there is likely to be a lot of grain around post-har­vest and with­out a work­ing crys­tal ball it is im­pos­si­ble to know what is go­ing to hap­pen in the fu­ture.

It is also un­for­tu­nate that we rely on the hard­ship of oth­ers around the world for our grain farm­ers to re­ceive high prices for their prod­ucts.

How­ever, in the event that prices do get on the move quickly some­time in 2017 due to mis­for­tune else­where, and with­out ad­vo­cat­ing one stor­age method over an­other, it might be worth hav­ing as many irons in as many fires as pos­si­ble to take ad­van­tage of all op­por­tu­ni­ties that come up through­out next year. This means not shun­ning the bulk-han­dling sys­tem com­pletely.

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