No Images? Click here Property & Livestock NewsletterIssue 2 - September 2018 David Nolan | 0447 278 236 Welcome to the next edition of our property and livestock newsletter.In this edition, we have asked friends and colleagues from Roma to Narracoorte and Coonamble to Melbourne to share what is happening in their part of Australia. We hope you enjoy the read and the diversity of topics. As our valued readers, we would love your feedback. As for Webster Nolan Real Estate, we have 6 outstanding properties all being auctioned on Tuesday 23rd October. Detailed Information Memorandums are available for all properties. For more information on these properties, check out our: Prestige Property Investments Guide: ArticlesDavid Williams We have seen a wall of money coming from offshore to invest in Australian Food and Agriculture this past three years from countries we have rarely or ever seen invest in Australia. Some of this is money escaping from what Family Offices and Pension Funds see as a crisis in the Euro and Eurozone. Some of it backing and chasing the new found understanding of the growth prospects in food to feed the growing middle class in Asia, and some of it coming here as a means of getting access to food to fill existing channels to market in Asia. The largest investors (by value) have been institutional funds managers managing money for endowment funds (e.g. Harvard University), foreign governments and pension funds. Australia is attractive to them as we produce high quality product; have reliable infrastructure and low sovereign risk and corruption. Their interest in our assets and our products is likely to continue as their alternatives in places like South America, Asia and Eastern Europe sometimes don’t offer each of these qualities in the one package. There have been a few hiccups along the way with respect to Australian government policy on foreign investment. There is speculation now that the gravy train might be slowing, some of this because it is getting harder to get money out of China and other countries to buy assets and some because it is getting harder to get it in to Australia even if you have funds at the ready. Elsewhere investors from some jurisdictions have come, fully invested and gone home probably never to return for 5 to 10 years. The Finns or the Greeks might be here today but once invested we might not see them again for several years. This trend of money coming in to Australia from new jurisdictions should be of intense interest to agents selling properties especially with regards to partnering with investment bankers and accounting firms. To our mind this trend is not a coincidence but more a reaction to the wall of money trying to find a home here and an acknowledgement that Investment Bankers and others can tap new networks of investors on the road to maximizing prices received on rural assets. Jacki Osmand Scone – Nestled in the Upper Hunter Scone is internationally known as Australia’s leading thoroughbred breeding region and is the home of the Australian Stock Horse Association. Only three hours north of Sydney, the Upper Hunter is the gateway to the North Western plains and the Central West of New South Wales. The surrounding regions support a wide variety of agricultural activities including lucerne and beef and sheep farms. The Upper Hunter has a strong community that is evidenced by the high levels of participation in events such as the Scone Horse Festival, the Aberdeen Highland Games, Murrurundi King of The Mountain, Denman Food & Wine Festival and the Merriwa Festival of the Fleeces. These and other events bring thousands of visitors to the region each year. Even with severe drought conditions, properties in the Upper Hunter are still highly sought after. Our property department has been involved in transactions where tracts have changed hands for as much as $24,000/ Ha (excluding water). The Upper Hunter is recognised with its vast stretches of gently undulating cleared land and properties with Water Licences, especially with access with General Security River Water, rarely remain on the market for long periods. There is a diversity of agribusiness, transport and horse industry related businesses in the region which are increasingly supported by ancillary service-based businesses. There is increased regulation across the agribusiness sector. Compliance and regulatory issues such as chain of responsibility and an increased focus on workplace health and safety have introduced added complexity to all agricultural sectors. As a result, more family operated farming enterprises are becoming more corporatised. This, in many cases, brings added complexity to succession planning where many farming businesses break away from a traditional “family owned” model. The result of these changes is that there is a growing demand for experienced in house style legal services. Global demand for Australian agricultural products has seen agricultural producers increasingly shift their focus on accessing markets outside of Australia. We have increasingly been called upon to assist with protecting our client’s intellectual property within Australia and overseas, assisting clients with supply chain issues and being involved with large scale transactions both locally and internationally. NSWWill Dixon The Monaro High Plains of NSW The Cooma & Bombala regions of South Eastern NSW are presently trying to emerge from what has been a very dry, cold & windy winter with cold change after cold change bringing a bumper ski season but not a lot of rain east of the ranges. We are by no means doing it as tough as our northern