Australia’s New Grain Deliveries Plunge Due to Drought

Normally, I’d relegate news about Australia’s agricultural output to Links, but I thought this sighting was worth elevating to a post in light of Lambert’s discussion of the Jackpot and California’s fires yesterday. As you’ll see, the fall in Australia’s new grain deliveries is dramatic.

Even when I lived in Australia from 2002 to 2004, policymakers were discussing that Australia was not getting enough for the water it was selling via agricultural exports, although nothing was done to address that issue. And after I left, Australia liberalized immigration to increase its population, which then was around 20 million. It is now over 24 million. The argument for continuing to restrict immigration was scarcity of water, that it was already a resource under strain and more people would only make things worse.

The West Australian gave a similar grim picture last month with Australia to deliver smallest crop in a decade:

Rabobank is forecasting 3.7 million tonnes of WA grain will head from west to east by truck, train and ship this harvest, because of the Eastern States drought.

The call, part of Rabobank’sAustralian 2018/19 Winter Crop Production Outlook, comes as Australia gets set to deliver its smallest winter grain crop in more than a decade, severely curtailing export volumes and weakening the nation’s position against competitors.

Rabobank is forecasting national harvest of just 29.3 million tonnes, down 23 per cent on last year.

With WA forecast to deliver 15 million tonnes (the only state with increases, being 3 per cent up on last year), the state will for the first time in 20 years contribute more than half of the national winter crop.

Rabobank said were it not for the better harvest prospects in WA, the country would be facing its lowest winter crop in the past 20 years.

The reduced harvest – combined with strong local demand and prices – also has significant implications for Australia’s export markets, with grains exports to be severely curtailed.

From MacroBusiness:

Via QCL:

HORROR receival figures into the GrainCorp storage network highlight the depth of the drought in Australia’s north-eastern cropping zone.

Total new-crop grain receivals into the GrainCorp bulk handling network as of November 5 totaled just 93,300 tonnes, with Victorian deliveries, traditionally not a major factor until December, making up over a quarter of the tally.

And industry figures expect the sparse level of deliveries to continue, estimating that GrainCorp could expect to see just 30 per cent of the well below average  east coast winter crop in its system given the strong domestic market this season.

The entire cropping zones of Queensland and NSW together have contributed just 67,800 tonnes into GrainCorp storages for the year.

Even this lowly total is a step up from last week’s figures, when there was just 22,000 tonnes across the two massive grain producing states, which normally put millions of tonnes into the system before the Victorian harvest is ripe.

In comparison, at this time last year, even allowing for a drought impacted season, there was 717,000 delivered to GrainCorp’s networks and in 2016, in spite of massive rain delays, there had been 1.2 million tonnes delivered.

This puts total deliveries this year at 7.5pc of receivals to the same time of year in 2016 or 13pc of those in 2017.

The shortage of cereals hitting the system is borne out by the fact a significant proportion of the grain hitting the GrainCorp system has been chickpeas from central Queensland.

GrainCorp is bracing itself for limited deliveries of whatever grain there is this season.

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  1. PlutoniumKun

    Australia is also – hard to believe – a significant exporter of rice.

    There are drought stresses in many of the worlds grainbaskets now. Southern Europe is suffering too and in the longer term major stresses in the great river valleys of Asia are inevitable. Only Russia and maybe Canada will have potential for increased yields due to longer growing seasons.

    1. Colonel Smithers

      Thank you, PK.

      Thanks to western sanctions, Russia has revamped its agriculture. Industrial production is on the up tick, too.

      We have heard / read about French farmers losing market share in Russia. Last night’s Swiss TV news mentioned that too, part of a report about a big increase in farm suicides, sadly increasingly common across Europe.

      At Mansion House yesterday evening, May made some less confrontational noises about Russia. Apart from the need to get over the hysteria, which is no different to what was propagated against France and Russia and Germany before WW1, City money was talking there. Brexitannia can’t afford to be picky about the company it keeps.

      Two City talks have been organised about China and OBOR / BRI for later this month. Russia and Central Asia will feature.

        1. Colonel Smithers

          Thank you, J-LS.

          Yes, they are.

          I know how dire things are in France and have heard about other EU countries, especially in the Med Basin. It was a surprise to hear about Switzerland yesterday evening.

