Grain Business Magazine - November 2014

NOVEMBER 2014

PRODUCED FOR THE BENEFIT OF AUSTRALIAN GRAIN GROWERS BY

Bumper global grain harvest keeps stock levels high SPOTLIGHT ON DURUM YIELD/ CONTROLLED TRAFFIC REVOLUTION

INDUSTRY SPOTLIGHT/ QUALITY THE KEY TO WHEAT COMPETITIVENESS

COVER STORY/ GLENVALE FARMS, KEWELL, VICTORIA

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FOREWORD/ PORT ACCESS CODE OF CONDUCT INTRODUCED

GRAIN MARKET UPDATE/ BUMPER GLOBAL GRAIN HARVESTS KEEPS STOCK LEVELS HIGH

FARM PROFILE/ GLENVALE FARMS

GRAIN MARKET UPDATE/ SPOTLIGHT ON DURUM

MARKETING/ WHEN GRAIN DOESN’T PAY

FOREIGN EXCHANGE/ AUD TO REMAIN FIRM IN 2014-15

INDUSTRY SPOTLIGHT/ QUALITY THE KEY TO WHEAT COMPETITIVENESS

FARM SAFETY/ CHILD PROOF YOUR FARM

YIELD/ CONTROLLED TRAFFIC REVOLUTION YIELD/ POST HARVEST Q & A

YIELD/ MAKING SENSE OF VARIABILITY

At Grain Business, we want to provide useful, insightful, and up to date information in each and every issue. If there are any topics you would like to see featured in future editions or if you have any feedback about Grain Business, please contact us at gbm@glencoregrain.com.au

FARM MANAGEMENT/ SHARING THE LOAD

© Copyright. Editorial material published in Grain Business is copyright and may not be reproduced in any form without written permission from the Publisher or Editor. Print Post Approved: PP 510545/00616

PUBLISHER Glencore Grain Pty Ltd 124-130 South Tce Adelaide, SA 5000.

T: (08) 8211 7199 gbm@glencoregrain.com.au DESIGN & PRODUCTION fuller.com.au

ADVERTISING Rebecca Long, RKL Media.

T: (08) 8843 0059 M: 0417 813 480 rebecca@rklmedia.com.au COVER NOTE Justin Ruwoldt, Glenvale Farms, Kewell.

COVER PHOTO: Tom Roschi, trp.com.au

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FOREWORD

FOREWORD/

PHILIP HUGHES, TRADING MANAGER, GLENCORE GRAIN

PORT ACCESS CODE OF CONDUCT INTRODUCED The Port Terminal Access Code of Conduct has been signed off by the Minister for Agriculture and came into effect on 30 September 2014.

Port Terminal Access Undertakings that were in place no longer exist, and where applicable, the Code provides the regulatory oversight for the commercial behaviour between port terminal service providers and exporters.

At this stage we are aware that the Code will: • Give grower owned co-operatives the opportunity to seek an exemption from the application of the Code • continue to impose significant regulatory costs on industry • have a 12 month transitionary period for port terminal service providers that currently do not have an Undertaking in place and are unable to obtain an exemption • impose different levels of regulation on port terminals depending upon certain criteria, including whether there is already an exempt port terminal service provider within the grain catchment area for the port concerned In response to the code, we believe full deregulation is the best policy for the Australian grains industry to maximise its competitiveness in the global market. Barriers to entry for other export port terminals

NOVEMBER 2014

are low, as evidenced by the new developments, despite surplus capacity already existing.

The cost of regulation for the industry is significant and a tiered approach across port terminals and operators in Australia may disadvantage export zones that are subject to greater levels of regulation.

We believe continuing the transition to full deregulation gives the Australian grains industry the best opportunity to maximise its competitiveness in the global market.

Turning our focus to this harvest, although spring rainfall across majority of Australia has been below average and some growers have experienced frost damage, Australia’s overall production is still likely to be around average given good rainfall and mild conditions at the start of the growing season.

With the northern hemisphere grain harvest nearing completion, I take a look at global production and consumption. This year will be the second consecutive year of record, or near record crops, meaning that stock levels are rebuilding and are at comfortable levels.

Also in this edition we take an in-depth look at the research into controlled traffic farming and hear from growers that are successfully using this method.

The Australian Controlled Traffic Farming Association is conducting a five year research project which aims for the first time to determine the benefit of the technology in low rainfall dryland farming systems.

A run of grain trader insolvencies in the last 12 months has once again put the spotlight on the importance of growers being active in identifying and managing risk. Grain Business looks at how to choose a grain marketer and gives growers the tools they need manage their own business.

I hope you enjoy reading this edition of Grain Business and I wish you all the best for a safe and successful harvest.

Philip Hughes Trading Manager, Glencore Grain.

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GRAIN MARKET UPDATE

GRAIN MARKET UPDATE/ WORDS/ PHILIP HUGHES, TRADING MANAGER, GLENCORE GRAIN

BUMPER GLOBAL GRAIN HARVESTS KEEPS STOCK LEVELS HIGH With the northern hemisphere grain harvest nearing completion there have been no major production issues in any region, boosting global grains and oilseeds supply.

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his year will be the second consecutive year of record, or near record crops, meaning that stock levels are rebuilding and are at comfortable levels.

Grains The USDA’s global wheat production estimates have been increasing each month since the initial forecast in May. The global wheat crop is anticipated to be 721 million tonnes, exceeding last year’s record crop of 715 million tonnes.

The USDA increased their forecast wheat production in the EU by three million tonnes in September, up to 154 million tonnes for 2014/15. Last year EU production was 143 million tonnes. Russia’s wheat crop is also up on last year, with the USDA forecasting production at 59 million tonnes, a seven million tonne increase year on year. Private analysts place the Russian wheat crop more like 62-63 million with some as high as 65 million tonnes as the crop continues to surprise to the upside. China is expected to increase their wheat production by four million tonnes, to 126 million tonnes. Canada is the only country expected to have a marked decrease in production, down from their record crop last year, closer to average at 28 million tonnes.

Global wheat consumption is forecast to be 714 million tonnes, an increase of 11 million tonnes on last year. Global stocks will increase slightly, forecast at a comfortable 27 per cent stocks to use ratio.

While there are no concerns about the volume of wheat production, there are some concerns about quality, with some weather issues during the northern hemisphere harvests

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GRAIN MARKET UPDATE

The global wheat crop is anticipated to be 721 million tonnes, exceeding last year’s record crop of 715 million tonnes.

resulting in downgrading. Large global corn and barley crops mean there are high volumes of feed grains globally.

Global corn production is forecast to be similar to last year’s record crop at 990 million tonnes. This will be the second year with such high production, more than 100 million tonnes bigger than previous years, and growth of nearly 200 million tonnes since 2007/08. This year, the US corn crop is expected to be 14 million tonnes up on last year’s crop, with the USDA increasing their production expectation by 11 million tonnes from August to October; however the other major producers are expecting slightly lower production.

Corn consumption is expected to rise 23 million tonnes year on year, to 973 million tonnes globally with lower prices fuelling demand. However with consumption lower than production, global stocks will increase for the third consecutive year. EU corn imports are expected to be much lower year on year, down from 16 million tonnes to seven million tonnes. This is partly due to the increased supply of downgraded wheat, with domestic wheat consumption up 10 million tonnes year on year, resulting in lower volumes of EU wheat destined for export.

Barley production is forecast to be slightly lower than last year, 139 million tonnes globally, with lower production in the major exporting countries of US, Canada, Australia and the EU. Production increases in the FSU offset this decline.

Global consumption is expected to be slightly higher than production at 140 million tonnes, so stocks will reduce by a small amount.

Consumption of sorghum continues to be driven by the Chinese market. Globally consumption is keeping pace with production, both 62 million tonnes, an increase of two million tonnes year on year, meaning stock levels are at a tight 10 per cent stocks to use ratio.

Oilseeds There is forecast to be a significant increase in global soybean production this year. 2014/15 production is estimated at 311 million tonnes, well above the 285 million tonnes produced last year.

All of the major exporters of soybeans, US, Argentina and Brazil, are expected to produce bigger crops this year and will also increase consumption domestically. China is the NOVEMBER 2014

significant consumer globally, to meet their growing demand for stock feed. In 2014/15, China is expected to consume 85 million tonnes, up five million tonnes from the previous year, of which 74 million tonnes will be imported.

Global soybean consumption has increased 13 million tonnes to 284 million tonnes. With such large production volumes, global stocks to use ratio sits at a very comfortable 32 per cent.

The large soybean crop is also influencing consumption of canola and oilseeds. Globally, canola production and consumption is remaining steady with both 70 million tonnes. Canadian canola production will be down three million tonnes on last year’s record crop of 18 million tonnes. The EU production is up two million tonnes, year on year, to 23 million tonnes, a record crop for that region.

The EU’s import demand is expected to fall as they consume domestically their increase in production.

Pulses Pulse markets have generally seen a lack of liquidity, with hand to mouth buying by the major consumer markets and a reluctance to trade on the back of weather concerns in Canada and Australia, the major producing countries.

The Canadian harvest is close to finishing. While production volumes are good, rainfall at inopportune times has led to some quality concerns. Consumption across the key importing countries, India, Bangladesh and Pakistan, is expected to remain, and with their domestic production of some crops down year on year, their demand for imports should also remain.

Containers Australian container export volumes have remained steady over recent months predominately into the South East Asia end user markets. Wheat exports have been at similar volumes to last year, despite strong domestic demand and competition from northern hemisphere exporters. The difference this year has been higher volumes from South Australia and Western Australia. Barley exports were strong in the first half of 2014 but have slowed in recent months.

Exports of sorghum have been solid with continued demand from China. Most of the demand for container exports will now shift to new season. | GRAIN BUSINESS MAGAZINE

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FARM PROFILE / GLENVALE FARMS

GLENVALE FARMS FARM PROFILE WORDS/ MEL KITSCHKE

OWNERS/MANAGERS

Justin and his wife Katie Ruwoldt and their daughter Maeja, 17 months, and new baby Luella, born in September.

Justin’s parents Robert and Wendy Ruwoldt are still actively involved in the farming operation.

COMMUNITY INVOLVEMENT

Justin and Katie are involved in the local Dimboola football and netball club.

SOIL TYPES

Sandy loams to heavy black soils.

RAINFALL

Annual District Average: 400mm Actual Last Three Years: around 350mm

CROPPING PROGRAM

Continuous cropping – cereals (wheat and barley); oilseeds (canola) and pulses (lentils, beans and chickpeas, and peas).

EMPLOYEES

Two full time employees plus seasonal workers during harvest (generally school leavers and university students).

MACHINERY

• Two 8000 series John Deere tractors • 30-foot Grisley disc seeder and John Deere precision planter • Spray Rig 4940 self-propelled sprayers • Harvester - Two S670 JD headers • Two trucks • One chaser bin • All machinery drives on 3.048 wheel spacings as part of their controlled traffic farming system • John Deere RTK guidance

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FARM PROFILE / GLENVALE FARMS

From left: Robert, Maeja, Wendy, Justin and Katie Ruwoldt

NOVEMBER 2014

PROPERTY LOCATION

Glenvale Farms is in Kewell, 40 km north of Horsham in the Wimmera, Victoria.

