Drought is gripping much of Eastern Australia.

Australia is a large country that encompasses a broad diversity of regions, each with their own unique topography, soils and environment. Each region of Australia is farmed for food and fibre where possible.

Because we are again challenged by variable climatic conditions and especially rainfall, we find reason to again remember the poem “My Country” by Dorothea Mackellar, where she describes Australia as a land “of droughts and flooding rains”. http://www.dorotheamackellar.com.au/archive/mycountry.htm

On December 14 2016, we posted as News on our Web Site: “In 2016, we experienced a rarity: farmers were able to “bless again the drumming of an army, the steady soaking rain” that spread over most of the grain-growing regions of Australia. As a consequence, farmers have generally achieved bountiful crops. Indeed, we are all very much blessed because nearly every paddock is producing much more grain than expected.”

Now, in 2018, we are experiencing a drought, as described in “My Country” with:
“Core of my heart, my country! Her pitiless blue sky, When, sick at heart, around us We see the cattle die”

As is being currently reported by the Australian news media nationally, drought is affecting much of eastern Australia. Drought creates enormous stress and hardship for individual farmers and farming communities. And because most Australian food starts with Australian farmers, there are considerable flow-on effects for food processors, where shortages and additional costs must also inevitably impact on consumers.

After a very late and dry start to the cropping season over all of Australia, even though famers in Western Australia have received timely rain and hope to record an average harvest, New South Wales is officially declared to be in drought. It is the first time since 1965 that many farmers in New South Wales and Queensland have not been able to sow winter crops. A high proportion of farmers in both New South Wales and Queensland have had complete crop failures, or have turned their livestock in to their paddocks to feed on the stunted and patchy crops.

Very significantly, in many if not most areas of eastern Australia that have not been formally declared as being in Drought, because of minimal, inconsistent and variable rainfall and challenging environmental conditions, existing crops are struggling to survive. And may not.

Crop Forecasting normally assumes that average weather and rainfall patterns will occur from the forecast point forward, however Weather Forecasts are for both hotter and drier conditions for spring and in to summer, and farmers in most eastern regions are facing the prospect of minimal rainfall and therefore poor crops for the second year in a row. In eastern Australia, we have high animal stock numbers at unusually high market values. Even though we have drought and a widespread a lack of pasture grass and crop failures, we may be spared Dorothea’s prediction of: “When, sick at heart, around us, we see the cattle die”, because farmers are able to afford to buy prepared animal feeds. This has created an unprecedented demand for grain-based prepared animal feeds, and this increased demand is currently driving up the price of grain across Australia, and progressively exhausting local grain supplies. We are hopeful that late rains may help sorghum production and provide relief to animal feed and grain pricing closer to harvest, but weather forecasting suggests otherwise.

Due to Biosecurity concerns, transport logistics, and quarantine regulations, it is very difficult and costly to import grain in to Australia. Last-seasons grain is being transported by ship from export terminals in Western Australia and South Australia, and grain and hay is being transported by rail and road to eastern and northern regions to feed livestock. As existing grain and hay supplies are being progressively exhausted at an unprecedented rate, grain buyers are competing for dwindling stocks. Fuelled by the prospect that there can be no further planting of winter crops, and that summer crops will be poor and may even not be possible, the already substantially-increased prices of available grain have recently skyrocketed.

“Milling Quality” Grades of grain are being increasingly utilised for animal feed in all regions of Australia, and supplies of some grades and varieties of grain have been exhausted in several regions. Increasingly, flour millers will find it difficult to source appropriate-quality parcels of grain for milling in to flour, especially if control of quality is not possible because the grain is accumulated from diverse regions and is shipped as bulk cargo.

Due to this continuing local drought, and escalating international grain prices, the prices of “milling quality” grain as available to Millers have progressively increased this year. During just this most recent week, grain prices have increased 10%, such that Milling Grades of grain have already increased at this point in time to levels that are 40% to 80% more than the prices for equivalent grain earlier this year, depending on grain type and location. Further, due to the current drought and the expectation of a limited supply of new-seasons grain, prices on offer for forward purchases of grain are either unavailable or are at additional considerably-increased levels.

Worryingly, due to perceived limited supply, existing stocks of grain may be withheld from the market, with the intent to speculate on the opportunity to later take advantage of an increased price. Such hoarding of grain then practically diminishes otherwise-available supply, and increases both supply volatility and the price even further.

At this point in time, the final outcomes of this Drought cannot be predicted, and will not become evident until later in 2018 and through 2019.

Laucke Flour Mills will continue to endeavour to successfully manage current grain supply and quality, however it is no longer possible for us to manage the volatility of grain pricing as a cost component of our flours. Even as we endeavour to seek out all the opportunities that we can to identify and reduce the costs of our products to you, our direct grain costs have increased such that we can no longer absorb these costs internally.

In this unique drought situation, there are regional availability issues associated with sourcing enough of the required Varieties and Quality Grades of grain, such as specialist Soft wheats being relatively less available and therefore more costly. We have decided to reflect that variability of grain cost in our product pricing.

Accordingly, in the near future, we must necessarily raise the prices for all grain-based products, such as our Flours, Meals, Semolina, and baking Mixes, which will be raised to reflect the relevant grain cost component increase.

“Soft” wheat flours such as Monjon, Numbat, Myotis and Quokka flours for soft biscuit, pastry and batter production, will rise in price by a greater extent than “Hard” wheat flours such as Bettong, Wallaby, Mulgara, Bandicoot and Euro flours as intended for fermented bread and other baked products.

If you are or have been a customer, we wish to thank you very much for your ongoing loyalty and support, and we look forward to continued supply of quality products whilst maintaining our high level of service to you.

Should you have any queries, please CONTACT US.

The following link leads to a good illustration of the effects of El Nino. CLICK HERE.