Record plantings, early rain and a global shortage of oilseed crops could set up West Australian farmers for a $2 billion canola harvest.
- Australian farmers will sow a record 2.9 million hectare canola crop
- Farmers are aiming to capitalise on a global shortage of oilseeds
- Farmers and industry group say canola seed is in short supply
Farmers across Australia are expected to sow almost 2.9 million hectares of canola, with more than half of that to be planted in Western Australia.
As the canola price soared, most West Australian farmers enjoyed strong season-opening rain, allowing them to increase their canola planting area to 1.5 million hectares.
It’s a crop which Grain Industry Association of WA crop report author Michael Lamond said could be worth $2 billion at harvest time.
“Then when you combine that with the good prices, it’s just a very unusual situation and it’s one that everyone is trying to make the most of.”
While prices have softened slightly over the past few weeks, they remain in historical context very high.
“In in 2006 – 07 the price was around $667 per tonne, it peaked at that, in today’s dollar terms that’s about 854, so it’s just under that,” Mr Lamond said.
“So it’s the prices we are getting for canola at the moment are the second highest ever on record and that has fuelled the extra canola area that has gone in.”
Why are prices so high?
A combination of increased demand from China for global oilseeds such as soybean and canola, and drier than usual conditions in key global production areas like Canada and Europe have contributed to the high prices.
The latest United States Department of Agriculture world market and trade report on oilseeds said the global oilseed trade was forecast to be higher, mostly on the greater soybean demand from China, which it projected to account for 60 per cent of global soybean imports.
By comparison to Canada’s 20 million tonne canola crop, Australia is a relatively small producer of canola, averaging three million tonnes per annum.
However it has established valuable export markets in countries such as the EU, Japan, Pakistan, China and the UAE.
Sowing his biggest canola crop
In Western Australia, Mingenew grower Geoff Cosgrove enjoyed his first ever seeding without sowing dry.
He gave the start to the season a 9 out of 10, thanks to subsoil moisture and good prices.
He expanded his canola program by reducing his seeding rate, planting 2,400 hectares rather than their planned full program of 2,000 hectares.
When to lock in prices on crops is a big question for farmers.
The Cosgroves use forward selling and long term growing averages as their main hedging tool.
“Production here is pretty consistent, we’ll look at our long term averages and hedge up to a percentage of that that we’re comfortable taking that risk with,” he said.
“When prices are so high it encourages you to go a bit higher but we stick to the formula.
Seed in short supply
Groups such as the Australian Oilseeds Federation and the Grain Industry Association of WA say a shortage of canola seed in Australia may have limited potential areas sown, particularly in relation to hybrid varieties.
York farmer and Pastoralists and Graziers Association of WA chair Tony Seabrook advertised some excess seed he had stored in the shed for sale, and was overwhelmed by the interest his advertisement attracted.
“It was gone in three of four days, I even had a phone call from central New South Wales of someone looking for canola seed,” he said.
“I was hearing stories two weeks ago that you couldn’t get hybrid canola, and based on our experience here selling the seed, demand has gone through the roof as people have increased the area they’re growing, or grow canola for the first time.
“Farmers are not silly, they wake up to where they money might be very quickly and we’re seeing that in the absolute shortage of seed.”
It is not all rosy, however, with farmers in some northern parts of WA’s grain growing region not enjoying such optimum conditions and in need of rain.
And for all farmers, a dry winter or frost in the coming months could reduce crop potential.