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FARM PROFILE / GLENVALE FARMS

We’ve now got years and years of stubble rotting away and there are earth worms absolutely everywhere.

When was the farming district settled?

The Wimmera opened up for farming in 1869.

Q What is the history of your farm? When was it settled and by who?

A The Ruwoldt family, who were from Germany, settled in the Wimmera in the 1880s. The property has been gradually expanded over time. Justin is the fifth generation of the Ruwoldt family to farm the property.

Q What made you want to be a farmer?

A Growing up on our family farm, I know no different. As a child I watched Dad farm and innovate and I knew that’s what I wanted to do.

Q Why grain farming - why not stock?

A We have a strict policy of keeping livestock out of our business. It’s not just about the compaction they cause, it’s about the weed seed numbers game. If you can leave your weed seed bank on the top of the ground it deteriorates over time. If sheep trample it into the soil, you get germination and weed spread.

We also like to have standing stubbles to sow into as they offer young seedlings wind protection and the roots a healthy nutrient and worm-rich environment. We also find legumes use cereal stubble as a trellis, lifting them off the ground and promoting growth.

We’ve now got years and years of stubble rotting away and there are earth worms absolutely everywhere.

Q What education and training did you undertake?

A I went through school locally at Murtoa and came straight home on the farm - for family reasons it wasn’t the right thing to go away to ag college. Education and training is an onQ A

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going thing for all farmers. We spend a lot of time and money doing our own research here on our own farm - the days are gone when you could rely on the government helping with agricultural research. I learn a lot from the internet and Dad does a lot of travel in different parts of the world and is always keen to try new things.

Q How do you manage your cropping program?

A We don’t really have an average crop rotation.

Each paddock is treated on its own merits and has its own rotation to address specific weed or disease issues or compaction issues.

In general two thirds of our cropping program would be wheat, barley and canola and one third would be legumes.

It really does depend on the paddock though. While our main aim is to make a good profit, we definitely don’t want to rob the ground to achieve a pretty bank balance.

Each crop has a particular range of weeds it breeds so we keep our rotations split up so numbers don’t get out of hand.

Varieties are a rolling target for us, we are constantly looking for the best fit for our farm in terms of yield, protein, screenings, disease tolerance, vigour and growth.

Q Explain your tillage practices A We are 100 per cent zero-till controlledtraffic farmers and this is the heart of our farming operation.

Dad was one of the pioneers of no-till farming in this district. We’ve been no-till for at least 30 years and zero-till for the past decade.

We use a Grisley disc seeder that Dad helped design. He’s spent a lot of time over

the past 10 years or so designing a seeder that will work well in our black soils which get very sticky when they’re wet. We’ve still got subtle modifications to make, but we’re definitely making progress.

Wheat, barley and lentils are sown on 38cm (15 inch) row spacing and canola, faba beans and chickpeas sown on 72cm (30 inch) row spacing.

All crops are sown on the inter-row except canola that is sown dry on the row in order to source the nitrogen fixed by the previous faba bean crop.

Seed placement is very important.

We are aiming for even seed placement both at depth and along the row to reduce crop competition. This has also meant we have been able to reduce our seeding rates.

For example, canola seed rates have been slashed to under 2kg/ha on 30 inch rows. Canola loves a bit of space to grow, so it grows out into lots of branches instead

FARM PROFILE / GLENVALE FARMS

of having one or two little stems, it gets a tree- like approach and we get more grain off those plants.

Q Tell us about your controlled traffic system A Our controlled traffic system is based on a 9.144m seeding bar, shrouded sprayer and harvester comb, and 36.576m self-propelled boomspray. All machines have 3.048m wheel centres and single tyres or tracks, and no dual wheels. Guide wheels run on the same permanent wheel tracks to avoid any compaction in the crop beds. Our harvester has also been converted to permanent wheel tracks and chaser bins and trucks are also kept on permanent tracks.

A specially designed wheel track renovator the width of each track is used for restoration and maintenance of tracks after a rain in summer (without maintenance, permanent wheel tracks can turn into deep ruts).

Controlled traffic keeps the soil NOVEMBER 2014

friable, uncompacted and moist. The longer we go down this path, the better soils seem to become. The bigger root systems find and extract more water and nutrients while less competition from weeds and other crops enables each plant to perform better.

Q What is your fertiliser regime?

A We use a combination of granular and liquid fertilisers (UAN and Phosphorus).

We don’t have a set regime, as we take into consideration seasonal variations, stored nitrogen from previous crops and projected yields. Each paddock is treated differently.

Q What is your normal herbicide regime?

A Our herbicide regime is tailored to each particular paddock.

Ryegrass management is a big thing and wild vetch in pulses are an issue, so we jig our rotations to accommodate those things.

Our plan is to manage the weed spectrum along with our soil health.

How do you manage herbicide resistance?

We try to avoid being backed into a corner in 10 years where you can’t use a particular chemical because you’ve over-used it now.

We mainly do this through our rotations.

Legumes are crop topped and the zero-till system by its nature reduces weed germination because the weed seeds aren’t buried and given a seed bed to grow in. Sheep aren’t allowed on the property so they can’t trample weed seeds into the ground.

Q Are mice an issue and how do you manage them?

A Mice are an issue from time to time and our system probably influences that a bit, but we try to do what we can. We try to minimise grain spill at harvest and actively bait when necessary, going by our observation of activity in paddocks. We know if mice damage canola it’s not going to come back, but mice can chew beans off to the stump and they’ll grow back.

Q A

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FARM PROFILE / GLENVALE FARMS Left: Justin Ruwoldt holding faba beans.

Right: Robert, Wendy, Justin, Katie and Maeja Ruwoldt.

How do you manage pesticide or fungicide resistance?

Our fungicide and pesticide regime depends on the paddock, the rotation and seasonal conditions. We run an Integrated Pest Management program, which means looking at what pests there are, how much damage they are they doing, whether they are worth spraying, and what the best chemical option is. We really don’t want to knock out the beneficiaries, it takes too long to get them back again.

Q Do you use GPS autosteer technology?

A We run John Deere RTK 2 cm.

Q Do you use GPS or yield maps?

A We have been using RTK guidance and yield mapping for 15 years or so. We use the maps as a tool to help us analyse what has and hasn’t yielded well, but it’s up to us to draw conclusions as to why the variations, for example looking at germination issues, seeding rates, seasonal circumstances.

We have noticed less variation in yield maps over the time we have been using the zero till controlled traffic farming, suggesting this system has removed some limitations.

We don’t use our yield maps for variable rates of fertiliser as we don’t have huge variations in soil types.

Q How does frost impact your cropping enterprise?

A Frosts are a problem in dry seasons. We have found the healthier and stronger crops are, the more resilient they are to handling those frosts around 0 degrees. If the temperature is Q

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-4 degrees everything’s going to get smashed, healthy or not.

Q Do you use off-farm soil and plant testing and quality guidance services?

A We are not big users of soil and plant testing.

We find results vary so much even at the same site, so we don’t get too bogged down in that information. We tend to rely on what we see happening in the paddocks.

Q Do you belong to a farm management group?

A I’m not involved in any farm management groups but Dad is a member of Victorian No Till Farmers Association.

Q What is your harvesting routine?

A We cart our own grain off the header, either to on-farm storage or to Melbourne. We use a chaser bin to maximise productivity and have our own trucks, it means we are masters of our own destiny at harvest time and can keep our headers going when the silo system is slow.

The amount we deliver versus what we store on farm depends on what grains we think have upside potential.

We are gradually building up more silo and shed storage space for grain. Our ultimate aim is to have the capacity to store all of our own grain and no longer be reliant on the grain receival system during harvest.

Q How do you sell/market your crop?

A We don’t forward sell - we don’t like selling something we haven’t got. We’re not into futures or swaps, we consider all this too big a risk for our operation.

So our strategy is to make sales

during and after harvest. We know our cost of production and use this to set a goal and trigger points for sales.

With some grain companies going into receivership, we aim to stick to major companies where we know we have 99 per cent chance of getting paid. We’d rather take $2 or $3 less to be sure than chase top dollar.

Q Who do you rely on for grain marketing advice?

A We have a network of people from different walks of life that we communicate with regarding grain marketing – the more tyres you kick the more you can generate your own opinion.

Q What are the biggest challenges/risks to your farm business?

A Rain is our biggest challenge and it governs our potential each year.

Grain prices can have a big influence on the outcome of the year, and the issue of not getting paid for your grain is another concern. We can’t afford to grow a crop and then have a grain company not come up with payment - that just isn’t good enough.

Q How do you try to manage those challenges/risks?

A We cannot control the volume or timing of rainfall, but we can make sure we are doing everything we can to store as much water as possible. This comes back to reducing compaction, breaking up the hard pan. And improving water infiltration. Evaporation is higher when rain can’t infiltrate the soil.

Summer weed control is also important.

FARM PROFILE / GLENVALE FARMS

We can’t control grain prices directly, but we can store grain to help us sell it at the best price we can achieve. We are constantly trying to refine everything we do, to make sure every piece of machinery is running right

Farming is an opportunity, everything in farming presents an opportunity and it’s up to us to make the most of that opportunity.

We are big believers in giving ourselves the best result we can achieve.

It’s about trying to control everything you can control and be ready to make the most of opportunities that present, whether that is in growing the crop or marketing it.

Timing is critical in so many things we do, whether it’s spraying seeding or harvest it’s important to get it done at the right time.

The things that give us the best bang for our buck are inter-row seeding, full stubble retention, controlled traffic, seed placement and natural biology.

Q Do you have a farm management advisor?

A We work with a couple of agronomists and do a lot of research on the internet. Google is my friend!

Q What technological developments do you foresee which will improve your family farm?

A I’m not sure that there’s one silver bullet that will make us a heap of cash. I hope the precision farming side of things has more to deliver in terms of yield gains and we are certainly open to evolving with technology.

Q Do you have future expansion plans?

A We are always open to expansion if the opportunity arises. Land values in this district NOVEMBER 2014

are between $1500 and $2300 and have definitely risen in the past 3-4 years.

In recent times there has been competition from overseas buyers. Foreign investment is a pet hate of mine. It’s pretty hard for a bloke like me to compete with a super fund. What people need to think of is not just the farm but the local community – making sure we’ve still got a local school and a local footy club or netball club to be part of.

Q Would you shift to another district for cheaper land or if rainfall becomes a problem due to climate change?

A We’ll stay and keep managing our farming system to be sustainable with the rainfall we get.

Q Do you have a business diversification strategy?

A Our biggest asset is our farm and we are pretty focused on making it work for us.

Q Do you think food production has a good future in Australia? What will inhibit that future outlook?

