WA farmers are eyeing a record grain harvest, but rising input costs and the grain backlog could derail profits.
More than 20 million tonnes of grain has been forecasted for this year's harvest, contending with last year's 24 million tonne record.
Although yields look fantastic, the expected profit margin has not generated the same excitement.
The rising cost of inputs, difficulty getting grain to port, market prices and the continued backlog of last year's crop are expected to impact the bottom line on pay day.
BusinessAg consultant David Falconer said he predicted WA grain would be discounted by $150 per tonne compared to the global market, due to delays in getting the harvest to port.
That meant the forecasted 20 million tonne harvest could cost the industry $3 billion in revenue.
Mr Falconer said the cost on the state's economy could be even greater.
"If we use a multiplier effect on the economy, it's probably more like going to cost the state 10 billion, because we can't get grain to port fast enough," he said.
CBH, the state's main grain handler, is still holding onto grain from last season.
"CBH has said that they're expecting a 3 million tonne carryover from last year … and from this year, another three to 4 million," Mr Falconer said.
Input cost battle
Growers who have been paying full price on their inputs will struggle more to meet financial goals.
"I think on the current prices, there'll be a marginal profit, because the input prices have been so high in the last year," Mr Falconer said.
"We've seen fertiliser [prices] nearly double, chemical probably up 40 per cent, labour up 25 per cent, fuel up 40 per cent."
Mount Walker farmer Bill Cowan, whose grain and sheep property is about 300 kilometres east of Perth, said he forward bought his fertiliser supply before the price hike.
He said he would be worried about his profit margin had he not done so.
"I'm hoping [the season] will be profitable, but it won't be anything like, had we had this yield a season ago," he said.
To add salt to the wound, the price of grain has taken a plunge since the peak in May this year.
"We've seen [the price of grain] fall considerably since farmers planted in April and May, wheat's probably fallen under $150 a tonne, and canola has fallen $400 a tonne," Mr Falconer said.
"The profit margin from planting to now has eroded substantially," he said.
High production, low cost
Mr Cowan said the state's grain would have a disappointing price tag for the quality of the crop.
"To have one of your top 10 per cent production years and to break even or round about there is not very good," he said.
"Had it been an average year, I think a lot of farmers would have been scratching their head wondering what they're doing," he said.
Mr Cowan said it was likely his property would grow less grain next year, and most other farmers he had spoken to were thinking along the same lines.
