Annual Report Sparks Farm, Morawa Western Australia. Manager, Ken Sevenson. driven by passion, performance & integrity

Transcription

1 driven by passion, performance & integrity Annual Report 2015 Sparks Farm, Morawa Western Australia Manager, Ken Sevenson ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 1 >>

2 Proem This is the annual farming report for Global Agricultural Services on farmland held on your behalf in Western Australia. It represents the actual performance and expected financial outcomes of your farmland plot for the 2015 farming year. Ken Sevenson, David Ferguson and Laurence Carslake are you re appointed Farm Managers for your farmland investment in Western Australia for the 2015 year. It is our responsibility to organise the farming of your plot and to make sure the farming is carried out correctly and your farmland is cared for. Our role is to overview the preparation, seeding and harvest of crops grown on your farmland. This annual report provides information on the location of your particular farming plot. It also illustrates the potential rainfall for an average farming year. The main body of the report reflects on the pre-seeding, seeding and crop care phase of the farming year which gives you a better understanding of what we do in maintaining your crop throughout the year. Finally there are some notes on harvest period, discussing the quality and price of grain. These are the components that go into the financial return that you would expect in any year. Some knowledge of this can therefore be useful. A complete financial report is being prepared and will be sent to you in September. This report covers a one year farming period being 1 st April 2015 to 31 st March 2016 Overview of Farming in the Northern Wheatbelt of Western Australia All of the plot holders farms that we manage are located in the northern wheat belt of Western Australia. The farming season or growing season in this area starts in April and finishes in October. Rainfall in this growing season is critical to the successful growth of crops and hence crop yields. The climate is referred to as a Mediterranean climate in that we have wet winters (June - August) and very hot dry summers (December February). The temperature maximums are in excess of 40 Celsius in the summer. The eastern zone of the northern wheat belt where most of the plot land is located has traditionally been a farming area. Wheat is the main cereal crop. Merino sheep, kept for their wool, has been the main livestock enterprise. Today the sheep enterprise has declined and more crop and areas of fallow are common. In the last decade a number mines have been developed in the area. Iron ore is the main mineral being mined for export to China. Today the area is best described as a mining and farming area. ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 2 >>

3 Improving Farm Performance The aim in managing the farming plots for our clients is that we improve the performance and productivity of the farmland. A number of issues need to be considered and I am highlighting these for your information. Good Infrastructure is Essential. Good infrastructure is very important for the successful management of the farming enterprise. The farms we manage have the need for good quality water in reasonable quantities. This water is used in crop spraying programs. Most of the water comes from underground via bores and windmill pumps. This water is stored in plastic or metal tanks. These tanks hold between and litres. Good quality water is essential as impurities can deactivate the active components of herbicides that are sprayed on the crop to kill unwanted weeds. supply which can be pumped to the surface and stored in a tank. This water is usually pumped by a windmill. So as long as the wind is moving water can be pumping. The problem with windmills is that they are old technology and require a lot of maintenance. They also create occupational health and safety risks as the mill doctor (as the person who repairs the mill is known), must climb a tower to repair the mill. New technology has solved the problem by enabling the windmill to be replaced by a submersible electric pump connected to a solar panel. The pump is lowered down the bore attached to a cable and pipeline to the water level. The solar panel generates electricity to power the pump and bring the water to the surface for storage in a tank system. The new system is reliable and low maintenance. All that needs to happen is that the sun keeps shining!! Our sharefarmers and lease holders require storage for seed grain. This storage must be water tight and sealable so that grain insects can be managed. Our farms have new grain seed silos which store between 50 and 200 tonnes of seed wheat for cropping. Fertiliser is an essential ingredient in the wheat crops performance, both liquid and granular fertilisers are utilised in the crop program. The infrastructure necessary to store fertiliser is either liquid fertiliser tanks or weather proof sheds with a suitable concrete floor and apron to allow the loading and unloading of fertiliser. Our farms have combinations of either tanks or sheds to cater for this important requirement. Solar Replaces Wind power. The water for all our farms comes from underground bores. These bores are vertical holes 10 to 20 cm in diameter drilled into the earth to a depth of 25 to 50 metres. The aim is to intersect an underground water ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 3 >>

4 Current opinion is that the Australian dollar will stay in the range of $0.65 to $0.75 in 2016 Profitability of Crop Farming in the Northern Wheatbelt Two factors influence the profitability of crop farming in the northern wheat belt of Western Australia. These are The exchange rate of the Australian Dollar (AUD) and The price of wheat sold in US Dollar values. The Australian Dollar Wheat is exported on a worldwide basis from Australia and the trade is priced in US Dollar equivalents. The exchange rate between US Dollars and Australian Dollars varies considerably, as the Australian currency is one of the most traded in the world. Events in Europe and the USA in the last five years have given a lot of insecurity to other currencies. The Australian Dollar is an AAA rated currency and the interest rates in Australia are presently quiet reasonable. The current Reserve Bank interest rate is 1.75%. (4 th May 2016) A high Australian Dollar exchange rate means our wheat is less competitive on a world basis. We do not pick up an exchange rate advantage when exporting wheat when the dollar is above parity with the US Dollar. This has a negative effect on the profitability of wheat growing. For every one cent increase in exchange rate it reduces the wheat price by approximately $2.50 per tonne. The adjustment in exchange rate in 2015 has positively influenced wheat prices by approximately AUD $15.00 per tonne. In April 2014 the Australian dollar was trading at over $0.94 to the US Dollar. By April 2015 the exchange had dropped to $ The expectation of many forecasters was a further decline over Today (May 2016) the Australian Dollar is trading at around $0.76. ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 4 >>

