Australia grows five percent of the world’s wheat crop but provides 12 to 15 percent of the wheat annually traded on the global market.
Western Australia, on 12 million acres, grows 80 percent of the wheat exported by Australia and many wheat farmers in the state are in big trouble.
Several poor seasons, increases in input costs and a lack of crop insurance or any form of government income guarantee or subsidy are all contributing to driving ever increasing numbers of Western Australian wheat farmers to the wall.
One rural politician has forecast that 30 percent of the state’s wheat land may not be planted this season because of lack of finance.
For many farmers, either they, their bank or both have had enough of the huge risks associated with the cost of growing wheat in the 21st century in Western Australia.
The number of wheat farmers has halved in 20 years and farm size has increased as neighbour has bought neighbour. As a result, cropping programs costing more than $1 million are not unusual.
The average farm debt in Western Australia is around $892,000 Cdn and average five-year yields are 485 kilograms per acre, although they vary greatly from year to year.
According to a farm consultant, the variable costs to grow an acre of wheat in Western Australia is $127 to $135 per acre.
Approximately 350 farmers, politicians and bankers recently attended a meeting in Kulin in the heart of the state’s wheat country. It was organized by the local representatives of the West Australian Farmers Federation and was called “Agriculture in Crisis — looking for a brighter future.”
There were no surprises and no answers, just disillusion and frustration. Western Australian wheat growers have been slowly sliding into financial trouble for years as their debts have increased and their terms of trade have been eroded.
The most recent figures show a significant decline in the number of farmers Australia-wide: from 246,000 in 1996-97 to 192,600 in 2010, according to ABS.
That’s a 53,400 decline in the number of farm borrowers in just 14 years, but look at how much 196,000 farmers have borrowed and how quickly their borrowings are increasing. Fewer farmers are borrowing more.
According to the Reserve Bank of Australia, rural debt was $1.29 billion in 1965, $2.45 billion in 1975, $7.16 billion in 1985, $17.76 billion in 1995, $43.35 billion in 2005, $62.24 billion in 2011 and $66.2 billion in 2012.
The number of farmers leaving the land in Western Australia is greater than the national average, with a decline of 40 percent over the past 30 years. On average, 300 people have left the industry every month.
The data also show a quarter of farmers are 65 and older and the median age of farmers is 13 years higher than that of other professions.
We have a problem in Western Australia, and it doesn’t look like there are any answers except, maybe, from the Chinese.
Over the last decade, the Chinese have bought many millions of tonnes of iron from Western Australia and are now showing an ever-increasing interest in buying Western Australian wheat farms. They have bought 250,000 acres, although some say it’s twice that amount, or more. The truth is, nobody knows.
With the world paranoid about food security, it looks like the Chinese have their eyes set on Western Australia, and there is no law to stop them buying as much land as they want.
There are many elderly farmers who would welcome a buyer knocking on their door, chequebook in hand.
Roger Crook is an agricultural writer and former Australian farmer.