Why do farmers have the feeling they’ve been fleeced.
AWB has just released its results for financial year 2008 and they are up a massive 137% on the previous year.
Like fertiliser manufacturer Incitec Pivot and Futuris Elders they can thank farmers for the past years record profit jumps.
AWB reported net profit for the year of $64.3 million, up $37.2 million on fiscal 2007.
AWB’s Landmark Rural Services had delivered its “best ever result” in fiscal 2008, particularly in merchandise and fertiliser, benefiting from increased agricultural activity across the country.
Landmark’s contribution to the result was a whopping $90 million EBITDA up from $54.7 million in FY2007 or $35.3 million / 64%. If you read this presentation you’ll see that:
Merchandise Gross profit grew from $128.1 million to $172.1 million or $44 million / 34.3%. The reason stated on the report was ‘margin management’. i.e. increasing the margins on merchandise sold.
Fertiliser Gross profit grew from $22.9 million to $39.5 million or $16.6 million / 72.5%.
Combined merchandise and Fertiliser Gross profit increased by whopping $60.6 million or 40%.
To give you an idea of how incredible this performance is, the combination of Livestock, real estate and wool gross profit increased by just 2.2% or $2.1 million.
Chemical & Fertiliser manufacturers and retailers have all had boom profits this year.
Sky rocketing farm input costs over the last 12 months seems to have had more to do with big company corporate profit taking than any reason doled up to empty pocketed farmers.
As I’ve said before.
With a handful of large corporates monopolizing the farm supply sector, this year really has been an extreme case of supply and demand. They SUPPLY and then DEMAND you pay what ever price they ask.
Has there ever been a better example than this year of why farmers should support the smaller independent retailers?
Have Your say!
Margaret and Central West farmer are probably both very nice sincere people who will eventualy agree not to agree.
The catch cry “deregulation promotes efficiency” is only jargon put around by free marketers and economic theorist bogged down in Keynesianism for want of a better word. The statement has never been proven and it almost always only applies to and is directed against our farm industries.
You never hear about it in the Trade Union Movement. Imagine the response if you announced that all workers have to take a 30% pay cut for the same work in the interests of efficiency because they are not making innovative productivity gains. There would be civil war.
I’d personally like to deregulate the public service and government. This should result in greater efficiency for our taxpayers dollars being spent, or am I just hypothesising like an economic purists. Then the public sector is a protected species with no chance of extinction
Margaret i don’t think your post deserved a reply but couldn’t help myself…
The Australian wheat market was one of the very few industries in Australia still encumbered by regulation. While it’s beside the point arguing about the merits of deregulation (it’s here to stay - like it or not) it’s a fact Margaret that deregulation encourages efficiency & innovation (yes a step forward not backwards). Whether you agree with it or not, you need to move forward - i think that was my point in the first place.
The strong will get stronger and those who refuse to adjust will be left behind and will likely sell up. The reason for this is that these growers are unfortunately refusing to move forward - not because of some whacked out conspiracy theory. Unfortunately you sound like one of these growers who will be left behind Margaret.
If deregulation was such a step forward then how come Canada and New Zealand are MOVING FORWARD to single desks for wheat and lamb respectively. And that is what the future trend will be right around the world because people want food security in their countries.
WTO/ free trade/de-regulation global corporate policies are a dying almost dead duck!!
If you like being tied to Monsanto and other seed companies you keep supporting de-regulation and the push of GM canola etc.
We won’t be tying ourselves to bl##dy Monsanto and Cargill we’ll be keeping our seed over .
We’ll be going ahead very nicely thank-you with all this lovely rain around.
“Sell up.”
That is exactly what the corporation/government (no difference between them) want you to do !! I don’t know why you would think deregulation was a forward step and we should move on with it and accept it. De-regulation was part of a widespread corporate plan by globalists to wipe out Australian rural industries , farmers and local production.
Enormous pressure will keep on being applied to you and other farmers to give up - the National party and independents are our only hope of stopping this WAR by Labor and Liberals against farmers and rural Australia.
I am a farmer doing it tough like everyone else. I’m just tring to keep my head above water instead of complaining - that’s the difference.
My point is this market has deregulated and you must now manage the marketing because AWB is no longer “putting a floor in the market” (whatever that means).
There have been plenty of chances to protect the price - instead of throwing your arms in the air at the time you could have been seeking advice and managing your marketing.
I understand this is a very challenging environment - all the more reason to get some help. What else are you going to do? Keep whining as you slowly get buried. That’s the way you’re going.
Bow Fly - PLEASE STOP COMPAINING AND GET SOME HELP WITH YOUR MARKETING MATE IT SOUNDS LIKE YOU NEED IT!
I’m really getting fed up with fellow growers moaning and complaining about deregulation, sky’s falling in etc etc (i opened my rural newspaper this week and it’s all the same - i prompty burned it). If these growers spent as much time & energy being proactive about their marketing as they do compaining then they wouldn’t be in the mess they’re in.
“The price is crashing” … “there’s no bid at the site” … “prices aren’t even covering my cost of production” … “the sky’s falling in” .. “we’ll all be rooned”.
Wake up it’s the real world. Get serious about running your business and get some help or sell up. Please stop winging it’s doing my head in.
The Central West Farmer must be a grain merchant disguised as a farmer or a Claytons farmer deriving most of his income off farm. He crows as if he is selling his grain for a sustainable economic return. The fact is current grain prices are not covering the cost of production and if we are going to continue to have low yielding crops because of continued dry seasons as predicted we will all go broke and there will not be a grain industry.
Why should the most efficient farmers in the world be expected to sell their grain cheaply into an international market where our overseas competing farmers receive massive government incentives and subsidies.
The introduction of private grain buying cartels, solely motivated by self interest, commissions and profiteering out of farmers grain production will do nothing for hard working resilient grain growers. The wheat board put a floor in the market and provided healthy non collusive competition unlike what we are about to experience. If the US derivative crash eventuates and yet another 20 trillion dollars is written off the US stock market in the next 6 months as is widely predicted, there will be no grain exports as there will be no money to buy it.
AWB have nothing to crow about. Locally in Southern NSW we can not even get a cash price for this years wheat. There isn’t any cash buyers. They are all waiting in earnest for the market to crash to $100.00 per tonne then like vultures they’ll all move in for the kill and rip us all off at the other end of the growing season.
The only good thing is that the day of reckoning is getting closer. AWB and Landmark may have made massive profits but the farmers have all accrued extra debt to pay for the merchandise. When the banks move in after they realise that the monopolies have sucked all our juice out only then will AWB and Landmark know what depression is.
With a bit of luck they having big overheads may fall over and be replaced by independents. A small drop in rural property prices will put agriculture into free fall as we will all have no equity left. Whose going to pay for AWB and Landmarks profits next year.
Tighten your belts for the roller coaster ride, could be interesting.
To play devil’s advocate I would say that input costs will most likely have a dramatic fall over the next 12 months. Spot crude is sub $50/bbl, Baltic Spot freight rates are down 77% from the highs and demand for all commodities is down strongly. When input costs were high, so too was the commodity price.
I would gladly pay high prices for fertilizer/fuel with grain @ over $450mt! I think it’s safe to say that there is a very high correlation…..For those that have high input costs and low prices I would say that you price risk management practices have not evolved post deregulation…..
And then the plant variety rights companies want their chop too. This crowd from Melbourne informed us that we have to be on their register.
Companies like that will gradually push GM seed and try to completely control farmers - MAKES ME SICK!!!