The team at Peppin are delighted to collaborate with Andrew for friends and clients.
Hi All,

Welcome to the third Progressive Agriculture Update. Same themes as last fortnight; please share with your friends and colleagues if you think they’ll like it.

Andrew Bomm
Prices have bounced

From the lows experienced early in October, temporary water prices have rebounded to around $60 in the Murrumbidgee. In the Murray above the choke it’s about $60 and below around $80. These are best estimates – price discovery in the market remains a dismal business.

On the supply side, allocations will reach 100 per cent for both Murray and Murrumbidgee GS, and most accounts will reach full capacity (carryover plus allocation) in the next month. The Murray price may have come down over the weekend after Murray Irrigation’s announced intention to sell efficiency dividends, rather than distribute them back to customers.

Demand indicators are also starting to firm. As the recent spell of fine weather holds out for a little longer, prices in temporary water markets have increased across the southern Basin. More cotton will go in than might have been assumed three weeks ago, and while there will be production risk from a cold and late planting, water demand is now a little clearer. Likewise, rice plantings shouldn’t have been too limited by the wet conditions.

The previous absence of buyer interest in the market - caused by uncertainty over summer crop planting - will shift. Growers without held entitlement to cover crop needs will be looking towards the temporary market to meet in season demand as the weather starts to warm up. Present low prices may reflect a lingering lack of urgency from buyers, but this won’t last as summer hits and water needs become more pressing.

Parking space – how will this market develop?

With a lot of cheap temporary water about, many irrigators will begin to think about how they can secure water for next season while avoiding carryover spill risk. Parking water on a licence with carryover space is an option increasingly being used, though it comes with a degree of counterparty risk. It’s an underutilised arrangement with limited information about market value to those with available space, or those wanting access.

It will be interesting to see how these market options develop, particularly as it’s use offers the prospect of more forward water leasing options on the market.
Summer and autumn outlooks
Discussion about the weather beyond November is beginning to firm around at least average rainfall this summer and potentially above. Although more speculative, autumn may be returning to dry conditions, which would make stored moisture dryland croppers and held water for irrigators critical.  
More on the BOM
The BOM issued a minor complaint about the criticism it received in the update last fortnight. Yes, Barnaby has directed them to improve services to agriculture, but it’s not yet been done and the organisation has a history of not delivering on new initiatives. I don’t know how much money went into the BOM’s goal of amalgamating a range of water resource information for irrigators, but it went nowhere.

We’ve seen the release of a BOM weather app delivering general, short term forecasts for the wider community. Where is the app for farmers with Norwegian-style detailed rainfall predictions, or climate outlooks updated regularly, or mixing height information to assist with stubble burning? Certainly one to raise with your local member when the opportunity arises.


National conversations that let us pick a team

The national political conversation today isn’t about productivity, innovation, federal-state co-ordination or an efficient tax and welfare system – all issues that properly addressed can improve not just our prosperity but our quality of life. Too complicated. No instinctive black or white responses involved. As well as a pretty ordinary debate on gun importation, we’re instead focussed on whether to have a vote about same sex marriage, the public’s views about which can be broken down thus:

  • 10%: Support it because it directly affects them or a relative/close friend
  • 15%: Support it because they are part of socially progressive inner city networks
  • 45%: Support it by default because they don’t really care who is allowed to get married
  • 30%: Opposed for religious or socially conservative reasons

There is nothing wrong with any of these views, but the debate isn’t getting us anywhere. At present, we will either 1. have an expensive vote about a reform we know Australians support, or 2. have a political stale mate, no reflection of the people’s will, and the national political conversation dominated by something that in the scheme of things is not that important.

Welcome to modern politics. In 2016, our leaders don’t trust the community’s capacity to engage in rational discussions about complex economic issues, and don’t have the ability to communicate about them.

How will farm businesses manage drought risk in the future?

Australian governments of both colours would like to get out of providing drought assistance. Many farmers don’t like it either, as it restricts their opportunities for expansion. The alternative often put up is multi-peril crop insurance, but whether it can stack up as a drought management tool is hard to fathom. It works in the US because the government underwrites it massively. Whether it will be priced commercially here, without government support, is questionable.

The other difficulty is that a lot of farmers and politicians have a tacit understanding that in tough times the government will help out - there’ll be payments available to make sure that no too many farms go under. This makes it hard to incentivise enough farmers to take up insurance of this kind, leaving us in a continuous policy trap. 

Here is a link to Australia’s main MPCI option.
Click here
What is success and what is failure?

Here’s a brief and interesting podcast on how to be gentler with ourselves about these issues in a haphazard, random world, and the vagaries of agriculture are no better example.
Make mine a Melbourne

Could there be a better combination than 1970’s stylised farming and Melbourne Bitter? No, this is indeed the pinnacle so enjoy:
NB: If you’re from the NE of Victoria you may recognise some of the characters in this one.
A roughie

The market on the gay marriage plebiscite is fascinating. On the question of whether there will be a plebiscite before 2018, Sportsbet have offered the following:
  • No - $1.15
  • Yes - $5.00
This is remarkable - $5 on enough cross bench senators doing a deal on this question isn’t bad value.

By the way, I hope someone out there took Hillary at the very generous $1.53 flagged here because those days are gone!

There is a lot of great information out there and it’s all on twitter. I’d recommend following the NFF’s social media outlet Australian Farmers, which includes a nice daily summary of commodity price information from CBA.
Click here
Southern Growers

Southern Growers is hosting a Winter Crop Field Day on Thursday 27 October. It commences at 9.00am with national variety trials at Mayrung, followed by canola agronomy at Finley from 11am and from 2.30pm at the wheat agronomy site. For full details, or to RSVP, contact Stephanie Chappell on M. 0417 444 750 or E.
Follow @progressiveagri on Twitter
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