Price rises put feed industry in peril
DROUGHT and dry weather have been battering the Valley for more than a year now, and feed suppliers are feeling the heat.
"Feed prices, hay prices, they've all been going up. From what I've seen, farmers have to put prices up due to the lack of water, and lack of raw materials." Marcus Harding, the business manager for Cottone's Hay and Feed Shed in Gatton said.
"There wasn't a lot of rain in the last six months of last year, and the first six months of this year."
As a distributor of products rather than a direct producer, Marcus said the feed shed wasn't as severely impacted by the effects of the drought, but farmers and other customers were paying the price.
"If a customer wants feed, we get it in for them. It more impacts the end user, how much they're spending at the end of the day," he said.
"It's all supply and demand. Going off conversations I've had with farmers who've come through the shop, I've realised that things are getting worse. We're at a stage where there is a shortage because we had a bad(year) last year."
Marcus said the winter months are usually a busy time of year for the business, but dwindling supplies and increased demand had made 2019 far busier.
"There's been shortages, due to the yield rates that farmers have got with particular feeds, so we've been out of stock of a lot of lines. People have had to try to switch products or find something similar to what they're feeding, so they can still maintain the condition of their animals," he said.
"During these drought times, our turnover rates increase a lot, and depending on how bad things are, we get a lot of people travelling to buy hay or feed from us."
There are also other limitations making it difficult for Marcus to get enough stock to meet the needs of all his customers.
"There's some things I can stock up on, other things there's only a certain amount I can attain at a time, so there can be a long period when I'm out of stock," he said.
"I have to try to find alternatives for the clients so they don't have to switch their feed, and at the same time try to maintain the price where it was."
With no sign yet of the drought letting up, the situation for farmers is likely to worsen.
"It's hard to say what will happen. I'd only hope that things get better," Marcus said.
Impacts felt Nation-Wide
"We've had widespread drought over many parts of the country, and that's run supplies of just about every conceivable type of fodder very, very low," Australian Fodder Industry Association CEO John McKew said.
The initial impacts of the drought were cushioned somewhat by a surplus of product, but the situation for the industry has become progressively worse as the drought has continued.
"At the beginning of 2018, we had a situation in the fodder industry of oversupply, coming off the back of strong production seasons in 2016 and 2017, so there was carry-over stock to keep up with demand," Mr McKew said.
"Then the drought started to bite, and bite hard through a wide geographic area, and people get very nervous about fodder supplies and being able to secure it, so we saw a rapid ramp-up in demand. We've got into a situation now where we've been very short on supply, and demand has remained quite buoyant."
"We're starting to see some pushback on price. It's got to a stage where people are saying it's no longer economically viable," Mr McKew said.
Fortunately, there is some hope to be seen in coming months, with spring traditionally bringing an increase in the production and harvest of hay and other crops.
"In terms of the cereal market, people are now starting to look towards and factor in what the next season will bring, what's going to be available, and what the harvest will look like," he said.
"They have to make some decisions about whether they're going to be able to hang on for a few more months, and look forward to maybe getting some more support."
He warned the reprieve wouldn't represent an immediate influx of cereal hay, with the harvest of products such as grain, oaten, and wheaten hay not taking place until October and November.
"There is, I think, a little bit of stepping back, there is still some supply out there. It is limited, but there is a view that there are positive signs on the horizon."