A Absolutely, we’ve got a growing population and we’ve all got to eat and drink. I’m pretty sure we don’t want to be importing our bread and drinking long-life milk made in China.

Q Will you encourage your children to return to the farm?

A Only if they are passionate about farming.

Your heart really has to be in farming to be a good farmer. It’s not a 9 to 5 job and to do a good job it is hard work and you have to make a lot of sacrifices. I wasn’t forced to come home, it was something I wanted to do.

Q A

What is your retirement/succession plan?

We are in the process of working though succession plans with Mum and Dad. While Dad has stepped back a little from the management side of things, he is still heavily involved in the farm especially during seeding and harvest.

Timing is critical in so many things we do, whether it’s spraying seeding or harvest it’s important to get it done at the right time.

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GRAIN MARKET UPDATE

GRAIN MARKET UPDATE/ DURUM WHEAT WORDS/ TOM SMIBERT, DURUM TRADER, GLENCORE GRAIN

SPOTLIGHT ON DURUM Despite being well known for making Italian pasta, durum is a globally produced and consumed wheat variety.

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GRAIN MARKET UPDATE

Australia generally produces up to 500,000 tonnes of durum a year, though in the last 20 years production has ranged between 120,000 and 800,000 tonnes.

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anada, US, Mexico, European Union, Australia and Turkey are the significant producers and exporters globally with Australia making up only a small part of global production. Annual global production is typically 35-40 million tonnes. While that is a small percentage of the 700 million tonnes total wheat production, the niche crop is a mainstay in global trade.

Australia generally produces up to 500,000 tonnes of durum a year, though in the last 20 years production has ranged between 120,000 and 800,000 tonnes. Despite only being a small producer on the global stage, Australia makes up for it with quality. Australia is world renowned for producing very high quality durum with the desired processing characteristics of high protein and gluten, low moisture, and good colour.

This year, global production is forecast to be lower yearon-year with less hectares being sown to durum in key producing countries such as Europe and Canada, combined with poor harvesting conditions contributing to widespread quality downgrades. These downgrades will see durum go into feed markets rather than its intended purpose of semolina. Global consumption will see a small increase year on year. Lower production and higher consumption means that global stock levels will tighten. This is positive for Australian durum growers with global end users now required to pay a higher price for quality durum.

Durum is grown in South Australia, Victoria, New South Wales and Queensland in high rainfall regions. In general, the area sown to durum in Australia is relatively stable, though influenced by global market fluctuations and seasonal conditions.

The majority of Australia’s durum exports either go to the famed Italian pasta market or to North Africa. Depending on the season, approximately half is processed and consumed domestically while the other half is exported.

The EU is a net importer, with exports from France into north African countries being offset by imports into Italy.

NOVEMBER 2014

Aside from the EU, Algeria, Nigeria, Tunisia, Morocco and Japan are the key importers of durum, using it to make a wide variety of food products including semolina, pasta, bread, couscous and bulghur.

North Africa does have some domestic production; however, due to the variable climate in this region, some of these countries can go from being a net exporter to a net importer thereby increasing volatility in the global demand profile.

The key for Australian growers is to maintain the quality characteristics required by the end-user while continuing to innovate, taking every opportunity to increase yield to meet the demand.

GLENCORE’S MARKET KNOWLEDGE BENEFITS GROWERS

Glencore has been involved in the durum market for many years and is largest trader of durum globally.

Glencore’s strong relationships direct with Italian pasta makers and flour millers and durum mills across the globe, assisted by a presence in the key export origins of Australia, Canada and the EU means they work directly with each end of the supply chain.

Our knowledge of the market means we offer competitive prices to Australian growers.

Glencore Grain is very competitive in the durum market, across South Australia, Victoria, New South Wales and Queensland, having led the market for 2014/15 prices and offering 12 day payment terms.

Official statistics show that Glencore Grain was the largest bulk exporter of durum out of South Australia and a top three exporter of durum from Australia for the 2013/14 season.

As well, our ownership in the Newcastle Agri Terminal reinforces Glencore Grain’s commitment to the New South Wales durum market.

Glencore Grain is here for the long term and sees a big future in Australia being a producer of quality durum.

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MARKETING

MARKETING/ HOW TO CHOOSE A GRAIN MARKETER WORDS/ MARCUS LaFORGIA

WHEN GRAIN DOESN’T PAY A run of grain trader insolvencies in the last 12 months has once again put the spotlight on the importance of growers being active in identifying and managing risk.

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he failure of companies throughout Australia including Convector Grain, Sapphire Grain, LGL and OneWorld has left millions of dollars in unpaid debts to the industry.

Managing Director of management consultancy Finesse Solutions, Malcolm Finlayson, who has been involved in the grain industry for 20 years admits there has been a “bad patch” of grain trader insolvencies lately highlighting the need for growers to be more active in managing risk.

“Grain growers are no different from any other business person. Insolvencies are a fact of life and good businesses put practices in place to manage that risk,” he said.

“The problem is that people are not managing their risk and they’re giving themselves too great an exposure to counterparties.

“Managing risk is all about your appetite for pain. You have to be careful that in trying to eliminate as much risk as possible you don’t create a worse trading situation.

“But I don’t think it is possible to eliminate all risk. For example you could try to negotiate pre-payment terms, but it’s a competitive market and while trying to eliminate the credit risk entirely you may not find people prepared to buy your grain.

“The risk of price volatility is far greater statistically than the insolvency risk.”

MARKETING

Tools to manage risk Balance your portfolio Like investing in superannuation or having a bet at the races it’s wise not to put all of your money on one horse.

“The first question is how much are you prepared to lose,” Malcolm says.

“You should not sell all of your production to one party regardless of how big they are. It leaves your revenue stream 100 per cent exposed to one buyer and that could mean a 100 per cent loss in one year. Are you prepared for that?”

Due diligence Malcolm says that every business that is buying and selling undertakes due diligence research on its suppliers and vendors.

“You need to do some level of analysis on the parties that you are dealing with, just for your own comfort,” he said.

“You can’t be certain that the best, most secure business is not going to fail but you can take some precautionary steps.”

He suggests accessing audited annual reports and more frequent and up to date monthly management accounts. You can access these by requesting a copy from the company and should be analysed with the help of an accountant who can bring a degree of independence and insight to the process – especially when trawling through complex balance sheets.

“You need to look at net assets – that tells you how strong a company is, how long they’ve been in business. That gives you confidence in the professionalism of management to run a business over a long period of time.

“Beware of spurious assets such as goodwill and intangibles. Also be careful of a revaluation of fixed assets to market price - these tactics over inflate what the realisable value is in an insolvency.

“Also how big is their line of credit - how much slack have they got, how much pain can they endure before they have a problem.”

Malcolm said it is also important to understand where the company you are dealing with is getting their working capital from. If they’re solely reliant on your grain for that working capital, the risks associated with that trader are increased.

For smaller traders Malcolm suggests researching the reputation of the business owners. While public information may be harder to find, it’s important to get as much information as you can on them. This may involve asking

NOVEMBER 2014

direct questions about heir financial position as well as asking around for personal references on the trader.

“Are they going to let the business fail or put their names on the line? Have they been bankrupt before and walked away from their debtors?” he said.

“You need to do your due diligence to understand as much about smaller traders as you would for the big companies.”

Most importantly, set credit limits based on the information you have on the trader so you are not leaving yourself exposed to a trader you don’t know much about.

Secure payment Wherever possible growers should try to negotiate a secure form of payment such as a letter of credit or bank bill and always insist on the shortest possible term.

“Of course these add to the cost of the transaction - every step that gives you comfort and security give you more cost.”

Insurance According to Malcolm, credit insurance is worth considering but the cost of the policy will depend on critical mass, in other words, how much you have to insure.

“This is where there is a benefit in insuring as a group which will give individuals access to a cheaper rate,” he said.

“However, once you are dealing with an insurance company they will want to minimise their risk too. They have a limited appetite for even some of the biggest players and you may find the lower prices from less risky traders is not worth the expense.”

Set limits Setting limits based on how much exposure you are willing to take-on with a particular trader is another important measure to put in place.

Malcolm recommends that you ask yourself the question – ‘how much are you prepared to lose’ with any potential grain trader.

“Insolvencies are a fact of life and good risk management practices will reduce the impact to your business being fatal,” he said.

Once you have done your research on a trader and made an assessment on the risks, set a credit limit based on that assessment.

| GRAIN BUSINESS MAGAZINE

13

MARKETING

Danger signs Malcolm says farmers are often too trusting. They need to be alert to the warning signs that every small business owner watches out for, every day.

“A classic warning sign is people not paying – you’ve delivered something to them and you’re waiting but there’s no cheque in the post.

“You’ve got to use your judgement. Everyone has hiccups from time to time. Someone could be on holidays or sick.

But when they don’t answer the phone, and other creditors are talking and you can’t access their audited accounts, then something is up.

“That’s when you have to act fast. Doing nothing is not an option.”

Malcolm also warned that price was one of the important factors to consider and that if a trader is bidding well above the market, there may be increased risk associated with dealing with that trader.

Relationship of trust Grain grower Leo Delahunty of Templemore Partners near Murtoa in Victoria, says conducting background research to “get to know the trader you are dealing with” is essential in developing a trusting buyer relationship.

“You have to be proactive and get to know their payment history and how long they’ve been operating in the industry,” he said.

“They should tell you if you ask them what their position is. It’s quite fair to ask what their asset base is and what their annual reporting shows. There’s no reason why we can’t get trade references on selling grain. Every time we want to buy product off someone under terms, we’re obliged to give trade references.

“If you’re unsure about any of their answers then that’s a tell tale sign.

“I also ask around and compare notes with other growers – you’ll always hear the negatives first.

“But in saying that, it is not very common to hear of rogue traders.”

Leo says he is always wary when somebody is bidding well above the market.

“We all have an obvious inclination to take the best price,” he said.

“But if it’s a price that’s happening out of context with the rest of the market you need to understand why that is.

If you’re still tempted to go with it make sure your payment terms are really tight or you negotiate payment up front.

“I push for payment terms that may only be 7, 10 or 14 days rather than traditional 30 days.

“The shorter the payment terms the more confidence you have that if there’s something going wrong it will come to your attention quicker. It gives you the capacity to adjust a selling program.

“What we are seeing is some companies heading more and more towards shorter payment terms and I find that very encouraging.

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“The shorter the payment terms the more confidence you have that if there’s something going wrong it will come to your attention quicker.

It gives you the capacity to adjust a selling program.

“I believe farmers should always be wary if payments are made outside of the agreed contract terms.

“Another good option for farmers is to use clearing houses such as CLEAR for certain grain sales. To have a guaranteed payment that comes to the seller before title transfer is certainly very reassuring.”

Leo says his approach to risk varies depending on the commodity that he is selling.

“High volume bulk products like wheat and barley and canola will get delivered into main stream companies with warehousing facilities,” he says.

