Making it through a long winter

Making it through a long winter

Factors Affecting Grain Prices in Australia

by Vicki Harvey

Grains are among the most important agricultural commodities in the world, with their popularity remaining fairly steady. Grains such as wheat, barley, canola and sorghum are widely grown in Australia for both domestic consumption and also export to other emerging markets.

Wheat is one of the most widely grown crops in Australia and it is exported throughout the world. Japan and Southeast Asia are the biggest importers of Australian wheat. Other popular crops include barley, of which Australia produces over eight million tonnes are produced annually, and oats.

Australia grows a lot of organic grains. For this reason, Australian grain can attract higher prices in the global market.

Factors affecting grain prices

The grain production industry frequently experiences fluctuation in price for a number of reasons as stated below.

  1. Climate: As agricultural products, grain production is heavily dependent on the weather outlook. Prolonged drought periods hamper growth and subsequent production of grains, leading to an increase in price due to heightened demand. Extreme winters or floods also negatively affect grain production, thereby leading to a hike in price.
  2. Economy: Based on the state of the economy, grain prices will fluctuate from time to time. When the economy is unhealthy, grains experience a dip in price. The opposite is also true as the recovery of the economy leads to grain prices rising immediately, levelling off with time.
  3. Inflation: It has been observed that the prices of grains tend to go hand in hand with the rate of inflation being faced. When the inflation rate rises, so do the grain prices. It is therefore important to take into account the inflation when considering grain prices.
  4. Production outlook: A fluctuation in grain production by the major contributors can affect the price of grains in the market. A dip in production will cause the grain prices to rise while overproduction causes low grain prices.
  5. Regulations: The grain industry is governed by a code of practice that ensures Australian grains and grain products meet standards for both domestic use and export. Industry players must comply with all laws and regulations relating to the growing, merchandising, inspection, grading, weighing, storage, handling and transportation of grains. The grain growers are also required to ensure all their activities are carried out with the least impact to the environment. This means the safety of fertilisers or other farm chemicals must be assessed before they are used on the crops.


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Making it through a long winter

It's always tricky dealing with the swings of the weather when you are a farmer. You can suffer if there is too much rain, not enough rain or even rain at the wrong time of the year. It can make it really challenging to have enough feed for livestock or to be able to harvest a crop later in the year if you are a crop farmer. Often there are some relatively simple things you can do to manage these issues, including buying supplemental feeds or running drainage ditches. This blog is about managing all of the events that can happen over a long winter as a farmer or farm manager.

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