      1. drumlin woodchuckles

        One wonders if the sanctions against certain trade from Russia and to Russia might have turned out to be an accidental experiment in Protectionism . . . . Protectionism of Russia itself. Outsiders forbidding themselves to sell food into Russia would have the same effect as Russia forbidding outsiders from selling food into Russia. The Russian producers of food would be Protectionized and given access to a whole new market to sell into, the Russian market.

        Is that view of things too silly for words, or might there be some merit in viewing the anti-Russia sanctions as being a kind of Protectionism-by-backfire operating to Russia’s benefit?

    2. Arizona Slim

      ISTR reading that Russian is largely self-sufficient in food production. A fairly recent development.

      1. Jessica

        A fairly recent development and a return to the past. Russia was a major grain exporter up to the early 1930s. The machinery and technology imported for Russia’s pre-WW1 industrialization and for the massive Soviet industrialization under Stalin were paid for with grain.

  2. The Rev Kev

    A drought would suggest a temporary condition, even if it took several years to work through, but I doubt that this is the case here. Had to go digging into the figures for this one. Apparently, Western Australia’s winter wheat crops are for export to Asia and the Middle East while those for the east are for domestic consumption and feedstock. If we are shipping wheat from west to east, this would suggest that it is to plug the shortfall. A major factor is climate change at work where we are getting less rain and the air temperatures is rising above the optimum wheat-growing temperature of 23°C (73°F). Thus yields are dropping over time. In the 20th century Australian wheat production tripled but has flat-lined since the 90s. Other countries like France, Canada and China are increasing their yields so this would suggest that this problem is specific to Australia.
    Some voices from our Commonwealth Scientific and Industrial Research Organisation are saying that by 2041, wheat production here will be down to 1.55 tonnes per hectare (1.74 at the moment). Our farmers are getting more efficient but it sounds like a case of running as fast as you can to stay in the same place. There is another problem heading our way (everybody’s really). We use phosphorus and nitrogen fertilizers for our soil but long-term world guano and rock phosphate mines will be exhausted by the end of the century. Luckily for world wheat needs, Russian wheat production is skyrocketing and now supplies half the world’s needs but that does not help much with our declining export of wheat. It doesn’t help that more and more of the world’s wheat production is used for animal feeds (grain fed beef instead of grass) and ethanol production (for cars) which is crazy when you consider that world wheat production will have to increase 60% by 2060. And as PK has noted, we also grow rice which is crazy but is perfectly rational in a neoliberal economy. Watch this space.

    1. animalogic

      ” It doesn’t help that more and more of the world’s wheat production is used for animal feeds (grain fed beef instead of grass) and ethanol production (for cars) “. Indeed.
      Not only is wheat “wasted” in these ways, but both (especially as cattle feed) contribute to global warming.

    2. drumlin woodchuckles

      If the mainstream farming community in Australia can learn to suck down and bio-fix all the sky-nitrogen it needs for the wheat crop . . . through using N-fixing legumes in rotation and through fostering the in-soil growth and activity of non-legume N-fixing bacteria, actinomycetes, etc.; then the need for guano or Haber-Bosch or any other purchased-in Nitrogen will be set aside and obsoleted.

      The Phosphorus problem will be harder to solve. I have read that some of the world’s deposits of hard rock phosphate are surrounded by larger deposits of lower-percent-phosphorus deposits of “soft” rock phosphate. If that is true, then time can be bought to figure out how to find and mine seabed deposits of Phosphorus rich shells from dead foraminifera. I believe the phosphate deposits are ancient sea-bed layers of countless dead foraminifera shells to begin with.

  3. Colonel Smithers

    Thank you, Yves.

    Across the Indian Ocean, agricultural production is also falling in Mauritius and the African mainland due to drought. As Europe and North America experienced a longer and warmer summer, the islands and some of the mainland experienced a longer winter than usual. It has also warmed up quickly. More whales were observed migrating from Antarctica this winter.

    Mauritius is expected to produce 350,000 tons of sugar in the 2018 season. Production for much of this century has averaged about 500,000 tons, but has declined in the past few years.

    Some of the decline can be attributed to the loss of EU quotas and guaranteed prices, but recent droughts are the main culprits.