“If there’s no presold or pre-committed contract we will be selling out of warehousing for a period of time.

“In the case of pulse crops they tend to end up in packing houses. We store that grain on farm because in many cases it’s not easy to place the whole lot of it at harvest time. We’re conscious that those packing houses are often smaller, independent businesses and we are taking some of the risk in trading with them. That’s where credit insurance might be advisable. Most of our local trading houses use credit insurance themselves.

“We also store on farm our off-spec grain - grain that might have some quality issues. We hold that and work on marketing options for that after harvest.

“We store about 35 per cent of our grain on farm for flexibility.”

Leo said spreading the sales program is also important.

Some is sold in the ground well before harvest and other commodities might not be sold for 12 months.

“I absolutely believe that growers need to be active in their decision to sell grain and it’s important part of running a modern grain farm.

“It takes 12 months to grow your crop so you should give the same attention to selling it.”

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FOREIGN EXCHANGE

FOREIGN EXCHANGE/

WORDS/ PETER DRAGICEVICH, SENIOR CURRENCY & INTEREST RATE STRATEGIST, COMMONWEALTH BANK

AUD TO REMAIN FIRM IN 2014-15 After a turbulent turn of the calendar year, when it declined by eight per cent in the three months to February 2014, AUD/USD recovered and stabilised.

Between late March and August 2014, AUD/USD traded in a tight three per cent range, centred on 0.93 cents.

T

he stability in the AUD was a function of: (a) The low levels of financial market volatility, stemming from the commitment by the major global central banks to keep interest rates low and policy accommodative for an extended period. (b) The widespread concerns that dominated the landscape early in the year that a sharp downturn in mining investment would lead to a sharp contraction in Australia’s economy did not eventuate. (c) The RBA shifted to a more neutral policy stance in February 2014. The RBA noted that a “period of stability in interest rates” was now appropriate.

This outlook continues to be maintained. (d) The mix of an improving domestic economy, pick-up in the growth rates of Australia’s major trading partners, Australia’s ongoing interest rate advantage and low financial market volatility encouraged an increase in net foreign purchases of AUDdenominated assets. This has been particularly true for Australia’s highly sought after AAA-rated government bonds. (e) A number of rolling developments, such as the US fiscal issues in late 2013, the cold snap induced early 2014 US economic slowdown, and the ongoing negative inflationadjusted US interest rates undermined the USD. The fortunes of the AUD have changed significantly over September. The AUD/USD has fallen by over 6 per cent.

The September 2014 slump is the largest monthly fall since May 2013. However, the extent of AUD’s move in September is not unusual, from a historical perspective. The average monthly trading range of AUD is 4.5 per cent per month since the float in 1983. AUD/USD has experienced monthly changes (up or down) of 5 per cent or more 115 times since

16

the AUD was floated, i.e. 31 per cent of the time.

Several factors have combined to weaken the AUD. Firstly, with iron ore accounting for 27 per cent of Australia’s goods exports, swings in the iron ore indicator spot price is an important focus for market participants. The Tianjin spot price indicator for iron ore has decreased below US$80 per tonne for the first time since September 2009. Rising global supply of iron ore and concerns about momentum in the Chinese economy have been the driving force. The Chinese economic data released in September has generally underwhelmed expectations. This has called into question Chinese policymakers meeting their 7.5 per cent 2014 growth target. Given the extensive trade relationship between Australia and China, the AUD remains sensitive to negative perceptions about the Chinese economy.

Added to this, the USD has rebounded. The diverging growth and monetary policy outlooks between the US and the Eurozone and Japan has seen the USD outperform. This is generating a USD bid in the market that the AUD (and other currencies) cannot avoid. Also gaining traction has been the sharp narrowing in the yields between Australian and US government bonds. Over the past year, the twoyear, five-year and 10-year Australia-US yield spreads have narrowed by 35bpts, 86bpts and 43bpts respectively.

The reduction in Australia’s relative yield advantage, combined with the pick-up in market volatility as the US Federal Reserve’s (Fed) monetary policy cycle has come more into focus has reduced the risk-adjusted return of AUD-denominated assets.

FOREIGN EXCHANGE

CHART ONE/ AUD VOL. & VIX VOL. INDEX

CHART TWO/ AUSTRALIA’S FINANCIAL ACCOUNT INDEX (A$bn, Quarterly)

CHART THREE/ AUD/EUR VS AUD - EUR 2- YEAR SWAP SPREAD

CHART FOUR/ AUSTRALIAN MERCHANDISE EXPORTS (% BY DESTINATION)

CHART FIVE/ AUSTRALIAN TRADING PARTNER GROWTH & GLOBAL PMI

The Chinese economic data released in September has generally underwhelmed expectations.

NOVEMBER 2014

| GRAIN BUSINESS MAGAZINE

17

FOREIGN EXCHANGE

In terms of the global macro picture, a key theme for financial markets over the coming year will be the impact of the US Fed’s monetary policy regime shift. The positive momentum in the US economy and labour market should see the US Fed begin to normalise its monetary policy settings over the next year.

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Looking ahead, we expect the AUD to stabilise and recover some of its recent declines. We are forecasting the AUD to average in the low 0.90’s over the 2015 calendar year. In our view, the backdrop of an improving global economy remains AUD supportive. Over 75 per cent of Australia’s exports are now sent to Asia and economic leading indicators for the broader region remain firm. The robust economic performance of Asia should help global economic growth accelerate to 3.6 per cent pa in 2015, in our view.

Furthermore, focusing purely on commodity prices ignores the shift in Australia to the volume phase of the commodity boom after years of investment in the mining sector. Indeed, the exponential growth in Australian export volumes has outstripped the moves lower in prices. Australia’s export receipts for its three main commodity exports (iron ore, coal and LNG) totalled A$131.6bn in the year to July, up from A$72.2bn four years earlier when commodity export prices were much higher.

Another factor that underpins our AUD view is our thoughts on the RBA. The CBA house view is for the RBA to start its tightening cycle in February 2015. While the expectations around the timing of the start of the RBA rate hike cycle will ebb and flow in line with the incoming Australian economic data, it is quite clear from the RBA’s commentary that the next move will be a rate rise. Higher Australian interest rates should continue to underpin the AUD, particularly against the lower yielding currencies such as the JPY and EUR. In terms of the global macro picture, a key theme for financial markets over the coming year will be the impact of the US Fed’s monetary policy regime shift. The positive momentum in the US economy and labour market should see the US Fed begin to normalise its monetary policy settings over the next year. We are forecasting the first US Fed rate hike in mid-2015. This is roughly in line with current financial market pricing. In the past, turning points in Fed monetary policy cycles have coincided with a rise in financial market volatility. The upcoming iteration should be no different. The consequent lift in US swap rates generated by higher Fed interest rates should also be USD positive. However, given the US continues to run a large current account deficit (equal to 2.4 per cent of US GDP), and real US interest rates will remain negative for some time even after the US Fed begins to raise interest rates, the extent of the initial upturn in the USD stemming from actual interest rate hikes may not be as large as widely perceived.

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INDUSTRY SPOTLIGHT

INDUSTRY SPOTLIGHT/

W

heat Quality Australia (WQA) is the organisation tasked with wheat quality classification and the output of the annual Wheat Variety Master List. This forms an essential part of Australia’s guarantee of grain integrity to the rest of the world.

WQA’s objective is to make wheat variety classification accessible, relevant and effective to stakeholders across the supply chain, providing a framework for the development and identification of high quality wheat varieties for production in Australia.

So how does this process of classification work, and what does wheat quality actually mean?

Grain Business spoke to Wheat Quality Australia to have these questions answered.

QUALITY THE KEY TO WHEAT COMPETITIVENESS Ensuring Australian wheat has the quality attributes required by the consumer is critical to maintaining Australia’s competitive advantage on the global market.

QUALITY ACROSS THE SUPPLY CHAIN Wheat Quality Australia’s role is to assure end use wheat quality; provide information about processing and end use quality; efficiently segregate market relevant grades; and create a framework of common terms to aid product specification.

Breeders Produce new varieties with grower and end user desired quality attributes and submit for classification.

WQA Panel Assess new varieties for inherent quality against control varieties.

Identify new varieties to be added to the Variety Master List each year.

End users/customers (Processors

WQA Classification Council

Use supplied wheat and provide feedback about quality requirements. Increase orders for Australian wheat that meets quality requirements.

Update and publish the Variety Master List annually (September), Distribute via GTA to industry and all receival centres. Set and manage classification framework.

and millers)

Wheat quality across the supply chain

Growers

Traders/Exporters Establish contract specifications based on GTA receival standards, perform pre shipment and quality testing and create cargo assembly plans. Sample and test shipment to contract specifications.

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Bulk Handlers Wheat varieties checked against the Variety Master List at point of receival. Segregate wheat into relevant grades. Site and zone composite testing.

Delivery of wheat to receival centres at harvest. Growers required to sign a variety declaration to identify the variety of wheat carried in each truckload.

INDUSTRY SPOTLIGHT

What is Wheat Quality Australia?

Wheat Quality Australia (WQA) is an independent company that classifies wheat varieties according to distinct quality attributes for end uses. WQA is the owner and producer of Australia’s Wheat Variety Master List.

What is wheat quality?

Wheat quality refers to the performance of grain in meeting the requirements of its use in flour milling, breads, noodles, cereals, pasta or animal feed. Quality is defined by the genetic attributes of the variety grown (assessed through the classification process) and the environmental conditions during crop growth (measured at receival).

What is the Wheat Variety Master List?

The Wheat Variety Master List contains the names of all varieties approved by the classification process.

It is updated and published on the WQA website annually on September 1, and distributed to stakeholders.

What is wheat classification?

The wheat classification process involves assessing the inherent quality characteristics of a new variety, focussing on processing and end use performance. This process involves comparing new varieties for up to 30 quality parameters with a group of control varieties grown at the same time over a minimum of three seasons.

Quality characteristics assessed at the stage of variety classification are more comprehensive than those measured at the point of receival.

The difference between classification and industry receival standards?

Receival standards, or harvest grading, measures the physical characteristics of the grain such as protein, moisture, test weight and screenings. Classification measures the inherent qualities required for the grain’s end use which can’t be easily measured at receival, such as milling extraction, baking performance and noodle colour.

How is wheat classified?

The complex classification process is undertaken by the Variety Classification Panel, an expert fivemember group (drawn from major end user interests) which is appointed

by WQA. They meet four times a year to consider submissions and assess quality data results. The panel liaises directly with breeders.

Classification measures the inherent qualities required for the grain’s end use which can’t be easily measured at receival

WHEAT CLASSIFICATION ZONES There are four wheat classification zones in Australia. A wheat classification is valid for one zone only.

Western Classification Zone Western Australia Southern Classification Zone South Australia and Victoria South Eastern Classification Zone Southern New South Wales Northern Classification Zone Central New South Wales, Northern New South Wales and Queensland

NOVEMBER 2014

| GRAIN BUSINESS MAGAZINE

21

INDUSTRY SPOTLIGHT

“Our purpose is to differentiate the Australian wheat crop to enable its stakeholders – breeders, growers, traders – to maximise the value they derive from the industry.