counterparts but we are looking for ‘the break’ as lambs hit the ground & cattle finish up calving all under supplementary feeding conditions. Early reports are of reasonable lambing percentages with merino’s lambing at around 85 - 90% & 1ST X ewes lambing at 115 - 120% with numerous snow falls effecting these numbers. The outstanding wool prices allowed for wethers to be taken through winter on supplement feed to be shorn now & into October, but with spring not yet showing its hand these wethers will be sold off shears if the season does not improve. The improved confidence in the wool market at present has seen the Eastern Market indicator (EMI) pass the 2,100 c/kg mark. Converted back to $’s per head this has seen some wether shearings gross $115 + per head & ewes out of the better heavier cutting flocks gross $100 + per head. These unprecedented times in the wool industry has had a knock on effect on the Monaro with land prices. Recently a well improved property on the Monaro’s eastern fall sold in excess of $1,500 per acre, the same property was sold in 2001 for $600 per acre. Traditionally properties on the Monaro are 3rd & 4th generation holdings, younger generations are keen to return home to the family farm on the back of current wool & lamb prices. Cattle confidence remains firm with recent bull sales seeing 100% clearance rates & averages around the $5,200 - $6,700 mark. The spring will dictate terms here with fodder very hard to source & no rain as yet to get things going. Ground water will be an issue as summer comes on. The sell off has already begun with southern Victorian & Tasmanian buyers leading the charge. On a brighter note the rivers & streams will open back up for fishing on the October long weekend & the ski traffic will be gone. David Chadwick Coonamble and the broader North West has experienced its worst ever drought. Locally some have been feeding since February 2017. Economically it has obviously been tough but coming off the back of 2016 where we saw 2t/ac crops, the district is displaying its ability to be a significant producer that can carry itself over these tough times. Obviously the people are proving themselves to be resilient and creative, but it does highlight how good the country is and that given time, it will boom again. In my 38 years as an agent I have never seen all aspects of agriculture so good. I have seen producers paid to shoot sheep and lambs during the Flock Reduction Scheme with the government paying $1.50 and $6.00/head. Now we see the records tumble. Just prior to the Flock Reduction Scheme, the wool reserve price was 1,100 odd cents before it crashed to a point that discussion took place about taking the stockpile to sea and dumping it. Now its over 2,000c/kg. Only two years ago, barley was $124 in Coonamble. Wheat $157. Now it’s close to $500 and with the production stocks, both here and around the world, looks set to be at high levels well beyond next years harvest. Cattle, whilst well down on 2016 prices, are still well worth owning and goats, who would have thought such a pest would be now such a prize. The only weak spots are dairy and pigs. Asian Swine Flu might see pig producers recover, dairy farmers will one day have their turn. Who knows, maybe even one day we will reflect on the “down down” days in the same way we talk about the dark days of shooting the sheep. In my career, having worked across the eastern half of Australia, I have never seen such vehement and united opposition to any project as that of the Santos’s Narrabri/Pilliga CSG proposal and the associated APA western slopes pipeline. Drilling 850 CSG wells into the most critical of the three recharge zones to the Great Artesian Basin is seen throughout rural Australia as the single greatest threat to communities and in particular, agriculture. It is not just about the depleted water supplies, but a much greater scale. Contaminating the underground water which could in turn jeopardise Australia’s clean green image. This grave concern is highlighted by an aquifer contamination in the Pilliga 22 times above the legal limit for Uranium. People are bewildered that the driest inhabited continent on the planet is considering plundering its only secure water supply. Nor can people understand how the most resource rich nation on the planet can have the dearest energy prices in the world, especially when the world is full of gas but not food. Rural people take most things lying down but this will be different. They are really mad and have the Nationals in the cross hairs to the point there are now advertisements on the television saying “put the Nationals last”. Something I never thought I’d see in a seat they have held for 30 odd years but when they are the only ones pushing for CSG in the North West, I can understand why. Droughts, floods, banks, markets are all accepted as part of the business environment but don’t touch the water. What it has done is bring communities together though. The Moree, Warrumbungle, Gilgandra, Coonamble, Warren and Dubbo Shire councils have voted unanimously against CSG supporting the community surveys that returned a massive 97% opposition to the project. Predictions are that by 2050 the world has to produce 50% more food. Consider that for a moment. The global land area is finite, or in reality, with urban sprawl, shrinking. The average age of farmers is rising so there will be less farmers. Efficiency gains will continue but at a much slower pace than the last 20 years. Now consider the basic laws of supply and demand. If food production is left alone, or even valued above all else, it seems there