Extracted from the Farm Tender weekly Newsletter - Sign up and get the email every Wednesday morning before 6 am. www.farmtender.com.au
By Dwain Duxson.
Usually, in this piece each week we focus mainly on the positive things going on in Ag. This time I thought we would focus on some of the problems we are facing right now.
The "overall" problem, is that Agriculture is booming, and all of the issues we discuss below stem from that.
Without a doubt, the biggest issue in Ag is access to people. Finding people to work on Farms or in Ag related jobs is getting hard. Rimfire Resources stated that demand for Farm workers has doubled since about April 2020, and we all know what initiated then.
I see Farmers advertising in a wide range of spots for 1 or even 2 positions available. This is not isolated. It's right across the country in a wide range of Farming pursuits. I know myself when we advertised for a position vacant 5 years ago, we would have around 100 applications. The roles I advertised in 2020 attracted around 15 applications each.
How do we address the problem? International workers, grey nomads, backpackers? In the current climate, there are too many restrictions there. The number of people heading bush from the cities might help a little, but it won't solve the problem.
It might be a case of looking for different ways of doing things, Automation (realistically a fair way off), some forms of technology can help, but the issue is here to stay.
I spoke to one Farmer who is exhausted at the amount of work he has had to do himself over the last 12 months, but feels more exhausted by what's in front of him.
Supply chains for new Machinery and Equipment are broken. In a lot of cases, and across a wide range of manufacturers both internationally and domestically, there is a 12-month wait for gear. I don't think we will see a change in this for a while to come as demand for new and used Machinery and Equipment is insatiable.
One Australian based manufacturer who makes Hay Rakes, said that from January to July this year, tube steel went up 45 percent, and flat steel went up 70 pecent. He has orders from late 2020 that he still hasn't filled, but his selling price was locked in before steel went up and now has to cop the upturn, as he didn't factor it into the original price quote.
Supply chain issue number 2 is the price and availability of inputs. I talk mainly of Fertiliser and Chemical. We all know about the price rises of Fertiliser over the last few months and, to a lesser extent, Chemical. The graph below is for UAN28, it's one out of the US, in US dollars, but it gives you an understanding of what's going on.
The price rise can be attributed in part to availability, but there is a secondary problem here: Farmers are now stocking these products on Farm when they would usually buy them hand to mouth. This in itself creates a new supply chain issue. We are seeing through our Prime Ag Centre, Farmers looking to access these products forward.
Go to a Chemical Shed on a Broadacre Cropping Farmers place, and you will more often than not see shuttles stacked to the rafters.
Access to capital is a problem. In the good old days, you would ring your banker and say you needed an extra $30k, and it would be there in a day or 2.
We commonly hear of overdraft extensions taking 6 months and asset finance deals taking months, not weeks.
This is the sole reason why we started our sister business DelayPay. We saw the convenience factor in getting money, or a limit within 12 to 24 hours, as a problem solver. And that it has been.
I saw a quote the other day, "nothing is more expensive than missing an opportunity". Long, drawn-out processes when accessing capital are opportunity killers.
Climate change can be a problem or an opportunity. I read the other day that climate change will surpass the internet as far as the level of dollars invested is concerned. I find that hard to fathom, but who knows...
Land prices, good for some but a problem for others. It's another topic for another day, but our Land prices are still cheap on a world stage.
To finish, a booming Agriculture sector is a good problem to have.
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