For anyone driving around between country towns in the Goulburn Valley over the past few weeks, the sight of hundreds of thousands of round and square bales of hay is an encouraging sign that things might be on the improve.
But the situation overall is complex. For a number of farmers, the production of hay is a means to generate an income. For some it is a by-product of recent destocking due to unsustainable increases in irrigation water costs and the former pasture land now becoming available for crop and fodder production.
Prices through until August were holding around $425 per tonne in the region but have dropped sharply with the availability of current production. According to Dairy Australia, recent prices for pasture hay have been around $270 to $330 per tonne and declining. Supply and demand is likely to impact on prices over time and as those holding stocks need a flow of funds, that might be sooner.
For those areas in New South Wales and Queensland still affected by the drought, the prices are holding around the $400 to $500 per tonne.
Coinciding with the increased level of production, the opportunistic sale of hay baling equipment up to $350,000 has almost doubled. Matthew Best at Central Machinery Service in Ballarat said, “Buyers are in a reactive phase rather than a planned forward approach.”
According to the Australian Fodder Industry, many farmers in the market for hay will hold off in anticipation that prices will fall even further. Recent government announcements for new, free to low interest loans for fodder will also cause some farmers to hold off until they can lock in the cheap finance.
It seems for the time being, that farming is destined to continue being on a never ending cycle of feast or famine.