has never been a more exciting time to be in agriculture. Abb McAlister Firstly, this month through David’s newsletter I am going to promote the upcoming events in Gundagai. The ones that are not to be missed, starting with The “Battle of the Bidgee” Stockman Challenge a three day horse event pitching horse against rider in the quest to be Champion of the Bidgee with contestants coming from all eastern states of Australia & South Australia. On Saturday 27th October the National Busking Championship will be held. Any of you great singers, jugglers, musicians or actor, get yourself to Gundagai to perform, it will be a great day. One event not to be missed is the Gundagai Snake Gully Cup, two day racing carnival at the picturesque Gundagai Race Course on Friday 11th & Saturday 17th November. If you are a racing enthusiast and just want to have a great time Snake Gully is not to be missed. Ladies dress up to be part of the popular “Fashions on the field”. Then on the 24th November the Gundagai Rodeo will be held. This Rodeo is a major event on the Rodeo Calendar with riders from all over Australia and Overseas competing on some of the best bucking stock you will see. Upcoming Stock Sales Wednesday 26th September Bongongo Angus bull sale offering 66 top quality Angus bulls. Friday 5th October Valley Vista Poll Dorset ram sale offering 150 rams. Valley Vista has had another great performance in the Show ring taking out the Supreme Poll Dorset ram at both the Bendigo sheep show and the NSW Championships and Supreme Champion ram at the Australasian Championship recently held. Congratulations to the Scott family. On the Agency side of things the livestock markets for prime stock remains strong while after the recent 20mm to 30mm in the region, store stock prices have taken a bit of a rise, however there are definitely still good opportunities out there to “make a bob” if you want to bank on the season. Properties for sale in our area remain scarce when normally this is the time of year they come forth. Two properties coming up for auction in the Wagga Wagga region in October listed by Webster Nolan Real Estate, “Birubi” & “Lone Pine” will, I am sure draw a lot of interest. Both are excellent properties and will demand big dollars. Ben Hiscox With the number of cattle being slaughtered heading towards 150,000 per week, a record 1.12 million head on feed as at the end of June 2018 and a drought that is continuing to play a massive part in all these statistics, there is no tougher time to be in the Australian agriculture industry. These current conditions are going to leave a mark on the livestock industry for some time to come. With the Australian dollar sitting at around .72 cents as I write this, it allows producers to feed and slaughter these numbers with processors also being able to move the product, ensuring that the market remains at a strong levels in comparison to droughts of the past. With this knowledge I believe that the livestock industry, for those who can maintain herd numbers as best they can, are in a good position. As soon as the current drought breaks the Australian cow herd will have to go back into a rebuilding faze which will drive greater demand and less supply, pushing prices for livestock in an upward direction. Breeders and traders that have feed and can control numbers are going to be rewarded for their hard work through this tough time. Having weight in your cattle over the coming months will pay dividends and help you to market your cattle very well. Just remember, all droughts eventually break. QLDDuncan McLeod Trade issues are front and centre at the moment as the USA and the Chinese ramp up their ‘tit for tat’ tariffs. These issues have tended to distract attention away from trade issues much more relevant to Australia. One Free Trade agreement that deserves plenty of attention, particularly on its effect on northern Australia is the pending Australian-Indonesian Free Trade Agreement. The Indonesians are looking to secure more Australian beef; both live and boxed going forward. Food security and price remain foremost in the minds of the Indonesian politicians. Indonesian live exports have been held ransom to the issue of live export permits; and without the issue of these permits no cattle can be imported to Indonesia. Under the pending agreement import permits will be issued annually and automatically without seasonal restrictions, and cattle imports are set to grow from 575,000 to 700,000 head annually. These import permits will be reviewed in 5 years. At present exporters have to send every consignment of live cattle with a certain percentage of female breeder cattle included. This would also be liberalised. Any tariffs in the import of boxed beef to Indonesia would be gradually phased out. Australia’s share of the boxed beef trade to Indonesia has lifted by 33% to 36,800t. Indonesia imported 770,000t of boxed beef over the past 12 months, with low quality low priced Indian beefalo taking the lions share of the market. The Indonesian government is also going to remove tariffs on lamb and mutton under the Free Trade Agreement. SAJoe Scamell Around SA The optimism of an average Spring in many areas of SA is rapidly starting to fade with a longer than ideal period of little or no rain following some very warm windy days in early September. The cereal cropping zones are a mixed bag of fortunes, with some localised good areas of the lower Mid North, lower Yorke Peninsular & West Coast and lower & mid-South East offering some promise albeit still requiring some more rain to finish off the season. In general though, the reality