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Drought drives demand for feed grain, forcing up prices and creating new transport routes

Kath Sullivan and Tom Nancarrow, Wednesday August 8, 2018 - 11:11 EST
ABC licensed image
Need for Feed has sent many truckloads of hay in the past, but is now struggling to source feed. - ABC licensed

Demand for hay and grain in Australia is headed for "uncharted waters" as farmers struggle to find feed for their livestock.

Sydney-based market analyst Nick Crundall said Australia is experiencing the "biggest domestic demand for feed grain that we've seen for at least 10 years," and for the first time fodder from Western Australia has been shipped to New South Wales.

"We've seen more vessels go out of Port Lincoln and Adelaide into Brisbane. We've seen WA also doing a few and expecting a few more to be unloading in Brisbane over the next few months," Mr Crundall said.



"We're starting to see a vessel go into Newcastle to supply that eastern part of NSW, the Liverpool Plains, where there's a feed market and livestock producers scrambling there to try and feed stock.

He said road freight was relatively well priced at 7-8 cents per kilometre, compared to shipping at US$20–$25 per tonne.

"It is pretty dire in Queensland and northern NSW. There's guys that have just simply not put crop in .

"If the season does not improve we're just going to see more and more ships and trucks and trains heading north from WA, SA and Victoria to alleviate the feed demand in those zones," Mr Crundall said.

"We've got to a point where livestock producers and feedlots, even flour mills, are buying whatever they can get their hands on.

"Protein stocks are very, very scarce but whatever there is still getting fed to cattle, with most guys happy to take feed barley, hay, varying qualities of wheat. They'll just buy anything to secure some inventory basically.

In survival mode

Chair of the Australian Fodder Industry Association Frank McRae said NSW had practically run out of feed for its animals.

"There's pretty much virtually nothing in NSW and supplies are rapidly drying up in southern Victoria," Mr McRae said.

"You have to go back to 1981–1982 to see a drought this widespread and so severe."

Mr McRae remained optimistic the season would turn for the better.

"We're in survival mode at the moment.

"Everyone is desperate and becoming really emotional, but I know producers out there planning and who are buying irrigation water, because as soon as temperatures warm up come mid-October, they're going to plant fodder crops," he said.

Export market redirected



Grain Producers South Australia director Garry Hansen said farmers who normally sold to export markets were now selling domestically.

"The domestic market will be prepared to, and is proving now, it is prepared to pay enough to stop it going on the export markets," Mr Hansen said.

He said the market was paying $320 per tonne for feed barley, over $400 a tonne for lupins and hay making over $300 a tonne.

"I think those prices are way above what you'd get on the export market."

"The import price of grain, into Australia, will put a lid on what they are prepared to pay.

"At the moment I don't know how far away they are from that import parity, but I would imagine we'd be fairly close."

Mr Hansen said he did not believe Australia needed a reservation policy that would ensure Australian farmers had access to feed, before it was exported.

"I don't like any intervention in pricing. I'm a strong believer in free markets," he said.

"If they are taking grain from WA, it is a matter of supplying the domestic market, rather than the overseas market.

"That all comes down to dollars and cents and value you're getting for the grain on the domestic, rather than the export market."

Mr Hansen, who farms at Coomandook in SA's upper south east, said while he did not know of any farmers currently importing feed, it was not beyond the realms of possibility.

"If you have got a large feedlot in Queensland and you need grain to keep that feedlot going, and they do the sums, which says you can import it cheaper than import from WA — then they've done it in the past, and they'll do it the future. But it will be based on the economics," Mr Hansen said.



Grain going back to farm

In South Australia, farmers have recalled 20,000 tonnes of grain from bulk handler Glencore over the past three months in a bid to feed livestock.

A spokesman for the bulk handler said its domestic contracts for farmers and small-end users had doubled each month since April.

South Australia's primary industries minister Tim Whetstone said it had been decades since such a large amount of grain had moved back to farm.

"If I look back it could have been the early 80s, I was just a boy then, but I do remember my father talking about it, in awe — you know how could this happen?" Mr Whetstone said.

He said many farmers in South Australia were struggling with extended dry and now fearing feed shortages.

'I don't want to say drought, until we have to say the word," Mr Whetstone said.



"SA has supported [farmers in NSW and QLD], we have sent a lot of hay, a lot of fodder, a lot of support to the eastern seaboard.

"Now we're looking in our own backyard wondering how we're going to support ourselves."

Mr Crundall said even if the current season improved, feed stocks next year would be under pressure.

"A few inches of rain would certainly help, but the damage is getting done the longer and longer we wait, the crop in the ground trying to grow is under a fair bit of stress," Mr Crundall said.

"If we see a dry and hard finish to Spring, who knows what will happen, we'd be very much in uncharted territory of that is the case."

The fodder farmer

In south west Victoria, grain and hay farmer Graham Thompson, said the season had been kind.

"[We're] now nearly at the stage, we're getting wet," he said.

Mr Thompson said this year he'd sold hay as far away as Scone in NSW.

"We're at the stage now, we've run out of hay. Most are keeping a very minimal reserve, just in case we have a bad season. Most of the hay is spoken for, gone and headed north.

Mr Thompson, who could recall the 1967 drought, said he wondered "if this one is one of the worst we've seen".

"Unfortunately, we can't direct rain from down our way.

"I'd send them [farmers in drought states] a 100 mm if I could, but we haven't worked out quite how to transport it."


- ABC

© ABC 2018

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