We protect and safeguard the industry’s competitiveness.”

2014 WHEAT VARIETY MASTER LIST Wheat Quality Australia was born out of the deregulation of the Australian Wheat Board in 2008.

“After deregulation a body was needed which would keep up wheat classification, and the Grains Research and Development Corporation and Grain Trade Australia agreed to set up WQA and continue to support WQA to maintain the reputation of ‘Brand Australian Wheat,’” said Don Plowman, WQA’s new chairman.

“Our purpose is to differentiate the Australian wheat crop to enable its stakeholders – breeders, growers, traders – to maximise the value they derive from the industry. We protect and safeguard the industry’s competitiveness.”

WQA’s main output, and the product which it is most well known for, is the annual Wheat Variety Master List which contains the names and highest possible grade for current wheat varieties approved by Australia’s wheat classification process.

Released in September each year it forms part of each season’s Grain Trade Australia Wheat Standards.

The 2014 list released on September 1 includes 11 new varieties – Kiora, Condo, Sunmate, Mitch, Supreme, Viking, DBA Aurora, Harper, Scenario, Adagio and Manning.

“The 2014 list includes a new Udon noodle wheat for Western Australian growers (the first since 2009), a new Durum, two new APH varieties, three feed varieties and a number of new AH and APW varieties,” Dr Plowman said.

“There have also been a number of upgrades to existing varieties in their primary regions and out of region.”

The WQA 2014-2015 Wheat Variety Master List is now available from the WQA website at wheatquality.com.au and is also published in the GTA Wheat Trading Standards graintrade.org.au. For further information on the eleven new varieties please contact the relevant breeding companies and seed commercialisers.

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What is the Wheat Classification Council?

The Council comprises nine representatives from across the wheat industry: growers, breeders, bulk handlers, millers and exporters. The Council is responsible for establishing and maintaining a wheat variety classification system in Australia that is based on the requirements of the markets for Australian wheats. This includes defining the common classes of Australian wheat and their quality attributes as well as identifying improvements in the strategic and operational framework of the classification system.

How does classification ensure post harvest quality?

Growers must sign a Variety Declaration when they deliver grain to an Australian receival centre. Wheat that is not classified is rejected for domestic or export markets (although it can still be stored and sold as feed wheat).

What would happen if there was no Variety Master List?

There would be less quality assurance available to buyers, which would affect Australia’s competitiveness in marketing wheat to domestic and global customers.

Classification is critical to ensure Australia remains a trusted world leader in the quality of its wheat varieties.

FARM SAFETY

FARM SAFETY/ WORDS/ STEPHANIE HODGSON

CHILD PROOF YOUR FARM Nearly 20 per cent of farm injury fatalities in Australia last year were children under 15 and more than half were from two key causes: drowning and quad bikes.

T

hese chilling facts were released in late July during National Farm Safety Week, reinforcing that it is not only farmers’ health and safety which is at risk but increasingly children on farms.

“As farmers our most precious gift is our children,” said Charles Armstrong, Chairman of FarmSafe Australia. “We really want all farmers to be pro-active and take the steps that we know can protect our futures.”

In 2013, 40 per cent of on-farm injury deaths were children drowning (often toddlers) and 17 per cent were from quad bike accidents. The two farm injury deaths involving children so far in 2014 have also involved quad bikes.

“Dams, wells and troughs represent obvious drowning risks and these need to be securely fenced to prevent children wandering into them,” Charles said. “Farms also need to establish a safe and secure place for children under five to play.

“Quad bikes are an increasing source of farm risk. We need to ensure that children under 16 years don’t ride or be carried as passengers on quads of any size.

24

“The risk is not worth it, as kids don’t have the physical size, strength, coordination and emotional maturity to safely operate such a dangerous piece of equipment.

“If you want to develop a love of the land put them on a two wheeler, make sure it’s the right size for them, that they have a helmet and other protective gear and are trained and supervised.

Yes they may come a cropper but the chances of serious injury or worse are far less, as two wheelers don’t crush or asphyxiate riders when they roll.”

Charles said it was most important to establish a safety plan, identifying possible hazards so they can be fixed and/or monitored closely.

“Safety procedures should be set and everyone involved should understand and abide by them. An emergency plan is also critical in case of an incident.

“It’s also important to realise that it is not just your own children at risk. Tragically around 30 per cent of child deaths on Australian farms over the past 10 years have been to farm visitors. You need to protect them from themselves.”

Top tips Do not allow children under 16 to ride or even be a passenger on quad bikes Create a safe play area such as a secure fenced yard to avoid toddlers wandering Fence and secure risk areas such as dams and wells Don’t leave keys in vehicles, tractors and other machinery Supervise children when they accompany you on jobs Do not allow children to operate machinery Ensure children wear seatbelts at all times when in farm vehicles Do not allow children to ride in the back of utes, unrestrained Ensure children wear helmets when riding motorbikes and horses

YIELD

YIELD/

WORDS/ PETER FULLER

CONTROLLED TRAFFIC REVOLUTION With the advent of “super machinery” and spray plants that can weigh up to 70 tonne, the rapid advances in GPS technology and no-till farming, and the constant quest to fine-tune agronomic outcomes to maximise yield, the next revolution on Australian dryland farms is expected to be controlled traffic farming (CTF).

26

YIELD

INTRODUCTION

C

TF (or tramline farming as it is sometimes called) is a farming practice that restricts the movement of machinery across paddocks with the goal of minimising soil compaction.

Paddocks are separated into two zones - roads (or permanent traffic lanes or wheel tracks) to carry tractors, seeders, spray units and harvesters; and root beds of soft, friable, non compacted soil for grain or pasture.

While CTF has been used in Europe since the late 1980s as a way of revitalising soils that had been compacted over thousands of years of agriculture, interest in Australia has been mainly from high rainfall Queensland grain growers.

Now dryland farmers in Western Australia, South Australia, Victoria and southern New South Wales are starting to show interest, as zero till agronomy and the evolution of GPS units and auto-steer machinery guidance becomes widespread.

A CTF conference held in Mildura in August attracted around 60 farmers and consultants from across Australia and latest estimates suggest between 16 and 20 per cent of farmers have committed to full CTF – which means they have their entire plant running on one three metre wide track.

Another 20 per cent have a “transition” arrangement with their tractors and spray rigs on two metre tracks and their harvesters on three metres.

For the majority of farmers the major resistance to the change is a lack of quantifiable data on the return on investment. CTF requires not just a new paddock layout but conversion of machinery to a consistent wheel-base width.

However, according to Richard MacEwan, senior soil scientist with the Department of Environment and Primary Industries Victoria, there is already plenty of evidence.

“Controlled traffic farming will definitely improve soil structure and strength, boost water use and availability, NOVEMBER 2014

reduce waterlogging, promote better root growth and enhance nutrient uptake by crops – and boost production by as much as 25 per cent,” Richard said.

“There were also measurable advantages in cost reduction through more efficient fuel use, and the more targeted placement of seeds, fertilisers and sprays.

“Australian farmers and scientists are working with some of the most challenging soils and environmental conditions in the world – and in a tough economic market – so CTF is another important tool in improving productivity and reducing costs.

“It is now an important farming technology worldwide.

“Soil physics is the same everywhere – we have limited soils and we have a demand for increasing production from a limited area of agricultural land to feed the growing population of the world.”

Richard, whose work includes statewide and regional assessments of soils in farming systems, says CTF and precision agriculture (PA) go hand in hand.

“There is an increasing focus on more efficient use of farm equipment, lower fuel costs, lower fertiliser costs, lower seed costs, better pest and disease control and improvements in soil structure,” he said.

“CTF delivers all of those and also helps with regionally specific problems such as bogging and compaction when soils are wet or plastic, because there is better drainage.

“Farmers need to start planning well ahead if they want to make a change to CTF,” he said.

“It is not something which can be changed overnight so you need to develop a medium or long term machinery, agronomic and soil plan.

“The first step is assessing your current soil status. You can undertake EM38 mapping, refer to yield maps and paddock histories or just observe the trafficability and difference in tillage effort.” | GRAIN BUSINESS MAGAZINE

27

YIELD

THE CONSULTANT

The Big Leap

CTF - harvest chasing on 9m tramlines

Deep ripping in a 12m CTF system from three metre tramlines

Successful farming is all about understanding and matching your land’s capabilities to the potential of every season, according to controlled traffic farming (CTF) consultant Don Yule.

“That is what CTF is all about - maximising your potential,” he says. “It means improving yields, reducing costs, growing crops you couldn’t grow before because your soil, your farm, your machinery and you are more efficient and effective.

“But unlike some other farming systems it is not something you can easily adopt step by step – you have to make a big leap with CTF.” Don has been working on CTF and precision agriculture since 1992 when as an soil scientist with the Department of Natural Resources in central Queensland he was asked to investigate soil compaction.

“We all used to talk about the hard pan caused by ploughing but it was really a result of the machinery. Wheels cause soil compaction and one pass is enough.”

Don started CTF Solutions in 2002 and now consults directly to more than 200 farmers, nearly 20 grower and catchment groups and has conducted 14 R&D and adoption programs for national and state agencies.

“In 1992 we came at CTF from a fuel efficiency point of view – tractors driving on hard wheel tracks used half the fuel of those in cultivated soils. We wanted to know if this concept of permanent wheel tracks was practical on grain farms.

“So the first challenge was the machinery. How do you expand a tractor to three metres, the same width as a harvester, and start thinking in three metre multiples with all of your machinery? The engineers solved these problems and modifications for three metre wheel tracks, nine or 12 metre planters and harvesters, and 27 or 36 metre sprayers became available.

“The second challenge was working out where to put the

wheel tracks in the paddock. Since the 1950s there had been a strong soil conservation focus in Australia on contour banks - but they aren’t equally spaced and parallel to each other. So how do you achieve controlled traffic between contour banks and still manage erosion?

“We looked at farming systems in India and also borrowed ideas from irrigated cotton that was planted up and down slope. We realised that running paddocks up and down slope creates a very small contributing area for run off and as long as every wheel track and row keeps its water, it’s like a corrugated iron roof. But professional design is critical.”

The third breakthrough, which also provided many benefits, was zero till. Fewer machinery passes, higher soil cover and improved friability all fitted with the notion of CTF. The guidance from controlled traffic made zero till easy and effective – a perfect job every time.

“So these three things – setting machinery wheel tracks, designed downhill paddock layouts and zero till – all came together as the core of controlled traffic farming.”

By 1995 Don had six farmers converting to CTF and they were at the point of proof of concept.

“The farmers showed that CTF could work with broadacre farming in Australia,” he said.

“The biggest difficulty was accuracy – we didn’t have any markers or GPS so setting out the wheel tracks was difficult.

