A COMBINATION of low commodity prices, a lack of rotational options and the booming sheep meat industry has meant Australian farmers are likely to cut cropping acreage this season in favour of increasing livestock numbers.
After three years of near-record plants as farmers attempted to cash in on high grain prices, the pessimistic outlook for grain prices in 2010 means many farmers will be cutting their acreage.
Australian Crop Forecasters managing director Ron Storey expected a lower acreage when his organisation released its crop forecasts for 2010-11 in March.
“You’d certainly expect that after seeing farmers in south-eastern Australia going for broke on grain over the past few seasons that things would correct themselves a little.
“They’ve been chasing the high prices, and given there have been consecutive crops in many paddocks, I think people are running into rotational issues.
“The other big factor to consider is the good price of livestock.”
One trend beginning to appear is the reversal of new croppers in high rainfall zones back into livestock.
Farmers in traditional sheep or cattle farming areas were tempted into dipping their toes into cropping by the big margins available over 2007-08.
Frequently, they used contract labour to put the crop in, not having the plant themselves, and reports are that many of these new croppers are unwilling to go through the expense again.
Ryan Milgate, chairman of the MacKillop Group, a research organisation based on the SA – Victoria border at Naracoorte, said there was definitely a switch in his local Apsley, Victoria, district.
“Those blokes who got in when the prices were high for grain, I’m hearing some of them are switching back into sheep.
“Newer croppers in higher rain areas are going back to what they know best and into livestock if they can.”
Mr Milgate said many farmers in the south-east of South Australia and the Kowree region of far western Victoria were disillusioned with high input costs and the variable yield and quality of crops.
“People are switching back into sheep, but that in itself is a pretty expensive exercise these days, with ewe and store lamb prices so high.”
He said mixed farmers who had stuck with sheep throughout the cropping boom were reaping the benefits at present.
“With the high price of ewes and lambs at the moment, it’s a bit hard for those who got out of sheep totally to get back in, but those who hung on to some sheep are certainly pretty happy with the job at the moment.”
“Overall, you’d say the smaller croppers in grazing country are looking at getting out and the bigger guys will be cutting down their cropping program.”
Mr Milgate said the other big trend through his area, with the low price of feed grain, was for farmers to use feed grain stored on-farm to finish lambs.
“There’s quite a bit of feed barley going down the sheep’s throat,” he said.
“You’ve got guys with two or three hundred lambs who would normally quit them before Christmas who are keeping them on and carrying them through, seeing a better value-adding opportunity by using their grain on-farm, rather than selling it at the current prices.”
But it is not just farmers in high rainfall zones getting back into sheep.
Jabuk, SA, farmer Ian Farley is based in a region with a nominal 400mm annual rainfall, much less in recent years, and this year he will crop 60 per cent less than in 2008.
“In 2008 we were cropping 75pc of the place, last year it was just over 50pc, and this year we will be back to 30pc in crop.”
He said the lure of the red-hot sheep market had been too good to refuse, especially with depressed grain prices.
“Every year we have been sowing more pastures, some with Veldt grass and some with lucerne, along with planting some grazing cereals for winter feed, that has taken over a lot of the grain crop area.”
He said he ran both a self-replacing Merino flock and also produced first cross Border Leicester ewes, as well as his lamb enterprise.
“If it's done right, it’s a good business, and the risks are a lot lower than in cropping, providing you haven’t had to buy in the sheep.”
Mr Farley said the gross margins were just not there in his low-yielding country on grain.
“We budget about $160/ha to plant barley, and with the current price of at $135/t on-farm, that only works out at around the cost of production given our yields of around 1.2t/ha.”
“Prime lambs are going berserk, I sold some recently at $129 a head, the margins are far better than in cropping at present.”
However, the trend for mixed farm does not extent to committed no-tillers, many of whom have sold off sheep infrastructure and ripped out fences to make their paddocks easier to crop.
A report from the Western Australian No-Tillage Association (WANTFA) found the number of its members running livestock in addition to their cropping program had declined significantly in the past five years.
In 2009, 69pc of respondents had both livestock and crop enterprises, compared with 85pc in a 2003 survey.
WANTFA scientific collaborator from the University of Western Australia, Ken Flower, said economics was the main reason for members making the switch.
“Other factors could be that some growers want to maintain full stubble retention with no-till and feel livestock do not fit in to their system,” he said.
“However, many others do feel livestock fit into a no-till system.”
It appears that Australia will not be alone in having lower crop plantings, in particular in the wheat field, with the US Department of Agriculture saying it expects American wheat plantings to be down as well, as farmers respond to the market signals of low commodity prices by substituting into more lucrative enterprises where it is possible.
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