5 Therefore at harvest 2015 the wheat price cash in the bank was $ per tonne. (Current 5 yr. average $273.00) At this stage we would expect the price for the 2016 cropping season to be similar although price pressure from world grain stocks could exert negative price movements. Mullewa Geraldton Morawa Wongan Hills Merredin WESTERN AUSTRALIA KM PERTH Brookton Newdegate Salmon Gums Katanning Ravensthorpe Esperance Current opinion is that the Australian Dollar will stay in the range of $0.65 to $0.75 in The trend does appear downwards which is positive for wheat prices in AUD. Wheat Price At harvest time (December) in 2014 the wheat price in Australian Dollars was around $275 per tonne Cash in the Bank. The average over the last 10 years was $258. Over the period from the 1st January 2015 to 31st December 2015 the wheat price has gone from a well above average price to a price slightly below average. Albany Farm Location Your plot is located at property known as Sparks which is North East of Morawa townsite in the shire of Morawa. Morawa township is located 370 kilometres north of Perth. The population of Morawa shire is estimated to be 950 people with 500 people within the townsite and further 450 for the remainder of the shire. The Shire of Morawa covers just over 350,000 hectares (3,528 km²) consisting of agricultural and pastoral land, mining leases, Crown land, reserves and town sites. ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 5 >>

6 Rainfall The Australian Rainfall Analysis for the period 1 st January to 31 st December 2015 illustrates that most of our farms had between 300mm and 400mm of rain for the year. The preseason rains were well above average but the Spring rains were poor. The annual rainfall was therefore either slightly above or just below average. Sparks farm rainfall Your farming plot received an annual rainfall 6.3 percent above average in Preseason rainfall was 248% of average (115.2mm cf 46.4mm). Map courtesy Australian Bureau of Meteorology Growing season rainfall was 22.24% below average (April to October). Despite the crop being sown into wet soils and establishing well, the poor May rainfall restricted crop yield potential by reducing tiller numbers. The critical event of 2015 was the low rainfall received in September and October. The crops receiving only 7.0% of average monthly rainfall. This stressed the crop and reduced grainfill. Station: Tardun Hill Number: 8308 Opened: 2001 Now: Open Lat: S Lon: E Elevation: 340 m Statistic Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual Mean Lowest th %ile th %ile Median th %ile th %ile Highest Tardun Hill (008308) Annual rainfall x median no data Rainfall (mm) x x x Year Data courtesy Australian Bureau of Meteorology ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 6 >>

7 Cropping Programme Details 2015 Grant and Clint Borgward will continue to farm the plots in 2016 The Sparks Farm property received very good rainfall up until seeding in May The entire crop in 2015 was sown by Grant and Clint Borgward who are local farmers and respected for their farming skills. Sowing of the crop took place between the 9 th and 18 th May. One wheat variety was used; Mace. The cropped area on the plots was 100% wheat. Ag Star was the fertiliser chosen to sow with the establishing crop. This fertiliser contains phosphorus and nitrogen. Establishment herbicides included Glyphosate (to kill growing weeds) and Trifluralin (to kill emerging ryegrass weeds). Logran & Ally were included to control broadleaf weeds. The spray mixture also contained a liquid nitrogen fertiliser Flexi N which was to support wheat plant growth and assists tillering and seed head development. Lack of May rains meant that the potential crop yields deteriorated from the early establishment period. Very low rainfall in Spring (September and October) stressed the crop and was a negative influence on grainfill. This impacted further on potential yields. The final harvest result was tonne/hectare for wheat which is just above average (1.3t/ha). Plans for 2016: No plot areas were fallowed in The proposed target is to fallow 30% of plot area each year. This will allow for better weed management and yield potential. Grant and Clint Borgward will continue to farm the plots in Financial Performance The dry September and October reduced crop yield potential and this will restrict returns, despite this, the financial outcome will be positive. The accounting firm C. Pope and Associates are currently preparing the 2015 financial reports for each plot holder. These financial reports will be available in September ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 7 >>

8 Gallery Global Agricultural Services Farms, Western Australia Flexi-N and granular fertiliser truck at seeding Crop boom-spray being filled Grain storage silos at St Joseph s farm. Share farmer Clint Borgward and agronomist Laurence Carslake Truck spreading granular urea at Maryvale farm. Wheat crop at St. Josephs farm late July 2015 Farm manager??????????????? David Ferguson. Harvesting a wheat crop at Golden Valley farm Wheat heads prior to harvest at Devon farm Filling a field bin with wheat at harvest Dorre-Dale farm ANNUAL REPORT SPARKS FARM, MORAWA, WESTERN AUSTRALIA << 8 >>