But the permanent tracks provided guidance and better access to the paddocks in wet weather which improved timeliness. We were saving on fuel and fertiliser and the soil had definitely improved. The layouts were tested by some large storms and erosion was reduced from 100t/ha (contour bank layouts) to 10t/ha (CTF).

“Then came the GPS on to tractors – the BeeLine – an Australian invention to support CTF – and that started the whole revolution about spatial technologies and precision agriculture.”

Photos courtesy of Department of Agriculture and Food, Western Australia 28

YIELD

12m seeder pulled by a tractor with axles extended to three metres using an off the shelf extension kit

Don said adoption of CTF technologies grew rapidly with as many as 200 farmers taking it up by the early 2000s. However, government funding cuts in research and extension saw interest drop off.

“The funding for field day and trials stopped and our conference also went into recess and only got going again in 2005.”

So what are the barriers to adoption?

“The challenge is that you need to take a big leap to adopt CTF as it is a holistic farming system that requires looking at the entire farm.

“To make CTF work you have to understand all of the bits that fit together as a whole farming system.”

Don advocates using a professional CTF consultant to help develop a farm plan.

“You need to start with some professional advice and then look for workshops and training sessions,” he said.

“Start by considering the three farming practices you need to modify. We start with a map of the farm. Things are now much easier with GPS especially with elevation mapping which helps design of your downslope layout.

“Then we do a machinery audit. You can actually get away with a lot less gear under CTF and typically the modifications are not expensive. The plan will look at your current machinery and whether it can be modified. Three metre wheel tracks for tractors and harvesters are a given, and they match with implements on nine metre or 12 metre multiples.

“Other implement widths are ok but are less efficient.

Currently RTK two centimetre guidance is a given and becoming much less expensive. Unfortunately, not all brands are compatible. This is very important if you use contractors

NOVEMBER 2014

or occasionally borrow equipment from a neighbour.

“Finally we talk about zero till. If farmers are not already embracing minimal tillage then they need to make that agronomic change. Controlled traffic provides guidance, makes zero till easy and ensures timeliness, no misses, no overlaps and no escapes.”

Don said the latest revolution in CTF was spatial technology that measured farm performance digitally in real time with most measurements automated.

“Growers and their advisers can now measure their performance with high accuracy (less than metre pixels) and have the reports available on their computer when they get home.

“Crucially, they need the two centimetre accurate spatial footprint provided by RTK guidance so they are ideally suited to CTF.” Don said the only thing holding back farmers was the decision to change.

“Just do it. Get good advice, develop the plan, and jump in. We estimate there are now more than 1,300 growers in Australia doing CTF and getting great results. They can help you.

“We have more than 50 success stories from growers who have attended the Australian controlled traffic farming conferences over the last decade which are all case studies available to growers wanting to find out more about CTF.” More information Australian Controlled Traffic Farming Association: actfa.net 2014 Australian Controlled Traffic Farming Conference: actfa.net/actfa-conferences/2014-australian-ctf-conference

| GRAIN BUSINESS MAGAZINE

29

YIELD

THE FARMER

Better bottom line Mark Branson, Branson Farms, Stockport, South Australia

Stockport grain grower Mark Branson says controlled traffic farming has definitely led to a measurable improvement in profit of around $57/ha after 10 years of using the technology.

Speaking at the Australian Controlled Traffic Farmers Association annual conference in Mildura in August, Mark said the better bottom line came from improved soil health and yield, as well as savings on inputs such as fertiliser.

The Branson’s farm of 1200 ha is in the reliable 425 - 525 mm rainfall area just north of Adelaide. About 80 per cent of the property is cropped to wheat (bread and Durum), malting barley, canola, monola, faba beans and field peas. The remainder is pasture for a self-replacing fine wool Merino and prime lamb enterprise.

Mark said his fifth generation family farming enterprise has always adopted new technology early – from superphosphate and ley farming in the 1950s and 1960s to grain legume rotations, nitrogen based fertilisers and no-till farming in the 1980s and 1990s.

“We started the journey into precision agriculture in 1997 with the purchase of a yield monitor but we didn’t adopt it in any significant way until 2006 when I returned home from a Nuffield Scholarship,” Mark said. “I focussed on PA and conservation agriculture on my travels and returned to the farm intent on changing our systems.

“We had introduced tramlining as far back as 1997 but the main change came in 2002 when we adopted no-till across the whole farm, after investing in a new sowing rig.

“Then with the purchase of an RTK (2cm) base station and autosteer system on the main tractor in 2004 we made the changeover to CTF. Most of those same CTF lines are still used today, more than 10 years later.”

Mark said he saw the potential benefit of CTF in reducing soil compaction and improving overall soil health on his red brown earths and dark brown cracking clays. But he also hoped that the new system would improve crop yields and increase the nutrient cycling in the soils.

“The biggest decision was choosing the width of the traffic spacings,” he said.

“Our machinery purchasing plan was driven by our CTF plan. When we started in 2002 with the first tractor purchase, its wheels were at 2.2 metre wheel spacings.

“Next came the sowing equipment which we put out to 9.8 metres and the airseeder cart (at 2.2 metres) in 2004.

“The tow behind sprayer was then expanded to be able to Photos courtesy of Department of Agriculture and Food, Western Australia 30

BOOSTING PROFITABILITY SAVINGS/YEAR

$/HA

YIELD GAINS/HA

$7.87

INPUT OVERLAP SAVINGS

$7.24

PA SAVINGS - PHOSPHORUS NITROGEN

$16 $33.78

GYPSUM/LIME

$4.36

TOTAL SAVINGS

$69.45

EXPENSES/YEAR MACHINERY PURCHASES RTK GPS SIGNAL DATA MANAGEMENT

$/HA $11.11 $0.17 $1

TOTAL EXPENSES

$12.28

ESTIMATED ANNUAL BENEFIT FROM CTF AND PA

$57.17

spray 29.4 metres. Next was the purchase of an SP sprayer in 2006 with the spraying width expanded to 39.2 metres, but still on 2.2 metre tractor spacings. We expanded that boom on the property but when we purchased the Nitro in 2010 we got the dealer to expand the boom width to 39.2 metres and the wheel width 3 metres.

“The last purchase was the CASEIH Magnum this year which has wheel widths expandable to three metres.”

Mark said being an early adopter meant there were some small mistakes made at the start.

“I had no one to bounce off of and no “fence to look over,” he said.

“The decision to go to 2.2 metre wheel spacings rather than three metres was because it was easier, but in hindsight I probably should have gone to three metres at the very start.

My advice to a grower considering implementing a CTF system is to start at three metres.”

Now 10 years into the CTF system and eight years engaged in full precision agriculture, Mark believes the economic patterns have bedded themselves down.

“Since 2004 and the wide adoption of no-till, CTF and PA soil health has definitely improved and there have been significant fertiliser savings.

“Most importantly we have measured an increase in farm profits of $57.17/ha - a benefit that goes straight to the bottom line.”

YIELD

THE FARMER

Better bottom line Geoff Rethus, Horsham, Victoria

Mark Johnson E Ogylvie singles

CTF chaser with table at Chris Leiths Vic.

Horsham farmer Geoff Rethus says controlled traffic farming is a “no brainer” based on the clear productivity and profitability improvements he has measured since introducing the farming system seven years ago.

Geoff, who farms 4000 ha of wheat, barley, lentils, broad beans and export hay in the 430 ml rainfall area of western Victoria, said CTF was a natural follow-on with the introduction of GPS guided farming systems.

Geoff said his Wimmera grey clays and duplex soils “are a bit more difficult to operate” than some other soil types in the southern region.

“We knew they were using CTF in Queensland on black soils but we didn’t think we needed it in Victoria,” he said.

“But when we introduced guidance systems on our equipment we saw that we were tramlining unintentionally.

We were getting visual effects in the crop from these set paths: in some fields the crop was 50 per cent less where the wheel tracks were compacting the soil, and we realised we needed to do something about it.”

Geoff said he made a bold move and changed the three main pieces of equipment over in one year – the boom spray, seeder and combine.

“We thought we had to fix it up as soon as we could,” he said. “We had read that tramlining can improve your bottom line by 15 per cent, so we figured it wouldn’t take long to repay the investment.

“We also decided to do the important things first – replace the machinery which is going to be on the soil when the soil is damp.

“We are running a seeder and a combine on 12 metre spacing and a boom on 36 metres so we have multiples of

three in our system at the moment. We are running on three metre tramlines. Most of our gear is on three metre wheel centres: tractors, chaser bin, boom spray, air cart and we are running the narrowest tyres we can, to minimise the width of the wheel track.”

Geoff said he found it took several years for the soil to repair itself, but now it seems to get better and better each year.

“Visually the soil is softer, there is better structure and drainage and fewer problems with water logging,” he said.

“We are capturing more water with self mulching soils as it is soaking in deeper and we have eliminated L shape roots in our canola crops.”

“We’re finding that our crops are more consistent and even, which is the biggest advantage. On a wet year you don’t notice it so much, but when you have a dry one the roots can penetrate deeper and get the moisture.”

Geoff said the biggest challenge with CTF was “to make the decision to do it”.

“Managing the tramline in heavy clay soils is also tricky,” he said. “They tend to spoon out a bit if they are wet. They can rut and there is work involved in maintaining that each year. The best advice I can give is to keep off them when they are wet and travel at moderate speeds to try not to rough them up.

“Apart from that it’s all been positive.

“I would certainly recommend CTF to other growers – if you look at the sums and evidence around it is a no brainer.

“For the majority of farmers who run guidance systems on their tractors, they are already putting their toe in the water so why not run everything on CTF and give yourself a five year plan to work towards.”

“We had read that tramlining can improve your bottom line by 15 per cent, so we figured it wouldn’t take long to repay the investment.”

NOVEMBER 2014

| GRAIN BUSINESS MAGAZINE

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YIELD

THE RESEARCHER

CTF trials to measure return on investment

Compacted soil under wheel tracks restricts root development, water infiltration and gas exchange.

CTF seeding on 3m tramlines and 9m

A five year controlled traffic farming research project aims for the first time, to determine the benefit of the technology in low rainfall dryland farming systems.

The Grains Research and Development Corporation will fund the study initiated by the Australian controlled traffic farming Association and led by Chris Bluett, HRZ Consulting Victoria.

“CTF adoption is at its lowest in the low rainfall zone of the southern cropping regions of South Australia, Victoria and southern New South Wales,” Chris said.

“It has tended to be seen as a high rainfall farming system but work undertaken in Western Australia has aroused interest from dryland farmers who tend to have the biggest farms, the lowest inputs over very large areas, extraordinarily large machinery and their topsoils are often sandier and lighter and are more prone to compaction.

“There are a number of successful adopters around. But it takes more than a few success stories to convince a farmer to invest and change his business.”

