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The effect of the Australian climate on harvest and grain marketing

The exchange has given me the opportunity to experience firsthand the after effects of the severe drought which has been a topical subject throughout the industry, writes Brown&Co’s George Lane.

A challenge which faced UK agriculture this year, also tested farmers in Australia who have extensive experience in drier conditions.

 

New South Wales is one of the most effected regions, reaching lowest rainfall deficiencies on record.

 

Although the drought is not new news, the effects of this are now coming to light and Rural Directions has been at the forefront of advising farmers through the challenging time.

 

I was thrown in at the deep end in one of its Grain Briefing sessions held at Rural Directions Freeling office (an hour north of Adelaide in South Australia).

 

These sessions are run three times a year across South Australia and Victoria and are open to farmers who subscribe to Rural Directions Grain Marketing Service.

 

I gave a quick presentation to a small group of these clients about the background of Brown & Co, what we do, my role within the business and what we are hoping to achieve with the exchange program.

 

This sparked some interesting discussions about the differences in agriculture between the UK and Australia, with the main focus being around Brexit. Most people in the room were bamboozled as to why UK farmers were still receiving subsidies.


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I spent two days on the road with Rural Directions grain marketing specialist, James Hillcoat.

 

Originally from Lincolnshire, James has been with Rural Directions for roughly 8 years and is based in their Freeling office.

 

We visited a farm on the Yorke Peninsula in SA, which is typically a higher producing area of the state, due to the rainfall which it catches coming off the coast.

 

The business farms various crops, including lentils which make up part of a secondary business.

 

The lentils are processed and packaged, then sold through local supermarkets and other outlets, value adding to the lentil crop.

George Lane
George Lane

The meeting with the client focused on their grain marketing position to date and how exposed to the market the business was. Due to the drought across southern and eastern Australia, yield estimates have fallen.

 

Lower supply and steady demand has resulted in higher prices. Therefore, many farmers are now more exposed to markets than they initially thought they would be at the start of the season. It was at this point it became clear just how much the weather can influence businesses.

 

The business had taken out SWAPs (a grain marketing risk management tool), so a discussion was had whether it was beneficial to close these or hold on for the time being.

 

The meeting finished off by drawing up guidelines around a grain marketing strategy. The aim of this was to make the business more transparent for all involved and to streamline succession, which is something I rarely come across in the UK.

Typically, farmers in Australia sell and move crops at harvest, as storage is difficult and costly, particularly with cereal crops due to the heat and the risk of disease. Therefore, the vast majority of marketing is done before or at harvest.

 

This is quite different to marketing strategies in the UK, where typically the majority of marketing is done after harvest. However, this requires investment into suitable infrastructure or off farm storage.

 

Frosts had been occurring in the weeks leading up to my arrival in Australia, which I found quite hard to believe in such a dry climate! With these frosts being so close to harvest it has had devastating effect on crops.

 

I spent a day with Patrick Redden, one of the agronomists and directors of Rural Directions. We visited a farm just outside of Clare to assess the impact of these frosts on crops, and to determine with the client if it was viable to harvest for grain, or to cut for wholecrop hay.

 

It is quite common to have frost close to harvest, so this is an issue which farmers often face, but this was something completely new to me. On this occasion, after evaluating the fields they made the decision to cut certain areas which had suffered more damage from the frost.

 

The hay crops are either used domestically or exported, but this year with the drought, hay crops are in high demand domestically, thus prices have rallied.

 

We then moved on to Balaclava to look at canola (oilseed rape) and pea crops to see how close to harvest they were and when they needed to be desiccated.

 

In this area, harvest of these crops look to be 2-3 weeks off, which is earlier than normal because of the drought. The last stop of the day was to a mixed farm on the edge of the town which rotational grazes sheep amongst the arable rotation.

 

This business uses vetch and barley crops to graze their sheep and to provide a rotational break.

 

Having a discussion with the farmer, it became apparent that the typical Australian farmer has fewer passes with the sprayer (typically 4-5 passes) therefore relying less on herbicides and pesticides.

 

The reason for this is that most crops are more extensively farmed than similar crops in the UK. With the hindrance of a drier climate, this also has its advantages as disease and weed pressures are far lower than those in the UK.

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