Ray of sunshine in the bush

Wool growers and wheat farmers are finally making some decent money, thanks to the chronically weak dollar. Rock-bottom prices for grain on international markets translate into a highest ever A$250 a tonne for Australian producers. Given half decent weather during the planting season, our farmers can look forward to a very profitable harvest. The bigger growers are locking in those good prices by selling a proportion of their future crop on the forward markets. The sheep story is nearly as good. According to ABARE, wool exports will be up 26 per cent this financial year to $3.7 billion – more than is earned from the oil and gas belching out of the North West Shelf.

Wool prices have climbed 34 per cent in local currency terms over the past 12 months to a six-year high of $8.50 a kilogram. Higher oil prices have also put upward pressure on the cost of competing synthetic fibres.

The mountainous 4.7 million bale stockpile, which has hung over the industry for more than a decade, has almost gone. It is now down to less than 400,000 bales and dropping fast.

The only cloud on the horizon is the parlous Japanese economy. A third of our wool is sold to the China, and PRC woollen garment makers depend on Japan for 25 per cent of their exports.

The number of sheep in Australia is down to 115 million, the lowest since 1951. WA has around 25 million, runner-up to New South Wales with 42 million. Although predictions of a new golden fleece age for the industry look a bit woolly, it is now a paying proposition for farmers to turn pastures over to sheep again. Agriculture accounts for five per cent of Australia’s GDP. The favourable currency will underwrite rural exports during a period of soft global demand, leaving the industry in very good shape for an upswing in 2002. The ability to be able to delay buying imported machinery is the swing factor.

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