Chris said a consortium had been formed to drive the project comprising: ACTFA, Department of Primary Industries Victoria, SA Research and Development Institute, SPAA precision agriculture Australia and five farming systems groups – Eyre Peninsula Farming, Upper North Farming Systems Group, Mallee Sustainable Farming, Birchip Cropping Group and Central West Farming Systems Group.

The project commenced on 1 July and will conclude on 30 June 2019.

“We are hoping to establish over the next 12 months four highly detailed research sites – from Minnipa on the Eyre Photos courtesy of Department of Agriculture and Food, Western Australia 32

Peninsula to Condoblin in the central west of NSW – and this is where the empirical research will take place on soil compaction and soil erosion and the relationship with crop productivity,” he said.

“Then we want to also engage the farming systems groups and involve as many farmers as we can by setting up another 20 development sites over two years. They can be simple or complex and will be designed to answer the key practical questions that farmers have: if I have permanent wheel tracks all through my paddocks, will they create wind and water erosion? Will I get weed issues? What sort of slope starts to get dangerous from an erosion point of view?

“This is the sort of stuff that you can work out on a farm and there will be funding available for farming systems groups to run these studies. We don’t want them to work on theoretical research, we want them to directly deal with the things farmers want to know.”

The site results will be communicated by farming systems groups through their usual channels as well as GRDC. Chris said GRDC doesn’t envisage that the project will lead to immediate farming practice change.

“It’s not designed for adoption itself, it’s designed to find out all the questions so as the answers become available the practices can start to change,” he said.

“We are starting from grass roots and we are going to try really hard to keep it at grass roots.”

Chris said he urged farmers to get involved in the project.

“Contact your local farming systems group, submit questions, visit the development sites and perhaps start your own CTF plan,” he said. “It’s a gradual transition - not something you can change suddenly.”

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YIELD

YIELD/

WORDS/ PETER FULLER

POST HARVEST Q & A Grain Business contacted leading regional farming systems groups to find out how growers will de-brief the 2014-2015 season and make management and farm system changes for the new year.

Paul Breust, Research and Trials Manager, Southern Farming Systems.

Dr Neil Fettell, CWFS Senior Research Advisor, Central West Farming Systems.

John Small, CWFS Extension Agronomist, Central West Farming Systems.

Paul Breust, Research and Trials Manager, Southern Farming Systems.

What questions should growers be asking after harvest?

A How have my crops performed in comparison to other growers – and against my benchmarked water limited yield potential? If there are differences what is causing it? Disease, weeds, nutrition, water use efficiency, water logging, pests and management decisions are all factors that can impact on yield. How can I adjust the system to measure, eliminate or reduce the differences in performance?

Q How should growers assess which part of their cropping system could do with improvement?

A To accurately measure problems you need accurate records. The Grains Research and Development Corporation (GRDC) National Paddock Survey Project will address this very issue. We will be closely monitoring 10 regional paddocks in the Sothern Farming Systems (SFS) area to measure actual versus potential yields and determine – through sampling and analysis – what factors have limited yield.

Yield can be limited by many factors, but the most critical is seasonal variability.

Our aim is to identify what factors are in play in this region which we address to reduce the seasonal influence.

Most growers know where their paddocks regularly perform well or poorly but may not be sure of the reason why.

Q

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Nigel Metz, Project Officer, South East Premium Wheat Growers’ Association.

Dean Wormald, South Australian representative, Mallee Sustainable Farming.

Growers now have many more tools to assess yield variation across a large spatial areas: GPS guidance, yield monitors, NDVI imagery, EM survey, topographic mapping, variable rate applicators and soil analysis.

Spatial analysis can accurately measure yield performance across whole farms and the success of remedial actions can be assessed the same way in the next season.

An excellent method of assessing the impact of management changes is the use of test strips in paddocks. This allows a low cost, low risk evaluation of practice change before implementing it across the whole area. SFS conducts small plot evaluations of cutting edge practice change on behalf of members to pre-test its suitability to broad acre adoption.

SFS takes the risk on behalf of the growers. This is well illustrated by the sub soil manure, spring sowing and early sowing projects we have run successfully in recent years.

Q What are the key priorities in 2015?

A In the SFS regions there are many challenges confronting growers. Developing herbicide resistance, water logging, sub soil constraints, high disease and pest pressures and nutrient management are high priorities.

Reliance on herbicides alone has been proven to be a recipe for disaster and development of an Integrated Weed Management program is essential for sustainability. Cultural practices such as rotations, crop and pasture topping, grazing,

burning and weed seed capture all have a substantial impact on weed seed numbers.

SFS is currently working with the GRDC and Adelaide University on a range of systems to minimise weed seed burdens.

The SFS is also working on a sub soil project to inject large quantities of organic matter into sodic subsoils and this has shown an increase in water-holding capacity and improved drainage, organic matter and nutrient availability.

Some soils in this region are severely constrained and the sub soil injection system has shown vast improvements in some cases. Some growers have adopted this practice with good results and further work is ongoing. Any improvement in the structure and depth of a soil in this region will be beneficial. Soil structure improvement can be expensive so a gradual approach will yield long term results.

Opportunistic early sowing establishes crops and allows good vegetative and root development before cold wet conditions occur. Sowing suitable grain and forage crops in spring provides ground cover, forage for livestock and reliable yields post grazing, which is very important to mixed farming enterprises.

Q Which changes will deliver the biggest results?

A There are very few silver bullets in agriculture.

Each grower has varying sets of challenges to meet as a result of historical management and environment, so developing a farming

YIELD

system that tackles individual problems is a good way to become more reliably sustainable and profitable.

However the best bang for your buck in the SFS region comes from managing herbicide resistance, nutrition and sub soil constraints. Each has the ability to severely limit yield potential and SFS’s work is ongoing to develop improved management systems for growers.

Dr Neil Fettell, CWFS Senior Research Advisor, Central West Farming Systems.

John Small, CWFS Extension Agronomist, Central West Farming Systems.

What questions should growers be asking after harvest?

A What is the herbicide resistant weed position on my property?

What has been the cost of nitrogen in the last year?

Q How should growers assess which part of their cropping system could do with improvement?

A Growers should ensure they are aware of the GRDC funded Water Use Efficiency project and start adopting those findings. They should also develop system plans (not season plans) to manage herbicide resistant weeds and their soil nitrogen.

Q What are the key priorities in 2015?

A Developing a rotation that works for your own business rather than copying the neighbours.

Don’t make farming system decisions based on only one year’s results: take the longer view.

Q Which changes will deliver the biggest results?

A Work out how well your farming system is converting water and soil nitrogen to grain yield and then understand where you can profitably manage the losses.

Timeliness of operations is also always crucial so review your machinery and labour resources and management systems to ensure efficiency without over-capitalisation.

Q

Nigel Metz, Project Officer, South East Premium Wheat Growers’ Association.

What questions should growers be asking after harvest?

A Growers should first review their cropping systems performance. This will start with a simple dollar return for yield and the overall gross margin. With the big picture at hand you can then drill down on a paddock level and look at problem parts of each paddock. A yield map will show parts that performed significantly better or worse than average.

The start of the year is also a good time to consider your weed management Q

NOVEMBER 2014

strategy and trash flow for the following year’s crop.

Weed seed management at harvest is critical. If weed burden is high growers need to think about ways to aggregate seeds and deal with them – windrowing, burning and dropping wheel tracks.

Q How should growers assess which part of their cropping system could do with improvement?

A Farmers really need to make sure they have a good handle on the profitability level of all crops over a number of seasons. You need to be clear on why you are continuing to sow that particular crop - if it’s not profitability then why?

You also need to be clear about gross margins. Be realistic about your gross margin estimates at the start of the year and then follow up with actual yields and prices. It’s important to do this on a paddock by paddock basis, not just the whole farm.

Q What are the key priorities in 2015?

A The post-harvest months are the time to review the businesses financial performance and agronomic performance and then implement changes for the season going forward. In particular, strategic goals such as controlled traffic farming need careful consideration, because that’s the time cropping plans and rotations, machinery plans and budgets are all considered. It’s the time of the year when you align your strategic goals with financial reality.

Q Which changes will deliver the biggest results?

A This is highly variable depending on where you are based. Every farmer needs to understand his or her own farming performance and costings thoroughly and that is unique for each individual business. Most importantly make sure you take a break and take care of yourself and your family and your workers – it’s the time to recharge batteries.

Dean Wormald, South Australian representative, Mallee Sustainable Farming.

What questions will I be asking after harvest?

I will consider and fine tune my crop rotations - what worked well in the rotation and what didn’t. I will also be developing a strategy for Beet Western Yellow Virus in canola in 2015 through weed control and rotations.

It’s a good time to think about logistics – were each of the farm operations as efficient as possible? For example at harvest how could I improve the location of the field bins in the paddock relative to the harvester and improve the accessibility for trucks.

Then I start considering my enterprise mix for the next twelve months, then two Q A

years out and three years out. Plan 2 Profit is an effective tool I use to compare enterprises within different scenarios.

Q How should growers assess which part of their cropping system could do with improvement?

A Growers will most likely look at their gross margins to identify which paddocks and systems were profitable. Another way to make the assessment is to analyse the grain quality of each crop by assessing receival point delivery documents to ascertain the amount of foreign material such as weed seeds.

It’s good to also determine if seed treatments were effective, the efficacy of the spray program, whether the nutrition levels were sufficient to attain the desired yield and protein levels, how much nitrogen was applied, were paddocks top dressed at the optimum time, and what was the water use efficiency of each crops.

This can all be assessed by considering each crop’s yield and grain quality.

This is also a time of the year when you consider your equipment and how you might change your machinery to improve the timeliness of certain tasks.

The cost of new equipment needs to be considered in conjunction with the size of the enterprise and the extra profit generated by the investment in equipment.

Contracting versus purchase needs to be weighed up. For example I chose to use a contractor with a self-propelled spray plant, late in the season, to spray for grubs in canola. The benefits were reduced damage by the machine compared to a tractor drawn boom spray and the faster application of the chemical.

Q What are your key priorities in 2015?

A Summer weed control is always a priority in our region to conserve moisture. I plan to implement soil moisture monitoring to provide more information on water availability.

I will also be assessing my variable rate maps and tweaking them according to the yield data captured during harvest.

Soil testing will be conducted in February/March for next year’s crop followed by plant tissue tests later in the season.

I will also be reviewing how efficiently we use our human resources and the return on labour units during peak times.

Q Which changes will deliver the biggest results?

A The strategic use of legumes, that are suited to the low rainfall environment, in the rotation is still the best way to fix nitrogen and provide effective disease and weed breaks.

I think we can always work towards increased timeliness of all of our operations. | GRAIN BUSINESS MAGAZINE

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YIELD/

WORDS/ MARCUS La FORGIA

MAKING SENSE OF VARIABILITY Farm sensors are one of a growing number of precision agriculture tools being used to lower costs and increase yields.

W

hen Marrabel grower Kym I’Anson wanted to control yield variability across his 1700-hectare property, he turned to sensor technology as a way of better understanding the problem areas.

