De-risking your production with storage

THE DIFFERENCE: A price differential case study by Entegra based around three north and central Victorian growers' scenarios.

AS the old saying goes, there are two certainties in life: death and taxes.

It would appear, however, that as times goes on, we can add another to that list of certainties:

Good hay production years brings with it spring rain.

The trade off between rainfall for production and the potential risk for quality downgrades has been an issue that growers have long dealt with, however with the increasing importance of Australian hay into the export markets, and thriving feedlot/dairy and consumable market, this issue has never been more impactful.

This current season is a case in point.

In what has been a very productive growing season, full of potential, we have seen (yet again) the impact of late rain affecting hay quality across the east coast and South Australian regions.

This coupled with a full supply chain and a flat domestic market has seen the financial impact of quality downgrades perhaps at its most extreme to date.

The ability to protect the quality of baled hay through utilisation of storage has never been more important in capturing the full value of the crop, and simply giving yourself the best possible chance of doing so is prudent risk management.

This issue is further exacerbated in a falling or flat domestic market where producers become “forced sellers” at harvest due to an inability to store product that needs to find a home out of the paddock, thus further putting pressure on an already deflated market due to an excess of supply.

Growers who have ample storage can wait out these market pressures until such time as the demand comes back to a more supportive level and allows a more risk managed approach to selling the crop.

By having ample storage, growers are often able to achieve more of a premium relative to what is offered in a pressured harvest market.

This coupled with the ability to protect the quality of the product allows for a much stronger marketing position.

In short, with the continued weather volatility through spring, the growth and increasing demand for Australian export hay, and a continued lack of available storage at harvest means that growers need to look at how to manage this ongoing risk and the opportunity cost of not having adequate storage.

There has never been a better time for growers to explore the option of increasing their storage capacity and de risking their business to achieve more stable and profitable returns.

For more information on the export market and storage solutions call Entegra 1300 296 206 and a design consultant can visit your farm to get you started.

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