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A timely break for the economy
This Agribusiness Bulletin looks at the importance of the so-called ‘autumn break’ for southern Australian dryland farmers and the Australian economy more broadly. It also explores some of the risks associated with a delayed or ‘false break’ and takes a look at how autumn 2017 is shaping up for Australia’s farmers.
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A timely break for the economy
On the back of a very favourable autumn break in 2016, many parts of south-east Australia have again been on the receiving end of handy rainfall in the month of April 2017. The impact this short burst of autumn rainfall can have on the Australian economy is large.
This Agribusiness Bulletin takes a look at the importance of the so-called ‘autumn break’ for southern Australian dryland farmers and the Australian economy more broadly. It also explores some of the risks associated with a delayed or ‘false break’ and takes a look at how autumn 2017 is shaping up for Australia’s farmers.
What is the autumn break?
In Southern Australia, the autumn break is perhaps the most important ingredient for a successful winter crop. This is because it is the first significant rainfall event of the winter growing season and signals the start of the growth period. It can ‘make-or-break’ the season for both growers and graziers alike.
The ideal level of rainfall in an autumn break event, however, is not the same for everyone – varying between crops and pastures, climate and soil profile. Pook et. al. (2009)1 defined the ideal autumn break for farmers in Northern-West Victoria as being either:
- Rainfall of 25mm or more received over a period of three days or less; or
- Rainfall of 30mm or more received over a period of seven days or less
The timing of the rain is important, as to whether it constitutes a break or not, as is the weather following. For example, a 25 mm rainfall event in March followed by warm, dry weather may not constitute the break. However, the same rain event in May will likely be the break, if it hadn’t already happened before then. Furthermore, the autumn break (in and of itself) does not guarantee a successful season; sufficient winter and spring rains are still needed to deliver a successful crop.
Why is the autumn break important?
In years gone by, grain growers typically awaited the arrival of the autumn break before sowing. However, the rise in popularity of minimum-till and no-till farming practices have enabled growers to sow into dry, warm soil. For those growers who dry sow, the arrival of the autumn break causes plants to germinate, utilising the maximum amount of rainfall of the growing season in the crop. The longer this growth season, the greater the biomass production and the higher the grain yield.
A break that happens late, once cold weather has arrived and potential crop growth has slowed, can drastically reduce the overall potential of the season.
In addition, ‘false breaks’ can be just as costly. These are smaller autumn rainfall events which germinate the seed, but leave insufficient moisture reserves in the soil to see the germinated plant survive through a dry period that follows. A false break can cause seeds to germinate unevenly, go mouldy or die. This can result in a worse financial outcome for growers than waiting for the real break (harder than it sounds), or even having not sown at all2. With the advent of minimum till and no till farming practices, the risk of suffering the effects of a false break are high and need to be considered as part of the annual sowing program.
With respect to livestock, the break is crucial to kick off and sustain pasture growth over the winter period – with the key benefit of less reliance on purchased feed. A late or non-existent break can simultaneously cause feed prices to rise (given lower feed supply) and livestock prices to fall (as graziers look to destock, thereby increasing livestock supply). In this case, graziers are faced with a decision to buy in feed, agist or move their stock to other regions with good feed supply, or sell down their herd/flock when prices are low.
The autumn break is also important for irrigators as it wets the catchment areas ensuring greater run-off when the winter and spring rains occur. This can mean greater water allocations in the irrigation season, and earlier allocation announcements, providing certainty for water availability and crop planting. With more water in the system, lower water prices are good news for those who rely on buying from the spot or seasonal market.
What is an ideal autumn break worth to the Australian economy?
A good autumn break is not just a positive outcome for those farmers whose livelihoods depend on it. A positive autumn break can have impacts on the economy beyond the farm gate. For example, May 2016 saw large areas of south-east Australia’s winter crop production zone receive significant autumn rainfall to start the season. For Western Australia, significant rainfall in cropping areas came during April 2016.
ABARES recently estimated that the 2016 winter crop harvest was 59 million tonnes – a record for the country and for every mainland state3. To put that in perspective, the 2016 winter crop harvest was around 44% (18 million tonnes) higher than the average of the previous five years. Translating that into dollars, the additional production would equate to an extra $5.4 billion across all winter crop varieties if the average price of $300 per tonne is used (although noting that prices would likely dip due to increased supply).
This increased production is a handy contribution to Australia’s GDP and trade balance since around 70% of Australian grain is exported4. It also impacts more than just grain farmers as the benefits flow through to grain handlers, marketers and transport industries, as well as grain-feeding livestock industries and food processors.
The value of a good autumn break to the Australian economy is also much larger when considering the benefits it brings to livestock industries and irrigators, potentially boosting agricultural production into the tens of billions.
How is this years’ autumn break shaping up?
For many farmers in Australia’s south-east, the 2017 autumn break arrived during April and brought with it a sense of optimism for the winter ahead. Across parts of South Australia, Victoria and southern parts of New South Wales the late April rain has created one of the ‘most impressive early autumn breaks for years’ as quoted in local media reports. Across those states, it is the typically lower-rainfall Mallee region which has had the highest rainfall5. For many farmers, the break has come early – with many farmers yet to sow before the late April downpour6. Those farming in areas that have received the break will now be able to sow their winter crops with confidence. In Western Australia, however, a relatively dry April and early May has delayed planting for some farmers7.
The current status of the autumn break appears to have caused some cautious optimism amongst forecasters. On May 10, the USDA released its World Agricultural Supply and Demand Estimates, with the Australian wheat crop estimated at 25 million tonnes. While this figure represents around 29% below last year’s record crop, it is 2.3 million tons higher than the Australian average since 20008.
Although not likely to make the national news, it is unlikely that any other economic news of the day could be as significant to the national economy on the day the break arrives. The positive autumn break across much of south-eastern Australia has laid the foundation for strong output in 2017-18 for Australia’s agriculture sector.
1. Pook, M, Lisson, S, Risbey, J, Ummenhofer, C, McIntosh, P, Rebbeck, M, 2009, The autumn break for cropping in southeast Australia: trends, synoptic inﬂuences and impacts on wheat yield, International Journal of Climatology.
3. ABARES Australian crop report, February 2017
4. Between 2010-11 and 2015-16; Source: ABARES Australian crop report, February 2017