Another shock to Aussie growth as drought bites

Via QCL:

HORROR receival figures into the GrainCorp storage network highlight the depth of the drought in Australia’s north-eastern cropping zone.

Total new-crop grain receivals into the GrainCorp bulk handling network as of November 5 totaled just 93,300 tonnes, with Victorian deliveries, traditionally not a major factor until December, making up over a quarter of the tally.

And industry figures expect the sparse level of deliveries to continue, estimating that GrainCorp could expect to see just 30 per cent of the well below average  east coast winter crop in its system given the strong domestic market this season.

The entire cropping zones of Queensland and NSW together have contributed just 67,800 tonnes into GrainCorp storages for the year.

Even this lowly total is a step up from last week’s figures, when there was just 22,000 tonnes across the two massive grain producing states, which normally put millions of tonnes into the system before the Victorian harvest is ripe.

In comparison, at this time last year, even allowing for a drought impacted season, there was 717,000 delivered to GrainCorp’s networks and in 2016, in spite of massive rain delays, there had been 1.2 million tonnes delivered.

This puts total deliveries this year at 7.5pc of receivals to the same time of year in 2016 or 13pc of those in 2017.

The shortage of cereals hitting the system is borne out by the fact a significant proportion of the grain hitting the GrainCorp system has been chickpeas from central Queensland.

GrainCorp is bracing itself for limited deliveries of whatever grain there is this season.

Houses and Holes

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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    • And someone posted of the minuscule amounts going into CBH Kwinana.
      said the farmers may as well use wheelbarrows.
      Now I’m no man made global warming flunkee
      but those farmer assholes have cut down way too many trees
      there is most of the issue in 1 sentence
      and they have overgrazed the joint by a factor of about 8.
      when you hit the environment that hard, in a fragile ecosystem like inland straya
      you have to muck it up.
      Its on average 150 years, since the explorers “found” that joint
      ruined in 150 years, by greed.

      • I go pig hunting up north and we see about 70% of the bush we used to hunt for the last 10 years has been cut to be farmed.

      • Re minuscule amounts going into CBH Kwinana.
        I assume you are talking WA. The crops in the WA wheatbelt have had a pretty good season, it’s just been a cool and wetish end to the season and it’s been a little too green to harvest. WA should have good yields, although a late harvest.

      • According to The Economist, Australia is one of the worst places in the world for deforestation.

        Australia is an unhappy exception. Land clearance is rampant along its eastern coast, as farmers take advantage of lax laws to make room for cattle to feed Asia. WWF, a charity, now ranks Australia alongside Borneo and the Congo Basin as one of the world’s 11 worst “fronts” for deforestation.

        https://www.economist.com/asia/2018/02/24/queensland-is-one-of-the-worlds-worst-places-for-deforestation

      • AGW is a well known cause of the increasing severity of droughts worldwide. Devegetation is just another minor factor.

      • Kwinana can hold about 1 million tonnes. But it is fed by a network of grain storage sites upstream in the middle wheat belt.

      • Huh? It’s been a bumper winter for most of the WA wheatbelt. I drove to Kalgoorlie a couple months back and it was a sea of green fields and yellow canola flowers. As mentioned, very cool wet spring, harvest hasn’t gotten going yet. Was late start too, it’s almost like the entire weather cycle has been pushed back two months.

      • F me!!! All bloody experts on farms, vegetation management, land management and farm economics. Effing great to be able to sit in the damned city and mouth off at people with more skills and knowledge than most of you can imaging.. Bloody incredible!!!

      • If directed at me… It’s an observation Flawse. Calm your tits. It’s the farmers themselves saying it was a good year in WA. And driving through the countryside you couldn’t help but notice it. Aren’t you just a China importer? What’s that got to do with farming?

      • I don’t blame the farmers per se. It’s just that we’ve always treated farming like mining in this country. Ie. Get in, strip the resources, get profits, get out. The mindset has been with us since we landed and begun our little expansion. It’s that mining mindset we have to change, else we’re all gonna get wrecked next a drought or some other (predictable) event hit us. And this doubly so with the climate emergency we got going on.

        There’s plenty of good farmers I know making changes. Some massively: there’s a mob out my way that in 3 generations have turned their completely cleared 500 acres of dead soil and mutton into a prime grade lamb, high grade wool and agroforestry set-up. They’re politically involved too, engaging, along with other local farmers – state and federal pollies for change and grants ect. Inspiring stuff. We gotta eat, just need to find long term solutions for doing so.