    Sugar cane is grown over about 58,000 hectares, representing about 31% of the (main) island’s total area. Agriculture, mainly sugar, accounts for 2% of GDP, provides almost 16% of export earnings and generates 28, 500 direct jobs. Other farmers are abandoning fruit and vegetable production. Non sugar production accounts for another 1% of GDP.

    My parents and I no longer grow sugar on our small holding. We have diversified into fruits and vegetables (especially vanilla, ask Vlade :-)), lease some of the land to a local hotel for its fresh produce, and lease some for pepper corn to families / fellow parishioners who don’t have any farm land. The mill where we sent the canes will close after this season, leaving three for next season, but another one or two may close in the next decade.

        1. Colonel Smithers

          Thank you.

          We don’t / the cooperative does not, but I can send you some. Please ask Yves for my private email.

  4. vlade

    I never understood Australia, the dryest inhabited continent, building its economy on water exports (not just agri, mining too).

    Unfortunately, when I talked about it to my Aussie mates, the answer usually went along the lines ‘she’ll be right mate – as long as there’s beer, who cares about water?’

    1. Another Scott

      Me neither, and if memory serves, the unsustainability of Australian agriculture was the subject of a chapter in Jared Diamond’s book, Collapse. I believe that was more about the soil in Australia than water. Australia is also a big user of desalination, which is incredibly energy intensive. Would desal be necessary if the country stopped growing food for export?

      1. vlade

        TBH, desal energy use is the least of the problem with desal in Oz – they could easily power that by solar (both thermo and electro. IIRC, Oz is one of the few places where thermo-solar electricity plants actually make sense, due to the combination of weather + arid emty space).

        The worse thing on desal is the concentrate it dumps into environment I.e. the water comes on one end, but all the other stuff (which is actually not entirely dry, but IIRC sort of a thick muck) comes the other. Which just tends to be dumped back into the sea. Coz, you know, it was there before, so it’s just putting it back, right? Except a few orders of magnitude more concentrated. Sort of like saying that since human body has quite bit of iron, stabbing someone with an iron knife is just putting it back.

  5. rd

    In California, I assume they would say that “as long as there is wine, who cares about water?” as they have similar water intensive agriculture for export (e.g. alfalfa).

    1. John k

      And rice,
      When do we take on the ag lobby?
      Ag total production is 2% ca gdp, uses 75% of water allocated to man.

  6. Jessica

    “Australia was not getting enough for the water it was selling via agricultural exports”
    First heard this notion in Heinlein’s The Moon Is a Harsh Mistress.

  7. Shane

    Much of Australian grain farming is unirrigated. We have a highly variable climate, but with improving weather data farmers are getting better at only planting crops when the rain forecast is favourable. The downside is unpredictable stretches where no crop is produced. This can be tolerated in a globalised grain market where transportation is cheap and reliable, but if those regions ever had to go back to just supporting themselves through local food production the variability would make it really difficult to support local communities in the long run. With world oil production looking to decrease at some point in the future, coupled with our very long distance from export markets (and the potential for conflict to shut down shipping lanes) the future of the Australian export agriculture model looks like it has a limited shelf life to me.

  8. The Pale Scot

    The number to watch are the ratio of money spent on fertilizers, irrigation and tech compared to the increase in production. 40 yrs ago every extra dollar spent resulted in a ten increase in output. The numbers I have seen for 2014 put at a one to now ratio. Just maintaining current global production will require inputs with no or little increased profits. All of the good arable land is already under the plough. I don’t see how the world in going to feed 2 or 3 billion more people in the next 50 years

    1. drumlin woodchuckles

      Ban concentrated feed-lot feeding of grain to livestock. Feed all that grain right straight to people instead.
      It means everybody eating mostly grain/roots/leaves/fruits/seeds. And the only meat anyone gets would come from carbon-capturing livestock on range-and-pasture systems.

      And that’s how we feed 3 billion more people. Stop feedlotting hundreds of millions of feedlot cattle and mega-pigpen pigs. And mega-battery chickens too. All that food to the more-people instead. ( And also, repeal the Forced Ethanol-in-gas Mandate in this country and grow corn-for-people on all the corn-for-ethanol land of today).

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