Supporting ag through the highs and lows of farming

Article by Rob Clayton, originally published in The Land 11/12/21.

It’s been an extraordinary year of weather events. The winter rain across the country has helped many cropping regions in the lead up to harvest, so it’s very disappointing to see what’s happening for many farming communities in Queensland and New South Wales, who are now seeing their yields washed downstream. This is a difficult end to the season and means we expect to see quality downgrades and production down a little year over year in NSW.

Nationally the winter crop will still be higher than we have seen in the recent past, according to the latest ABARES forecast. This is cold comfort to the farmers that are coping with the hand dealt by the current weather conditions.

It’s been a volatile year and it’s a challenge to assemble all the various components of the global ag marketplace to predict what might happen next. But one thing is certain – the fundamentals of global agriculture are strong, and therefore the outlook for Australian growers is strong.

Even as farmers on the east coast manage and then recover from the current floods, they will be looking ahead to their next move. Australian farmers find themselves in a unique time when opportunities are immense but cashflow is limited.

There have been major supply chain disruptions and price increases across all the input categories that growers depend on (seed, crop chemicals, nutrition, fertiliser) further amplifying the need for speedy and smart decision making.

However, we are optimistic about the prices growers will continue to receive for their commodities, particularly grain and livestock, and the incentive that remains for growers to plant big next year on the back of a strong seasonal outlook.

At a global level, supply is struggling to meet demand for a wide range of agricultural commodities. Back-to-back good seasons have enabled Australian growers to take advantage of this situation, allowing them to consolidate farm incomes and build resilience for the future. In the last 12 months alone, domestic young cattle prices have increased 40%, lamb 11% and canola 50%, providing exceptional opportunities for producers to capture profits. Globally food prices are at 10-year highs. The price rise in cereals and vegetable oils have been a major driver in this.

And here’s the rub – the volatility in the supply chain brings uncertainty around the availability and the pricing of inputs. At the same time, farmers will be looking to make quick decisions about what they do for next season.

While the onset of La Nina can mean rain and cooler conditions for Australian farmers and is having devastating impacts for some growers as they rush to get off what crop they can. It will also mean many farmers will see reduced or delayed grain income this year.

However, the rain will leave a strong moisture profile, setting up grain growers for a good season next year. Much of the east coast is already sitting at 100% saturation of root zone soil moisture. And this is where grower’s ability to access the capital needed to grow to the season, not their current cashflow, is vital. Farmers have some of the lumpiest cashflows of any industry on the planet. The timing of cropping applications is critical to optimise next season’s crop and it means they may need the inputs before they have the cash to pay for them.

As all farmers know – timing is everything in agriculture. With a footprint right across Australia, our business feels the great obligation and privilege to walk with farmers through the tough times and use the assets we have at our disposal to ensure they can access the liquidity needed to make the most of every season. Certainty of supply and flexibility to pay later when their cashflow suits is key to managing lumpy cashflows and dealing with the vagaries that weather will throw at every grower over their time on the farm.    

This approach is about supporting sustained growth over the long term – to take a big picture view when the chips are down, knowing that farmers will pick themselves up and dive into the next season.

PHOTOS:

Connor Parkes, Nutrien Ag Solutions Narrabri, standing in front of the flooded Namoi River. (Credit: Ngaire Roughley).

Staff at the Nutrien Wee Waa Branch moving along some unwelcome guests after the recent flooding (Credit: Nick Brennan).