of season has well and truly played its hand in many of the remaining inside farming districts resulting in some difficult decisions being made regarding what to do now. Crops which looked promising in some areas have been hit hard with frost and farmers have taken little time in dropping them to make hay with most being sold out of the paddock into NSW around the $280-$300/t. In the agricultural areas of mid and upper North, upper West Coast and Mallee districts, sheep are being turned onto cereal, hay and canola crops prematurely due to both low subsoil moisture and lack of bulk to be able to take the crop for hay. Cereal crops that looked okay two weeks ago have dried off very quickly and the actual yields of cereal crops taken for hay are lower than expected in many cases. The situation within the Pastoral zones to the NW, NE and Eastern areas of SA have continued to deteriorate with surface water levels becoming critically low as well as little or no feed. Those graziers that have chosen to supplementary feed their stock face continued low supply and high prices for fodder. In some areas, stock are now too weak to travel and are really starting to show the signs of the continued long dry period that these areas have endured over the past 18-24 months. Lamb marking rates are considerably lower and range from 5%-25% in those hard hit areas to 40%-60% with isolated results of up to 80%-100% where conditions have been favourable but this is pretty uncommon. Livestock Markets With regards to livestock prices and markets locally in SA, prices have been pretty buoyant considering the season which has been well below average in many grazing areas apart from the mid & lower areas of the South-East of SA and Kangaroo Island. Store lamb prices have been very strong with both XB and Merino lambs making $3.40-$4/kg live weight. The fresher types of the light trade and domestic trade lambs have been consistently in the $8-$9/kg dead weight range over the last couple of months however processors now look to be targeting the heavier new seasons lambs by chasing the 23-24kg dead weight plus lambs with in local prime markets. We are seeing the freshness of the light weight trade lambs starting to drift as early weaning programs are carried out and good feed is in short supply in the wheat/sheep zones. An increased supply of store lambs, both Merino and XBs will continue to hit the market as pasture paddocks run out steam with cereal and hay stubbles expected to be significantly lower in feed value this year. Professional lamb feedlotters have been very active in recent weeks securing lambs from 30kg live weight plus at rates up to $3.60 but we are seeing reduced activity from the opportunistic feeders due to the high purchase price of store lambs coinciding with expected low grain yields and quality, high ration input costs and the low availability of grain or pellets to feed lambs. Young 12-15 month old ewes have enjoyed a magnificent early selling period with light Merino ewes selling from $140-$210 for 38-44kg live weight affected by the dry season. Heavier ewes 48-55kgs have been making in the range from $190-$260/hd with those well-bred and better presented heavier ewes making $250-$300/hd. Older breeding ewes are still making $125-$200 as graziers' requirements for restockers remains fully firm in the view that breeding sheep will be hard to secure when local or interstate seasonal conditions improve. Robin Steen We have been blessed in our area in the mid South East of South Australia. After a slow start we have received good rains and have a great pasture base for the spring provided things keep going. Not that far north of us through the Mallee, Mid North, West Coast and Pastoral Areas are nowhere near as good and will battle to get average crops, enough hay or pasture to carry through. Our early suckers are just starting to flow into the market and over hooks are returning unbelievable money. Top of $271 a couple of weeks ago and with this week still coming in at $240/$255 or around $8.00/kg dressed. With over 50 years in the Agency game it is very good to see all vendors receiving reasonable monies for their surplus stock in their current situations. My first drought was in 1967 when we were selling reasonable, fresh small lambs for $0.10 per head. I have never seen mutton, lamb and wool as strong together and even though we have seen $10.00/kg dressed for a few perfect market lambs just remember up until July none of us had ever received $7.00/ kg dressed over hooks. The price will settle back as we still need people to be able to afford to buy lambs and keep it on the shelves. One major buyer this week advised that they were selling 40% less lamb at the moment compared with this time last year so price is always a factor. Our district livestock numbers will remain stable going forward with lambing %’s back 10% this year on an unbelievable year in 2017, so it has still been an excellent result. We will be able to buy our replacement Merino ewes this year but with this widespread drought rain or no rain it will see prices for these ewes at extreme rates going forward into 2019. Our cattle job is just starting to get dearer as quality grass fattened stock becomes scarce. The cow market has been quite strong at $2.15 to $2.40 /kg live for our best cows and heavy good quality 600/650 kg bullocks just breaking the $3.00/ kg live mark. The impact of the drought and the cost of feed have seen light cattle coming south and this is certainly impacting on the prices for lightweight store steers and heifers. Steers and heifers up to 300/350 kg live were