Introduced by Ben Curtis, Esperance
In December each year, we pull together the most popular and relevant articles from our monthly Farmanco Facts publication, highlighting industry key issues with our suggestions for managing these.
2021 saw some huge changes in the agricultural sector. Good seasonal rainfall together with cool spring conditions led to high yields for those areas not frosted or flooded. The year has been underpinned with large gains in land value and lease prices, increasing grain and livestock prices and followed with a late and rapid surge in fertiliser and chemical input prices.
Supply of inputs remains the biggest threat to production next season. For many growers, the lack of fertiliser at seeding might be a greater risk than current high prices.
2022 will be a year where care with placement and quantity of inputs will make a huge difference. It is likely to push more growers into using basic precision agricultural principals to strategically place inputs, in order to save on costs while maintaining productivity. Hedging some of the high input costs with forward selling of grain is also being used to protect against the chances of grain prices falling during 2022. Fortunately, the cash rate has remained low, although there are now some signs of longer-term rates rising. It will be an interesting budgeting period!
Farmanco has continued to grow and change. Laurence Carslake replaced Rob Sands as chairman of the Farmanco Board and is joined by David Cameron, Ben Curtis and Nigel Hennessy.
We continue to develop our software and products and have released the iPestbook edition of our popular Pestbook. This is an intelligent and intuitive way of interrogating the vast amount of information contained in the Farmanco Pestbook.
Also we released an app version of Farmanco Facts that allows you to search for articles and topics in our back catalogue going back to 1996, including videos, sound files and ad hoc articles.
The Agribusiness Edition has been provided to industry bodies who contribute to the growth and development of Farmanco’s farm business clients.
We wish all Australian farm business and support industries the best for 2022, and a wonderful Christmas season with family and friends.
To read the complete edition, see PDF attached.
Location, location, location: Where world wheat stocks are located matters
(Mae Connelly, Grain Marketing Consultant)
Total global wheat stocks are the fifth largest on record
There is an inverse correlation between global wheat stocks-to-use ratio and global wheat prices
In 2021, global wheat stocks are relatively high, but global wheat prices are also high
The reason the correlation has been lost is because of the shortage of wheat stocks in the major exporters
The lack of available exportable tonnes of wheat has importers concerned, and global wheat prices have rallied.
"A significant reason for high (wheat) prices has been the fact that while total world wheat stocks are high, stocks that are in the major wheat exporters are at record lows.”
Gross margins and fertiliser
(Greg Easton, Management Consultant)
Gross margins are a useful tool to compare relative profitability of similar enterprises
A positive gross margin means that the enterprise is a better option than no enterprise at all, e.g., fallow
A negative gross margin would need to have other rotational benefits that are better than fallow to be considered useful
High fertiliser prices don’t necessarily favour lower fertiliser use enterprises such as legumes and livestock
Gross margins are useful for short-term rotational option comparisons
Gross margins do not consider overhead and capital costs, and they can be substantial
Long term changes to rotations require profit analysis, not just gross margins.
"It is not often that I use gross margins, preferring to consider profit for business analysis and comparisons. However, high fertiliser costs are an example of where gross margin analysis is a suitable tool”
As the world moves to low carbon economies, what does this mean for agriculture?
The world is moving to lower carbon economies
There is pressure on larger companies to reduce emissions
They will pass this pressure on to their customers
There are opportunities for agricultural businesses to profit in this environment
You need to be able to measure where you are before you can see where you need to go.
"Whichever side of the fence you’re on, it’s clear that most of the world believes in manmade climate change, that the consequence of this is an existential threat to humans, and that governments are acting accordingly (or if you’re cynical, at least trying to give the perception of acting accordingly).”
Glyphosate residues in grain and soil
(David Cameron, Agronomist)
AMPA is the abbreviation for aminomethylphosphonic acid, a product of glyphosate degradation
AMPA can have low levels of herbicidal activity, but it is tolerated well enough by most crops we grow. It can be absorbed through the roots, translocated through the plant and into the seed during grain fill
Lupins are a more sensitive crop and AMPA levels in sandy soils can affect early growth
Low PBI soils and applications of phosphorus fertiliser can release glyphosate and AMPA from binding sites in the soil, which can lead to AMPA uptake
Glyphosate and AMPA can chelate trace elements, making them less available
Rhizoctonia may be more of an issue when high rates of glyphosate are used.
"Glyphosate is an incredible herbicide. It is affordable and, until recently, has been highly effective. Because of this and a shift in farming systems and the weeds present, we use large volumes of it and at different crop stages. This comes with consequences.”
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