        But yeah there’s also plenty of shite farmers just as there’s shite mechanics, builders, doctors, lawyers ect.

      • And where are the hypocrite Greens on this matter?

        Too busy arguing for an expansions of the refugee intake, despite the fact that the ones we do take in home invade, carjack, and slit our throats on the streets, and that for the same amount of money we could support 10x as many people in their home regions.

      • Some feedback from a small farm, front paddock last year 160 bales , this year 26 bales.Every year we plant trees , last year 45, this year 34…
        Lamb pricing up, got $240 a head last month at the yards..spent a fair bit buying in hay tho..

      • And where are the hypocrite Greens on this matter?

        Usually getting yelled at by people like you and flawse for suggesting rampant land clearing might have some negative environmental effects and that the laws allowing it are hopelessly broken.

        But, hey, I’m sure if we stopped all the immigration tomorrow, the land clearing would stop the day after, right ?

      • Ref other writers re bumper WA crop and late season there .. and dry East Coast. Smells awfully like a classic Pacific El Nino just not declared yet. Usually means a knock to GDP. Good reason for RBA to not raise rates right now on top of everything else.

    • Worse, we are running out of water. Greater Sydney dam levels a couple of weeks from desalination being switched on, resulting in higher water bills for all. And maybe 3 moths from hitting the half empty mark and water restrictions. That will have an economic cost to industry, including local food-bowl production which is currently depending on town water, so more food inflation. A very lucky thing the oil price fell, that could have been an ugly combination with feed, livestock and produce having to be shipped ever greater distances.

      https://www.waternsw.com.au/__data/assets/image/0018/137502/8-November-2018.png

      • They must have expedited its repair, so its ready to go now, but it takes another 8 months to ramp up to full production after it is triggered when dams hit 60%.

      • Sounds like it’s time for more immigrants …

        More mouths to water means more urgent need for desal plants means more infrastructure spending means higher GDP means the Govt get to declare sound economic management (trust us why don’t you) and so on …. and so on ….

  1. I know someone very senior at one of the rural banks and involved in country community said to me a few weeks ago it’s much worse than city people understand
    It’s 2020 food shortages in oz much worse than we expect
    They said don’t be surprised if a good fillet steak at the pub $30 is no longer

    • ABC Rural is reporting that we will be importing wheat, soy, canola, corn, and peas this year for the first time.

      Food prices will be going up, as will animal products that feed grains, like eggs and meat.

      We still have to fulfill our export agreements, too.

      And for an added dose of stupid, the NSW Greens are arguing against increasing the storage capacity of Sydney’s main dam.

      • Should be able to get it all cheap via the US. Apparently there is some trade war going on…….

      • Absolutely insane to be using water to grow grain to feed cows / sheep / etc to eat
        Massive problem no one seems to want to talk about

        Again, Grantham’s Aug 18 a must read. We are utterly f#cked. Soil erosion, farming land loss, water evap, heat, toxicity.

        Lotta people gonna starve.

        Poor old Kevin Hogan busy running a scare campaign in Page re: Greens and the cattle industry but can’t see 5-10 years in front of him.

      • you betcha burgon.
        I’ve been talking about our parlous food security for 15yrs, as long as the food bowl for Asia schtick has-been around.
        Guess what topic got the airtime? and who was ridiculed?
        and at the end of this decade will we have a cogent food security plan? or fuel security plan?
        No fcuking way.

  2. What a perfect time to be continuing to import 200,000 people a year into this glorious country.

  3. Oh hells bells!!! We don’t need no damned farmers!! We don’t need no damned exports!!! We can borrow everything we need and then pay it off buy selling key assets and resources to foreigners. Every damned economist in the country, educated in the last 50 years knows this.
    Anyway – we can print our own currency to pay for everything!!!
    Stop the blubbering and hand wringing and get on with it.

      • You’re just a lying prick about it all. The Hansen BS the other day was a classic – his damned stupid hockey stick has never been proven wrong!!! Of course it hasn’t. The b…ard destroyed the original data!!! The models can’t get back there and the models have been shown to be wrong wrong wrong – over decades!
        As a scientist original data is sacrosanct. Everyone who has ever done any research of any kind knows that. it’s about the first thing you get hammered into you before you are even let near a test tube!!! Yet it was all destroyed! They were intent on rigging the arguments right from the very start.

