Navigating the ups and downs

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Extracted from the Farm Tender weekly Newsletter - Sign up and get the email every Wednesday morning before 5 am. www.farmtender.com.au

By Dwain Duxson

This will be the last "weekly" newsletter for the year. We will keep the "daily" newsletters going right through Christmas and new year. On with it...

We have just witnessed a confidence rollercoaster period. Six weeks ago, Farmers really started to lose control of their season as it kept raining and flooding. Many Farmers thought the worst for their Crops and Hay stands, and some did have some pretty devastating losses. Those in the flood-prone areas were affected the worst.

But since then, we have experienced some dryer weather and given us the opportunity to get into Harvest. It's been a frustrating slog with getting bogged and how slow things have been with logged Crops etc.

But the best news is that most we talk to have been surprised by how well the Crops are going. Some are even smashing records, and although it won't be a record Crop for the nation, it will be pretty good.

So what we have seen in the last six weeks is the confidence of Farmers go from pretty high to very low and back up high again.

Rabobank measures confidence in Ag every quarter, and I think when you see a scenario like this, you are going to get a pretty mixed confidence measure. I guess if they do the survey towards the end of the quarter and everyone is confident, then you will get a high-confidence reading.

But the point is that things can go from high to low and high again all within a quarter. And I am not saying that Rabobank do measures more often. I am sure those movements are spelled out in detail within the report.

In Farming, confidence is everything. We (us at Farm Tender) see it every day and see the signs when things look like they are going up or down. Things can change in a matter of days, and all of a sudden, Farmer's attitudes are different. They collectively start shifting their focus to what might be. This could mean a reassessment of where the Crop is at, the value of their Herd or Flock, and a scaling down or up of their expected returns from those Lambs or Weaners. It can come in many different forms.

But once something is decided upon, it's usually a ripple effect than can run far and wide. Just look at the confidence of Sheep Producers, who have Ewes or Lambs ready to sell anytime soon. They would know that they are not going to get what they probably budgeted for.

This has an effect on the Farmer's psyche, and all of a sudden, they are planning for less income. This then flows through to the 3rd party service providers that support the Farmers, all of a sudden, their income starts to get affected, and they are making less than they thought.

The quick information flow in Ag contributes to more short-term confidence movements than we have ever seen before. Farmers find stuff out really quickly now, and they then form opinions really quickly. Look at the period when the media got hold of the information that FMD was in the Bali part of Indonesia. The story was all over the news for weeks, and markets and Farmers lost confidence. Prices dipped. But as soon as everyone realised that yes, it was a threat, but in reality, Farmers realised they had to get on with the job of Farming, and the media hysterics waned, confidence then went back up again.

Once again, a short-term rollercoaster period of confidence going up and down.

So confidence in Agriculture can really shape where things are going or where things are at. Right now, if you have a good Crop, you are pretty happy again. If you are just about to sell Weaner Cattle, you know you aren't going to get as much as you did last year.

Farmers have so many things out of their control. They work with and against nature, the environment, rainfall patterns and often globally affected markets. The vulnerability of Farmers is going to keep getting tested. But some of the best advice I have heard is to stay confident in what you do and don't get ahead of yourself.

Have a great Christmas and new year from the "weekly".

End of message.