Outback Australian farmers — hardened from dealing with extreme weather, fires and pests — now have to wrestle with modern trading tools and technology after a tough day tilling the land as they adapt to the rigors of a deregulated market.
For many, especially older farmers facing a bewildering host of new choices, the changes mean they may miss out on the best prices or even come under pressure to sell up to bigger farmers or foreign investors.
Farmers visited during a crop tour in eastern Australia last month had mixed feelings on the ending of the monopoly held by the Australian Wheat Board (AWB), which meant they now had to keep close tabs on day-to-day global prices.
Wayne Dunford, 60, who grows wheat near Parkes in central--west New South Wales state, said many farmers faced an uphill task coping with the new system.
“They’re not used to things like forward selling, futures and hedging, preferring the old system where they just delivered to the wheat board under the single desk system,” Dunford said.
Some older farmers were also less technologically savvy than younger farmers or lacked the business skills required to market wheat on their own after the single desk system ended three years ago.
For nearly 60 years until 2008, AWB had sole marketing rights over the country’s wheat export sales. When restrictions were eased, commodities giants such as Cargill Inc and Glencore International swooped on the world’s fourth-largest wheat exporter, eyeing it as an opportunity to gain a new source of grain.
Canada, the world’s second largest wheat exporter, is the last major western supplier to operate a wheat marketing monopoly through the Canadian Wheat Board that has had sole marketing rights since World War II. However, the country’s conservative government plans to abolish the system in August next year.
Australia’s decision to free up the market was one many smaller farmers opposed, as they liked the system that allowed them to deliver into AWB pools while concentrating on growing grain.
“Under the old style wheat board you knew what you were going to get [in terms of price]. Our wheat board was very efficient as they knew how much wheat they had and how much they had to sell,” said Brian Johnston, 55, who farms an area 400km north of Sydney. He said farmers now had to fire up their personal computers virtually every day in an effort to get the best rates in a volatile wheat market.
“I can’t work a computer so my wife does all that — the young blokes can handle them ... they’re computer literate, but not me,” said Johnston, who has worked on his property since he was 15.
Global wheat prices have been volatile this year. The Chicago Board of Trade’s spot month contract hit a high above US$8.93 per bushel in February on concerns of dry US weather, but struck a low near US$5.65 at the start of July as Russia and Ukraine relaxed export restrictions.
Prices have climbed back to above US$7.00 since then, in line with rising corn prices.
Other farmers have got used to the new system, though they are still building up expertise.
“There’s hedging products — risk management stuff — you can sell any amount of grain forward but that’s pretty tricky at this time of the year when you don’t know how much will be produced,” said Jock Coupland, one of the largest grain growers in the Condobolin district of the New South Wales’ mid-west.