Australia Wheat Farmers Bet on Drought-Busting Crop

Michael Byrnes, PlanetArk 19 Jun 08;

NARRABRI, Australia - Wheat farmers in Australia, the world's second-biggest exporter, raced this week to plant their fields, gambling that recent soaking rains would lead to one of the best crops on record and put an end to seven hard years of drought.

In one of Australia's biggest grain-belts, wheat farmers struggling with years of losses were once again ploughing and sowing their fields around the clock, encouraged by a few weeks of steady rain and forecasts for a rebounding harvest.

"It was fantastic rain," said Ron Greentree, the nation's biggest individual grower, whose workers were busily sowing about 80,000 hectares (198,000 acres), roughly the size of Hong Kong.

"Everyone around here is working 24 hours, now we've got the rains," he said as he walked through one of his fields, his boots sinking into the crumbly, moist soil.

"We have waited a long time for this rain. We are 70 percent done. Hopefully we will finish in the next 10 days."

Greentree is looking forward to a good crop of around 250,000 tonnes from his properties alone. Last year, encouraged by a winter sprinkling of rain, he and other farmers sowed their fields, only to watch the wheat wither as the rains dried up.

Global food markets are also hoping this year will not be another false dawn for the world's second-biggest wheat exporter.

On Tuesday, Australia caused some concern in markets by cutting its official wheat output forecast by nearly 9 percent after the return of dry weather in April and May in parts of the country.

It still expects wheat exports to more than double to 16.3 million tonnes in 2008/09, but news of the smaller crop threatened to tighten wheat markets at a time when record corn prices had put food inflation in the spotlight once again.

The downgrade was also bigger than similar cuts announced by private forecasters over the past week, though the new 2008/09 crop estimate of 23.68 million tonnes would still mean a rebound of more than 80 percent from last year's drought-hit production.

In Narrabri, about 500 km (311 miles) northwest of Sydney, farmers are investing about A$250 a hectare to plant their fields -- roughly A$20 million for Greentree's estate -- and in some cases straining bank credit to the limit to put in another crop.

"It's been a pretty devastating last four to five years. It has really hurt the communities," said Greentree, his face shaded from the clearing sky by a battered felt hat.

"It was a real relief when it did rain, but people are a bit gun-shy. Last year it looked good until the end of July and then it didn't rain and all the crops failed."

Australia's main eastern wheat-growing state of New South Wales normally accounts for 30 percent of the country's crop, but encouraging rains early this year stalled in April and May and only resumed in the Narrabri-Moree district early this month.

Elsewhere, the state is still dry, waiting anxiously for rain. But planting is well underway in Narrabri, making it one of the main hopes for good production from parts of eastern Australia.

The drought halved Australia's previous crop and helped drive global wheat prices to all-time highs earlier this year.

An estimated 26 percent of the New South Wales wheat crop has been sown, mostly into dry soil, the New South Wales Department of Primary Industries estimated this week.

Victoria state, which produces about a tenth of the national wheat crop, is in slightly better shape than New South Wales, with rainfall about 50-60 percent of average by late last month.

South Australia, which normally supplies 15 percent of the annual crop, also got planting underway well before New South Wales. Western Australia, which normally contributes about 40 percent, was best placed of the cropping states, with good early rain across most of the state.

Australia's best wheat crop was 26.132 million tonnes in 2003/04. Drought cut the two most recent crops to just 13.1 million tonnes in 2007/08 and 10.64 million tonnes in 2006/07. (Editing by Mark Bendeich and Mathew Veedon)