        You never search for truth. You haven’t taken a glance at the maths details on ocean temperatures or atmospheric temperatures. You better brush up on your scientific knowledge by reading the Guardian in the morning.

      • I’d guess you are an MMT fan and a negative RAT interest rates fan so that we can use up our world as quickly as possible.

      • Flawse….

        The only people left denying AGW are people with religious issues or people with an Upton complex or a mix.

      • Flawse…

        I thought the whole consume everything issue was due to supply side economics and the folks that supported it… self licking ice cream cone as it were.

    • A. Farming is fine as long as it acknowledges environmental realities and does not externalize long term issues for short term profit.

      B. Selling Assets was done under EMH and corporatist globalization and not to pay for stuff e.g. all investor driven.

      C. A Sovereign currency issuer can pay in country for goods and services where debt in foreign denoted currany is another matter all together.

      D. all the above is problematic for people that get their information from right wing mobs like Cato, Heritage, Petersonm institutes aka the oligarchical support group network.

      • “Selling Assets was done under EMH and corporatist globalization and not to pay for stuff” Bwahahaaaaa!!!!!
        BS! We sell stuff to cover our CAD to maintain an overvalued currency so consumers in cities can live way beyond their means at the expense of productive manufacturing and farms.
        Just a note – MMTers can’t admit we are not the world Reserve currency. Breaking news – we aren’t.

        When you pay in country by printing money i.e. without saving, you get an overflow of consumption resulting in imports (in this country the way it is structured) Thereby arises a CAD. Thereby arises the need to sell assets to maintain the value of the currency or let it float to zero while we consume our little heads off and produce SFA

        You haven’t a clue! You’ve never read anything that might challenge you. You sprout off about where I’d get information but you can’t even figure out the basics of a national economic model. You don’t read. You don’t think. Simplistic assumptions are all you can do.

        How many times have I read over the decades that we don’t need farming anymore because it is only 2 % or so of GDP???? Idiot economists sprout that stupid BS all the time – the underlying assumption is that we don’t have to produce anything. We can just print up money or assume we can borrow it and make up the foreign debts with asset sales. It’s the modern economic model so beloved by MMT. MMT is just another more extreme form of your globalist neo-libleralism. No worries mate! CAD’s are ALL good!!!!

      • Hay Flawse Supply Side economics has been driving the bus for before my time so drop the RW talking points. Then you can brush up on the other stuff with some Hudson.

        MMT is only pointing out how it works for developed soverign issuers post WWIl and Nixon, that you project your sound money theory on it and it ends up a rubbish in and rubbish out observation is self inflicted.

        https://www.nakedcapitalism.com/2018/11/j-d-alt-treasury-bonds-future-dollars.html#comment-3055236

        Unlike your mob the MMT camp goes to great lengths in detail to explain it all.

      • Neoliberalism is just another form of corporatism flawse, how those use MMT is the issue and not MMT in of itself e.g. you could have full employment vs NAIRU i.e. MMT does not force the use of NAIRU, that is an ideological based decision. Plus MMT is not supportive of neoliberalism in the least – see NC blog and NEP over the years. So stop projecting falsehoods to support your position, its ethically challenged at the least. Jebus wept… the MMT camp et al is opposed to the mainstream economics used during the neoliberal period.

        I repeat… anyone can easily check the validity of what your claiming and find it absolutely false. Then you will wonder why I don’t respect people like your and yours.

        Just try and wrap your head around half this stuff – https://larspsyll.wordpress.com/

        P.S. Hayek and camp were the original proponents of neoliberalism Flawse… deal with it.

        https://www.nakedcapitalism.com/2013/01/philip-pilkington-the-origins-of-neoliberalism-part-i-hayeks-delusion.html

    • WA’s rainfall has been sinking for decades, and is headed lower, and AGW is the cause according to scientists. So they had a freak bumper year this year, does not change the trend.

      • Yes, I know, WA ag long term is rooted, AGW disaster unfolding before our eyes, salinity, overexploited groundwater.

      • skippy – if you had more than half a brain cell you would understand that it really doesn’t matter a rats long term what currency the debt is in. If someone is holding your currency they can buy your assets – and that is exactly what they do. Now you can legislate against that (and I’m all for it) however expect your currency to head towards zero and your ability to buy internationally to reach the same figure

        FFS skip – just for once use your brain!!!.

