Sharing with permission - Suicide in the farming community is sensitive and painful issue for those left behind in very small communities, where everyone knows everyone. So no, no one yells about it from the rooftops or keeps a tally on the fridge door. In fact it is hardly talked about but those of us who live out here and work in the ag industry all know someone who isnt here anymore. Perhaps we should have started having this conversation with the broader community years ago, in any case we are having it now. With regard to LE, the reason people still bring it up is becuase it is still having an impact. What we are seeing now is really the delayed impact of that fateful decision to destroy the market. Everyone thinks that once the ban was lifted it was situaton normal. It was no such thing, it is only in the last 2 months of 2013 that the trade started to look anything like normal. For the rest of 2011., all of 2012 and 3/4 of 2013 only the occaisional ship took cattle to Indonesia. Indonesia was the biggest buyer of Northern brahman cattle by a huge margin. The loss of that buyer destroyed confidence across the industry. No one wanted the young brahman cattle or the mature cows that bred those calves. The Australian domestic market discounted the brahman cattle by 15 to 25c/kg compared to traditional breeds of cattle such as hereford and angus. If a farmers cost of production is $1.00 per kg of liveweight and freight to sourthern markets costs another 15c/kg then your cost to market is $1.15/kg. when the market is only paying $1.50/kg (if you are lucky). Then at best only 35c/kg goes back into your pocket, out of which you make your loan repayments, you buy food and clothing, you school your children. On $1ml of debt, the interest alone is $70k at 7% . Add $15000 for living costs and $30,000 for boarding school of 2 kids. Therefore $115,000 has to be generated at the rate of 35c/kg and in this scenario would require the sale of 821hd of cattle weighing 400kg each. There are very few family farms that would turnoff 821 head each year with only $1mln of underlying debt. The more realistic amount is 600hd. so 600hd @ 400kg * 0.35 = $84,000, even fewer would average 400kg as a sale animal, so 600hd @340kg *0.35 = $71,400. Therefore that family is short $46,000 just to meet basic living and debt maintenance. In contrast, prior to the ban, farmers were getting upwards of $1.85/kg live at nearest depot at a cost of perhaps 5c/kg freight, giving them a margin of 80c/kg. 600*340*0.8 =$163,200. A surplus, which pays tax, repays debt, replaces the worn out ute, buys the missus a new dress. After the ban, farmers did the math and worked out, they would make a loss if they sold on current prices. The 2011 wet in the north was pretty good, so people had grass, the 2012 wet was ok and people had grass so they tick along, sell the bare minimum numbers and to hold stock and hope that prices would rise as the live export picked up. THEN THE DROUGHT HIT! Jan 2013 wet season was a complete no show. It really only rains in the summer up there, so the ground was already dried out, it hadnt rained since march 2012. By early April 2013 it was clear that northern beef producers were in a big jam, carrying losses from 2011 and 2012, lots of cattle on hand and still no sign of pick up in volume or prices of cattle going live export. At that point many knew they did not have the money to feed cattle through the long dry 2013 year. Thousands of cattle were trucked south to Roma, Dalby and far into NSW and sold. It crashed the market for all classes and all breeds of cattle. Now southern producers with good quality, flat back cattle that met spec were only receiving $1.50/kg and those selling Brahman cattle were getting $1.20/kg and less. Thousands of breeding cows were sold at $0.80/kg and still are being sold for that price. If it costs $1.15/kg to get the animal to market and you get less than that for it?????????? So early 2013 saw many northern beef producers roll into their 3rd straight year of losses, and then its time to start buying fodder for the few cattle left that are the nucleus for your future. Now it is the end of Jan 2014 and again the wet season is late. The stakes are high and many people have run out of options. The point is that 2011 and 2012 could have been surplus years for producers if the live export ban did not occur, less cattle would have been on hand at the start of 2013 if the live export ban did not occur. With less cattle on hand and more money in the bank, farmers would have been better able to manage the drought. less cattle would have died and someones brother, son, father or husband might still be sitting down to the dinner table tonight. Written by a woman in Agribusiness & Finance.
Posted on: Mon, 20 Jan 2014 11:04:44 +0000
Trending Topics
Recently Viewed Topics
© 2015