Trouble for Farmers in Australia’s Central Wheatbelt

Jonathan Barratt

May 12, 2021

Decile 1 rain in April, low subsoil moisture, and neutral climate indicators could mean trouble for Australia’s Central Wheatbelt farmers if the Autumn break is not substantial.

On the back of last year’s production, expectations for this seasons broadacre crops are extremely positive with plenty to spend on production and purchasing new assets. Production coffers have generally been replenished and so we expect area under crop this year to be solid. A touch of La Nina, perhaps a little too much in some regions, has also delivered much-needed rain and in many areas that will be enough to get the crop established. Many producers are also fortunate to be sowing into a moist bed which will help seedlings seek out mid-level soil moisture profiles and look to help consolidate the crop. The start of the season looks positive for most, however, in the central zones, it’s a completely different story.

Farmers in Australia’s central Wheatbelt have a heightened risk of losses to yield and income for 2021. After careful analysis of  BOM soilweather data, and forecasts for climate drivers, seasonal issues could just be around the corner. Decile 1 rain in April, existing low subsoil profiles, and neutral climate indicators could mean big trouble if the Autumn break does not provide ample precipitation soon.

Growing regions such as SW NSW Central, SA Vic Mallee, SA Vic Bordertown-Wimmera, SA Midnorth-Lower York Eyre, and WA Mallee and WA Sandplain are all waiting for a decent Autumn break and are currently experiencing dry emergence conditions. In the Eyre Peninsular, for example, emergence and establishment rains have been exceptional light so far. Kimba Bom for instance has so far recorded only 0.6mm for the month of April against a mean of 22mm. Historically, this represents a less than 1 decile event for April (3.6mm is decile 1) with the lowest being recorded in 1997 at 0.4mm, then 1.5mm in 1993. It is fair to say that the Autumn break will alleviate moisture pressures as it does for most years but what happens if it is not enough to replenish profiles like in 2006 and 2007?

As can be seen from below the BOM’s water balance tables for the regions and relative to historical values are “below” and “very much below” the averages. Regions west of Mildura around Renmark are currently experiencing root zone soil moisture of at the lowest 1%. Further, if the crop has been sown on soil types that have moderate moisture-holding properties such as calcarosols and tensols a heightened risk to production should be assumed if the rains fail to materialise in any substance.

Low subsoil moisture coupled with neutral Climate Drivers and low moisture-retaining soils heightens the risk for a troublesome season.

Neutral Climate Indicators mean an uncertain forecast.

With climate drivers moving towards neutral, the probabilities of a drier winter and spring remain 50/50. This is an issue as it becomes more of a lottery on the consistency of precipitation and one that naturally warrants caution on spending large amounts on inputs.

Neutral ENSO outlook
Neutral Indian Ocean Diapole (IOD)

CelsiusPro, as a result of the above highly recommends that farmers in these areas have a risk management strategy that involves a dry season certificate so as to insure against the lack of rain from now through to the end of spring.

Premiums for Weather Certificates remain steady and with the neutral outlook on climate drivers, the volatility costs on current certificates represent fair value. Capacity seems to be relatively liquid at the moment which is providing a good opportunity to get well-priced seasonal structures away. At the moment we are seeing limited demand for emergence covers which makes sense, however, a lot of enquiry and demand for dry season covers from mid-July through to the end of September. Value seems to be coming around decile 1 and, in some cases, close to decile 2. 

In summary, certificates covering production costs where strikes are around decile 1 events ie $250 /ha are being priced at between $5 – $15 / ha depending on the region and decile 2 events if some excess is taken over the risk period. Further, given the market for the weather and the premiums for weather certificates we feel that covering $100/ha of risk for $8/ha makes for good farming in these uncertain times. At least it will enable farmers to farm with confidence.

If you’re concerned or have any questions feel free to email CelsiusPro at info@celsiuspro.com.au or call us on 02 9994 8009.

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