making as low as $1.80 to $2.20cents/kg live. They look great buying but feed is gold. Real Estate With not a lot of properties on the market in the SE we are seeing plenty of buyers heading south to buy feed to hold breeding stock. We also have quite a few locals wanting to expand their operations because of strong commodity prices and low interest rates. We are a very lucky part of Australia. The next part of this will be different and I hope will open some minds for discussion. Holidays - Norway What a great country with plenty of forests and a great coastline of inlets and fiords. Population 5.5 million people. This was once a very poor fishing nation relying on fish exports until oil was discovered in the North Sea during 1969. What has happened since is amazing! From this struggle to freeways, bridges and tunnels. These people are the best at making tunnels and use them through mountains and under the sea. We left the Main Street of the northern city of Tromso through a tunnel that had two roundabouts and came out at the main airport kilometres away. Obviously their POLITICIANS back then devised a plan that has seen the oil wealth converted into a National Future Fund that now has nearly 1 TRILLION KRONE in it and from this 3% is used annually on infrastructure spending. NORWAY didn’t miss their boom like we have with our minerals and has set itself up for future generations. What of Australia!!! Our POLITICIANS only argue and cannot govern because of minorities. Why Not Us? Our big miners pay minimal tax and no levies for exporting our wealth. Why Not Charge a Levy!!! Let Australia charge the world a levy for our minerals, gas and oil. ARE WE THIS DUMB? We export gas and then buy it back for more because of a shortage. A moderate levy of 3% to 5% or $5 per tonne and similar levy for oil and gas would turn our wealth into a great FUTURE FUND and benefit all Australians. THIS NEEDS ALL SECTORS OF OUR POLITICS JOINTLY to do something positive together for every Australian. If the world doesn’t which to pay the levy leave our wealth in the ground and they’ll come back later. What's our Problem? We sell our clean coal to India so they can reduce their pollution Where are all our scientists that should be able to produce a filter that would allow us to use our resources and extract those emissions along the way? We spend millions on Research. Get Over It - Climate Change is a Fact of Life. There is no argument. It has been followed by experts and can be tracked for millions of years and with accuracy from ice age to ice age. FACT- Any one of the current active volcanoes emits many times more CO2 in a year than Australia produces in decades. REMEMBER we are only small fish in a very big sea and don’t control very much at all. TO FINISH -To all those less fortunate than we in the SE may the weather and seasons turn for the better in the not too distant future. VICNick Adamson The security value of South West Victoria’s high rainfall is something that can’t be underestimated. While it might seem a bit wet now most of Western Victoria is looking in great shape. The high rainfall triangle of cropping country from Beaufort to Inverleigh and south to Mortlake looks magnificent with a sea of yellow canola and lambs half grown. This seasonal security is attracting strong buyer enquiry from all points north, with interest coming from buyers in the red meat commodity and wool sector from the New South Wales Riverina and the Victoria and South Australia river land, all looking to drought proof their operations and purchase southern country. Due to the lack of grazing country, buyers are also looking to convert dairy farms for beef and sheep. The land values for dairy farms and grazing properties have never been closer with many dairy farmers leaving the industry due to lack of profitability and volatility. Land sales to the grazing sector, dairy herd dispersals and the infusions of beef bulls into dairy herds are depleting milk supply substantially. Surely with new players in the milk processing sector all looking to guarantee supply one would think the dairy could turn around quicker than anticipated? The grazing and cropping sectors have never been in better shape, even though the beef cattle market has slipped considerably. However, with the continued sell off in northern areas due to drought the future in the south looks positive. This is generating the demand for high rainfall grazing country and outstripping supply, particularly for well-improved properties, which will attract plenty of buyer enquiries this spring. Also the anticipated low yields at harvest in the drought affected areas and high grain prices is resulting in strong demand for cropping country in Western Victoria. Despite the lack of profitability and volatility in the dairy industry, as mentioned earlier, transactions have increased to the non-dairying sector, and more enquiries for well-established large dairy farms with substantial capital improvements. There is no doubt that due to the severe drought in much of Australia, South West Victoria is under the spotlight due to its seasonal security, high rainfall and fertility. It is fast becoming the food bowl of our state if not the nation. Scott Rumble - 0401 214 427 Your dedicated specialists in agriculture equipment, heavy duty and general machinery finance. We genuinely want to do the hard work for you and go above and beyond to make the application to settlement process informative, easy, and as cost effective as possible on any piece of equipment you are looking to finance.
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