Climate and rainfall in the Australian Wheatbelt
The rainfall pattern over Australia is strongly seasonal with the summers in the south being mostly dry and hot and the winters being wet and cooler. By contrast, the tropical regions to the far north have wet summers with the October to April monsoon driving rainfall patterns in the northern part of the Wheatbelt.
The majority of the Australian Wheatbelt averages 300 to 600 millimetres of rainfall annually with production timetables varying from region to region depending on the timing of growing season rainfall. Generally, farms closer to the coast receive higher and more reliable rainfall, with conditions becoming drier and more volatile further inland.
Within each of the Wheatbelt regions agricultural productivity and land prices are determined primarily by the level of rainfall. Hence, it is common practice for Australian farmers and agricultural investors to categorise farms according to the level of rainfall they receive. The three commonly used rainfall categories are:
- Low rainfall farms: <350 mm of annual rainfall
- Medium rainfall farms: 350 mm to 450 mm of annual rainfall
- High rainfall farms: >450 mm of annual rainfall
Due to the relatively low levels of rainfall over much of the Wheatbelt, river flows and underground water resources available for irrigation are minimal. As a result, almost all grain in Australia is produced under a ‘dryland cropping’ system (i.e. crops are rainfed as opposed to irrigated).
The north is home to most of Australia’s irrigated crop production (although this is predominantly cotton and sugar country, so much of the irrigated area would not be classified as Wheatbelt territory). When irrigation dams are at full capacity, more than 400,000 hectares can be irrigated, but given the high variability of rainfall in the north, irrigated crop production is actually more volatile over the long term than some of the more reliable rainfed regions of the Wheatbelt.
For more on the regional variations in climate and growing conditions in different parts of the Australian Wheatbelt, Click here to download Climate Risk and Australian Arable Cropping.
References and data sources:
- Australian Bureau of Meteorology, Historical Climate Data, 2012
- Australian Bureau of Statistics, Agricultural Land Use and Selected Inputs Data Series, 2012
- Australian Government Department of Agriculture, Fisheries and Forestry, Australian Bureau of Agricultural and Resource Economics and Sciences, Agricultural Commodities Statistics, 2012
Farming is like any other business: all other things being equal, income is dictated by the quality of the management team. Even enterprises with similar soil, climate and business model can show a high degree of variance. This means tenant / manager selection is a critical component of the agricultural investment process.
Inefficiencies in the farmland pricing mechanism are one of least exploited opportunities to increase returns as a farmland investor. When it comes to buying agricultural assets, we are able to help our clients beat the market because of our unconventional approach to acquiring farms and the information advantage we have in the markets in which we specialise.
Investing in Australian agriculture
Australia’s robust economy, strategic location and investment friendly business environment have made the country one of the world’s top destinations for foreign investment, with FDI inflows of over twice the OECD average (% of GDP basis, 2011).
Geographic and sector focus
For investors, the choice of agricultural sector will be driven by your risk tolerance and overall investment objectives. As a general rule, arable agriculture (i.e. the cultivation of annual crops, in particular grain) is the least volatile farming sector.