      • Heard this on the Country Hour ABC today.
        WA rain fall reduced 30% in 20 years, Vic 20%.
        30% rainfall reduction + 40% less run off.
        No end in sight. AGW
        We are only now realising how much sh!t we are in.

  4. So in a few years, it won’t be a matter of having no water to drink, we’ll also have no food to eat.

    Great. Just fcuking great.

    Now lets import gazillions of idiots from other countries so we use it all up quicker and get the famine started sooner.

    Jebus Wept.

      • Lol…I was having a nice morning until now. 🙂

        Using typical Army nomenclature (eg Hats Khaki Fur Felt, Cups Canteen etc…) we always referred to the bickies as “Biscuits Dog”.

        My fave was the WW2 vintage chocolate that had turned white on the outside. And the tube butter is best not spoken of in polite company…

    • Its called global warming for a reason, running from one side of the orb to the other does not fix it, but the solution is unpalatable to some due to ridged ideological dramas – file under socialism [tm] or group solutions that don’t genuflect be for the all powerful and all seeing market.

  5. Banking fecked, housing fecked, NBN fecked, power prices fecked, petrol prices fecked, mental health system fecked, food is now fecked… is it possible to have a royal commission into everything?

    • I think the country needs a Royal Rogering more than anything else. All this says to me, is go semi-regular on an acreage (preferably a couple), install water tanks, solar + battery and start growing your own food. Have a couple of chooks for eggs, maybe some goats to graze the grass and provide goats cheese/milk etc.. and become more self sufficient in general.

      If things get real bad, you may need a couple of those banned guns… 🙂

      • A royal commission does not fix the problem astrolin, you would need a reformation in economics and currant problems with democracy to sort it out.

      • Let me check, 65 acres tick, chickens tick, sheep tick, sustainable wicking garden beds in kick ass garden tunnel tick, 14 x rainwater tanks tick, just need solar pump to replace my windmill and a couple of tesla power walls…and the reason for the ticks? Cause I have read and listened to MB and all of the members…

  6. I grew up on a farm and the main problem for farmers in Australia is not drought it is debt. Drought is just something people need to plan for and deal with in a desert/semi-desert which is what most of Australia is. Due to farmers needing massive amounts of money to get into farming a lot of them are burdened with huge amounts of debt and spend their lives working extremely hard, destroying their physical health, making the banks rich, but not really making any money themselves. There are some people that make a reasonable amount of money from agricultural activities but those are rarely the ones doing the work, for example Joe Hockey and his equally rotund investment baking wife owned farms, but I suspect have never done a day of physical labour in their lives.

    Here is a short list of things that could make farmers a lot better off:
    – remove the parasites (bankers) from the system by making it illegal to purchase Australian land using borrowed money (i.e debt of any form).
    – Cancel the debts of farmers that currently work their own land. The thieving banks deserve it so don’t give them any compensation.
    – Make it that anyone owning a farm has to live on it and work the land, this would stop the rich from buying up the land as investment properties and getting richer from others labour.
    – Limit it to one farm per person, for the same reasons as above.
    – Put in a minimum tariff of 100% on any imported food from countries with equivalent labour and environmental protections or better and even higher tariffs on food from countries with lower standards. Free trade is inherently undemocratic and largely benefits the finance and rentier sectors of the economy over the productive sectors of the economy that are producing tradable goods.

    Some may argue that this would make food production less productive, but I don’t see how the agriculture industry giving billions of dollars of interest payments to banks every year is in anyway productive. Also the above restrictions would lead to a significant reduction in the price of farmland, and a decrease in the cost of land is surely an increase in productivity. Food prices may increase slightly, but people need to remember that a farmer only receives a small fraction of the cost of any food item purchased at a supermarket and if you want to reduce food prices there are plenty of middlemen and retailers that could reduce there profits.

    Also the whole migrants to the bush and backpackers being forced to get rural jobs is junk. There is already a lack of decent employment opportunities for the rural population they don’t need the competition. The same result could be achieved by making farm labouring a tax free occupation and not counted for welfare purposes if less than 100 days per year. This would allow welfare beneficiaries to do seasonal fruit picking without losing benefits, which would provide some of the necessary labour required.

    Unfortunately, none of this could every come to pass direct democracy as all politicians consider free trade to be sacred truth, despite their being no evidence that it increases the quality of life of the general population.