Agmates editor Steve Truman writes:
Drought breaking rain across much of Australia could not have come at a better time. Australian Agriculture is in the box seat to take advantage of booming international commodity prices. But there are enormous challenges ahead for our farmers.
Why, two words - China & Biofuels.
Wheat prices are up 62% on this time last year.
Wool prices are up 12% on this time last year.
World dairy prices have risen 44% in the past 12 months.
The Westpac-NFF Commodity Index is at it’s highest level since it began in 1983. Up a massive 20% on last year.
The 6 year drought however has had a huge impact on production levels.
Reduced water allocations because of the drought has our current Rice crop production at the smallest amount in 50 years. Cotton is the smallest crop in 30 years. Wine grape harvest is expected to be 1.22 million tonnes, down from the peak production of 1.98 million tonnes 3 years ago. Dairy production is down 16% on last year.
China’s double digit growth continues with the impacts just starting to be felt in the protein markets - meat & milk. With their GDP per capita moving above $US5,000 their massive population is getting enough money to purchase a refrigerator for the home. This means that they can can store food. For the first time in history we have a billion + people who can now consume animal proteins and dairy products and have the money to pay for them.
In the next decade for the first time in history will see a billion plus people suddenly appearing in the world market as consumers of meat & milk. The impact will be astronomical. The impact will be felt in world grain markets. To produce 1kg of grainfed beef requires 6-7kgs of grain, one litre of milk needs 2kgs, pork and chicken require 1.5-2kgs.
The world wide push to use biofuels to ease our dependence on fossil fuels has already had an incredible impact on world grain prices. High value Durum wheat, used to make pasta has hit $650 a tonne. The long term average wheat price is $180 / tonne. We have seen food riots in certain parts of the world.
With 99% of Australian Agriculture being family owned and operated there are tremendous opportunities and challenges ahead.
Droughts, Floods, Bush fires and ever expanding populations in capital cities such as Melbourne, Adelaide and Brisbane who are drawing more and more water that was traditionally used for irrigation are all challenges that won’t go away.
Inequitable free trade agreements that force us to compete with countries that pay 3rd world wages, whilst we pay 1st world wages. Our producers endure costly regulatory production standards that just don’t exist in those countries we must compete with.
These things coupled with Carbon Trading, the rapid expansion of farm forestry consuming formerly productive farm lands (Great Southern Forest is now the largest single landholder in Australia), total tree clearing bans across Australia meaning no new productive land can be opened up, and reduced water allocations for most irrigator’s. Yet somehow we as an industry must produce much more food to keep up with world wide demand.
It’s an exciting time in history to be involved in Australian Agriculture.
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Yes, Yes, Yes…….actually, to be part of Australia’s agricultural industry is always the right time as there are always endless possibilities, with the only barriers being those in the minds of people who are unwilling to change in order to grasp opportunities.
Certainly, soil moisture provides greater ‘guarantee’ of successful crops but soil moisture is not always reliant on only rainfall. When soils have the capacity to absorb and retain moisture - and be fully hydrated - then that precious soil moisture profile provides the necessary components for plants to grow AND provides the resilience to whithstand less optimum growing conditions.
Another wonderful opportunity in the agriculutral sector is the trading of soil carbon, for those landholders who have made decisions over the years to maintain perennial plants - the key to ensuring reliable and long-term atmospheric soil sequestration. The market is hotting up (no pun intended) as the realisation that actively growing trees will be useful in some sequestration but functioning soils are the most active terrestrial sequesters.
Yes……I am glad I live in interesting times……and opportunities always abound…..when the mind is in the receptive frame to see them AND be willing to act upon them….especially when that requires changing beliefs and adopting a ‘can do’ attitude……..
Cheers and laughing,
bush goddess
Theses are certainly exciting and interesting times in Autralian Agriculture but they are also some the most challenging, particularly to young people trying to start out in such a volitile industry. Profit margins are becoming increasingly slimmer as the costs of production increase and current land values are ensuring that without significant family backing, viable land acquisitons by young Australians are mostly a financial impossiblity.
However, on the reverse side of the coin, young people in Agriculture are no longer restricted to working with a crowbar and shovel all day just to be involved in this industry. They are some of the most highly educated in the history of Agriculture and have much to offer the traditional farmer in this age where knowledge is power. Their abilities in negotiating the minefields of such areas as carbon trading, public relations and marketing should be embraced by the industry. Farmers no longer have to be a jack-of-all-trades but instead can focus their own talents on managing their operatings to make the most of these properous times.
One final point; can all farmers please encouage this younger generation to continue with agriculture because although Generation Y can often be a pain in the arse, they are the future of the Australian Agricultal economy and negativity will result in them persuing much more lucritive careers in mining
G’day Bridget,
Tried to email you but the email address you entered was incorrect. Wanted to ask if you’d like to write Agmates an article on “Their abilities in negotiating the minefields of such areas as carbon trading, public relations and marketing should be embraced by the industry.”
I agree 100% that Gen Y has the education and ability to drive these sectors of the industry - they just have to be encouraged in by their parents.
Hopefully hear from you.
Your Agmate - Steve