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Farmanco Facts - November 2021

David Ward introduces the November edition of Farmanco Facts. He says

“there is nothing more important than being well organised and prepared. Not only for this harvest, but for the cropping year ahead of us.”

This month Wayne Birch writes on Cereals: Wet Harvests and Falling Numbers, Greg Easton on Gross Margins and Fertilisers, David Ward provides Part 2: the State of Agricultural Businesses, Adrian Clancy looks at International Freight.

We also introduce the Farmanco Facts App.

– available on iPhone and iPad (in development for Android devices).

Key Points:

Cereals: Wet Harvests & Falling Numbers

(Wayne Birch, Agronomist)

  • What are falling numbers?

  • How do they affect grain quality?

  • What factors influence falling numbers?

  • What can you do to minimise the effect of a wet harvest?

  • We will have a look at some new developments in our understanding of falling numbers.

“The falling number for wheat is a test that has been in use domestically and internationally for over 50 years to detect the presence, via correlation, of alpha-amylase and sprouting in a sample of wheat”


Gross Margins & Fertilisers

(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.

“This article looks at some predictions for the Australian grains industry in 2030.”


The state of Agricultural businesses: Part 2

(David Ward, Management Consultant)

  • Establish your business's financial strength and viability, then plan accordingly

  • Determine the expected return on any potential investment

  • Decide on your business's priorities before making a capital investment

  • Assess the level of risk and how this will affect you.

  • It is important to take the emotion out of your decisions

  • Farmanco's Business Expansion Risk Matrix (rating system) can assess all of the risk factors and deliver a recommendation.

“Financial strength is determined by equity and key financing ratios. We will develop our view of whether it is viable or non-viable.”


International Freight

(Adrian Clancy, Grain Marketing Consultant)

  • International freight rates have more than doubled in the last six months.

  • Baltic Dry Index (BDI) is a good measure of international trade

  • There are indications that a correction is now in sight

  • High shipping rates give us a strong advantage into Southeast Asia, due to our proximity

“The clearest indication on how the market has moved is the Baltic Dry Index (BDI).”



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