With extensive lodging and waterlogging across his property in South Australia’s Mid-North, Kym needed a way to accurately identify problem areas before he could take steps to further investigate and remedy the situation.

The answer was a biomass sensor, which enabled him to map the variability across his property and then investigate the low and high vigour areas to see what was causing those issues.

“We run a rotation of wheat, oaten hay and canola, and our export quality wheat and hay in particular needs to be of a very high quality,” he said.

“We were finding large yield variations across paddocks and needed to find a way to limit that to improve average yield and quality.

“The biomass sensor essentially allowed us to determine the biomass of the crop and then investigate the problem areas. It is not always a lack of nutrients that is causing the problem. It could be waterlogging, chemicals or subsoil limitations. There’s half a dozen reasons, but what the sensor enabled us to do was pick up where the crop was thick and thin and then investigate further to see if it was responsive to nitrogen.”

Impressive results The results have been impressive, with average yields improving since introducing the technology.

“The biggest effect has been a doubling in yield in the poor yielding areas because we’re able to specifically target high rates of nitrogen where it is needed,” he said.

“We’re applying nitrogen rates at levels that would be uneconomical across the paddock, but because you’re applying them to smaller areas, we are able to significantly increase our yield and profit.

“We are also able to reduce nitrogen from some parts of the paddock, lessening the biomass in those areas.”

Kym said the biomass sensors were one piece of the puzzle when it came to solving the issue of crop variability, stressing that understanding the root cause of the issue was just as important as identifying differences in biomass.

36

This view is echoed by precision agriculture specialist, Sam Trengove, who said identifying areas of low or high vigour was only the first step.

“Biomass sensors do a good job mapping crop variability, but it is getting to the bottom of what is causing the variability that is the issue,” he said.

“The easiest way to adopt the biomass sensors is for variable rate nitrogen application on the go. The sensors control the application automatically. There’s no data to process or mapping that needs to happen.

“The problem is making sure the areas that are identified as being low vigour by the sensor are nitrogen limited and not something else like shallow stone, non wetting soils or poor subsoils. The standard calibration on the sensor will try to apply extra nitrogen fertiliser to that area when in fact extra nitrogen may not fix the problem.”

It is for this reason that Sam believes the adoption of biomass sensors had been relatively low among growers.

“Introducing biomass sensors requires a significant capital investment and unless you can use them to their full potential to realise the yield benefits and/or reduce fertiliser costs, there may not be a financial case for adopting them,” he said.

“It’s important to understand how the sensors work so you aren’t misled in terms of their capabilities.

“You need to have some understanding of the underlying causes of the variability in crop vigour and how this will relate to a management decision. Don’t expect it to just pick the nitrogen responsive areas. You need to be able to interpret the data and investigate the causes before determining where you should put more or less.”

Sam said a more widely adopted sensor technology had been weed-seeking sensors, particularly on properties which run long-term fallows for up to 12 months.

Weed seeking sensors are used for spot spraying in fallows and work by picking up the green colour of the weed against the soil background. Selective spraying has a significant cost saving in herbicide application.

YIELD

“The biggest effect has been a doubling in yield in the poor yielding areas because we’re able to specifically target high rates of nitrogen where it is needed.”

IN-CROP WEED ID ON THE HORIZON Growers may soon be able to eliminate weeds ‘in-crop’ and further slash herbicide costs with an innovative new sensor – the H-Sensor – currently undergoing testing in Australia.

The main application of the H-Sensor is for the real-time targeting of weed patches and individual weeds in-crop without having to spray the entire paddock.

Precision agriculture specialist Sam Trengove said the development of a better sensor to patch out weeds would significantly reduce spraying costs for growers.

“Growers patching out weeds based on their own knowledge of a paddock is nothing new, but quite often you get feedback from them at the end of the year saying they wished they’d done the whole paddock because they’ve missed patches,” he said.

“With the development of a better sensor, hopefully we can develop better weed maps which tell us exactly where the weeds are and target those areas with more expensive herbicides. There will also be a cost saving by only targeting problem areas rather than spraying across the entire paddock.

“Knowing where the weeds are you may be able to save some money on the low density areas of the paddock but then go a bit harder on the high density areas of the paddock to really try and run those patches down and eradicate them.”

The H-Sensor works by using cameras that take images in the red and near infrared part of the light spectrum, and then using an algorithm to identify plants against the soil, stubble and crop residue background. Once it has confirmed the object as plant matter, it uses shape parameters to differentiate between crops and weeds.

Sam is heading up a project to make the sensor, which was developed by Agri Con in Germany, applicable to Australian conditions. This includes building databases so it identifies weeds specific in to Australian agriculture.

A project of SPAA, the research is being conducted in collaboration with Agri Con and funded by the South Australian Grains Industry Trust Fund (SAGIT).

NOVEMBER 2014

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FARM MANAGEMENT

FARM MANAGEMENT/ WORDS/ MARCUS La FORGIA

SHARING THE LOAD With rising machinery and input costs increasingly eating into growers profit margins, syndication and its related models may provide a workable solution.

D

espite the long-recognised financial benefits of farm syndication, examples of growers working together to spread cost and risk have been few and far between.

The main reason for this, according to agricultural economist Mike Krause of P2P Agri, is that many farmers believe the practicalities of working together to share inputs such as machinery are just too complex.

However, Mike believes that as land values and risings input costs continue to put pressure on profit margins, syndication and its related models, like collaboration, will become increasingly vital to the industry.

“One of the biggest problems with syndication is timeliness. Everyone wants the machine at the same time,” he said.

“That’s why neighbours find it hard to syndicate seeders and headers because everyone is sowing and harvesting at the same time. Everyone sees the thunderstorm coming and wants to use the header so they can get their crops off.

“But with higher costs, as an industry we need to look at ways to develop and run businesses more efficiently - if not syndication then collaboration where we go as far as joining businesses together.”

Making syndication work Syndication generally means two or more farm operations sharing the costs of ‘big ticket’ items, like tractors and harvesters. It allows small to moderate sized operations to add the latest technology to its armoury, without outlaying huge amounts of capital.

According the Mike, the golden rule of farm syndication is that it needs to be well planned and thought through before you enter into it.

That includes putting together a formal agreement in writing which outlines things such as detailed sharing arrangements, and how conflicts will be resolved should they arise.

“The agreement may not be legally binding, but it does force you to think through all aspects of how the partnership is going to work,” he said.

“You’ll be able to see where everyone’s benefits are coming from, how you will address issues of conflict and responsibilities for repairs and maintenance.

“Where I’ve seen syndicates fail is that generally a conflict will arise where it hasn’t been thought through properly and it all ends in tears. They can fail, and that’s probably why farmers have tended to shy away from them rather than embrace them.”

Good governance is just as important with syndication as it is in business.

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FARM MANAGEMENT

If you have different values about the way you treat your machinery, the syndicate isn’t going to last long.

NOVEMBER 2014

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FARM MANAGEMENT

Mike said he had seen syndicates work successfully where growers’ farming practices were complimentary. “It helps if you’re not demanding the machinery at the same time.”

“As the relationship moves on and unforeseen issues arise there needs to be a few rules in place to ensure they’re dealt with in a satisfactory way,” Mike said.

“Hand in hand with this, there needs to be a willingness from all parties to see things from their partner’s perspective.

That will ensure full and free communication.

“If you don’t have the right attitude of flexibility and cooperation going into the relationship, it’s likely that it will fail.”

Mike said he had seen syndicates work successfully where growers’ farming practices were complimentary.

“It helps if you’re not demanding the machinery at the same time,” he said.

“Another important requirement is shared values. For example, if you have different values about the way you treat your machinery, the syndicate isn’t going to last long.”

The art of conflict resolution is another important tool according to Mike, as there’s likely to be issues arise after an agreement has been struck that have the potential to end the partnership if you are unable to work through it.

Buying groups Another form of syndication is a buying group, where farm operations work together to purchase inputs such as fertilisers and herbicides. With an increased volume of inputs going through one buyer there can be significant financial discounts.

While buying groups can be financially rewarding, Mike warns that to make them work there needs to be a passionate person willing to drive and manage the group.

“Effectively, you have one person doing all the work so the leader of that groups needs to have a lot of passion,” he said.

“It’s the voluntary nature of a buyers groups that can be their downfall. Generally, at some point the person doing all the work will want to be financially rewarded for their efforts and the others don’t recognise this.

“That’s certainly where I’ve seen buyers groups fail in the past.

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“If you want a buying group to work successfully you’ve got to set up the rules of engagement so that the people who are putting in the effort to make it work are financially rewarded in some way, independent of the cost savings.”

Collaborative farming One of the more recent trends to emerge is collaborative farming, which is closely related to syndication but features some key differences.

Collaborative farming involves two or more businesses bringing all of their assets, including land and machinery, together as one farm with the land-owners working the land collaboratively and sharing the benefits.

The most successful example of collaboration has been at Bulla Burra in South Australia’s northern Mallee region.

“The reason that collaboration has advantages over syndication is it removes the antagonism caused by the ‘my land’ mentality,” Mike said.

“Instead, growers do what is best for the landholding as a whole. If it makes sense to harvest one crop before another, then that’s what they do. There’s no argument because the yield from the land is collective.

“Collaboration can work more effectively than syndication because it involves all of the business, not just a part of the business. They share the risks and benefits together and focus on getting the best efficiencies as a unit.”

Mike said collaborative farming suited growers who viewed their farms as a business, and were prepared to overlook the individuality that drives many rural enteprises.

“Farmers who would look to collaborative farming are big picture thinkers who are planning to have strong businesses 20 years down the track, not just the next season,” he said.

“It means running the business more corporately. That means holding board meetings and projecting financials. The trade off is that once it is successful, you can achieve a more balanced lifestyle because you begin employing people to work the farm.”

GOLDEN RULES OF SYNDICATION CAREFUL PLANNING IS ESSENTIAL

Before you enter any syndication arrangement, understand why you are doing it and what the benefits are, particularly the financial benefits. Only enter the partnership if the figures make it worthwhile.

FORMAL AGREEMENT

Put in place a formal agreement detailing the sharing arrangements, responsibilities and conflict resolution measures.

ADDRESS ISSUES OF CONFLICT

Conflict arises in any partnership, so it is important that you are prepared for it. Document a resolution process in your agreement and have an open mind.

MATCH YOUR SYNDICATE

Syndicates work best where there is a complementary work schedule so participants don’t have the need for the same machinery at the same time.

SHARED VALUES

The best partnership are those where you share values, otherwise there is a risk that conflict will arise down the track.

PUT IN PLACE GOOD GOVERNANCE

Once the agreement is locked away, ensure you have good governance in place to guide the partnership into the future.

THINK BEYOND SELF-INTEREST

Always try to see things from the point of view of others.

INVOLVE AN INDEPENDENT THIRD-PARTY

Involving a third party to oversee the partnership is always a good idea as they’ll be able to give you a view without the emotion.

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