Increased rainfall a mixed blessing for SA farmers
Tuesday 13 December, 2016
Relatively high rainfall across South Australia in the past year has proven to be a mixed blessing for the State’s farmers, according to the latest BankSA Rural Price Index.
The Rural Price Index reveals good news for producers of horticulture products, with prices spiking by 13.6% over the past 12 months, while prices for livestock and livestock products also rose by 5.2%. However, grains producers saw prices slump by 13.4%.
The crops and grains commodity group is historically affected the most by short-term changes in weather conditions, and while higher rainfall meant production levels were up, prices were pushed lower as a result.
For the livestock commodity group, higher rainfall led to many farms rebuilding their herd numbers, which contributed to a fall in the supply of beef that in turn helped push prices up.
Meanwhile, for the horticulture sector where there is always a fine line between good rainfall and too much, conditions remained on the positive side this year leading to substantial price increases for wine grapes, fruits and vegetables.
In fact, this is the third consecutive year of increase in the price of wine grapes in the local market, ending a long period of decline that at one stage saw average wine grape prices fall 50% between 2008 and 2011.
BankSA Chief Executive Nick Reade said that overall it has been a solid 12 months for South Australian farmers.
“Despite lower world prices for some agricultural commodities, business conditions for South Australian farmers over the past 12 months have been reasonably good,” Mr Reade said.
“The relatively high rainfall in South Australia this year has certainly been a mixed blessing for farmers depending on the type of farm product they produce, but overall the level of rain has been positive, particularly for cattle farmers and grape growers.
“Product prices were up for many farmers this year, while for many others it was a case of higher production but lower prices, which isn’t necessarily a bad thing so long as output rises enough to offset the effects of price falls.
“In terms of the Australian dollar, it’s the lower the better for domestic producers who export to global markets. And while the dollar came off the lows it hit in the latter half of last year resulting in slightly lower global competitiveness in 2016, it has remained steady in recent months to provide more stability for local farmers.”
Looking ahead in South Australia, the production of wheat and barley – which were both above their five-year averages in 2015-16 – is expected to increase again in 2016-17 thanks to good rainfall.
And despite below average production of canola this year, it too is forecast to lift next year, with the area planted rising by 2% as local farmers attempt to capitalise on expected growth in returns and average yield.
The BankSA Rural Price Index has been tracking farm prices for South Australian farmers since 2000 and is a measure of prices received for grains, livestock and horticulture. It aggregates price movements across 17 products, which make up more than 80% of the State’s farm output, and informs South Australian farmers and farm industries how local farm product prices are faring