(Wall Street Journal) – Two thousand of Troy Setter’s dark-haired cattle have been trekking along centuries-old paths through isolated Australian farmland, chomping on grass and roadside vegetation to fatten up before slaughter.
The migration recalls a bygone era, but this is no nostalgic trip. The most severe El Niño in nearly two decades has parched pastures in eastern Australia, leaving cattle short of feed.
The company Mr. Setter runs as chief executive, Consolidated Pastoral Company, has embraced an age-old ranching tradition to overcome some of the business disruptions El Niño is causing. Other farmers are benefiting from past preparations for dry spells or simple luck, but broadly crop yields are down, including rice, the region’s staple food.
Since May, El Niño has brought high temperatures and lower-than-normal rainfall to eastern Australia, Southeast Asia and India. The drier conditions make it more costly and time-consuming to produce many agricultural products, a factor that has driven up prices in the latter half of 2015. Futures of agricultural commodities have risen since June, with Malaysian palm oil up 9.6% and raw sugar 25% higher.
Other regions have benefited from the weather system. In South America and the U.S., El Niño has brought ideal conditions to the region, supporting bumper grain crops.
El Niño occurs when winds in the equatorial Pacific slow down or reverse direction. That warms water over a vast area, which can upend normal weather patterns around the world. Scientists measure the severity of the phenomenon by ocean temperatures and changes in wind patterns.
After a third year of drought in some parts of Australia, drovers are using the farmland march to add some weight to their cattle before arriving at feedlots, where they are fattened before slaughter. Consolidated Pastoral Company trucked a small proportion of its 375,000-cattle herd from western Queensland state south to Goondiwindi where they are being walked through the lush Narrabri region in New South Wales state. The stock will then either be returned to the ranch if the drought ends or shipped to feedlots in Indonesia.
Unlike the dry fields of Queensland, the Narrabri region’s prime seasonal conditions mean Consolidated Pastoral Company’s drovers can “walk [their cattle] through high quality feed” so they can gain weight, said Mr. Setter.
Droving has been part of Australia’s history since the 1830s and has been popularized by movies like the period film “Australia” which features cattle being walked across the northern territories. In the case of Consolidated Pastoral Company, just a single cowboy astride a horse is walking 2,000 cattle around five to 10 kilometers each day with the help of some well-trained Australian cattle dogs, known as Australian Kelpies.
The routes are state-owned and ranchers are allowed to graze their herds on the surrounding land as long as they keep them moving so they don’t eat all the grass.
The company has also trucked stock between some of its 20 properties across Australia while others have been shipped to Indonesia to be fattened to avoid the hot, dry weather.
The size and spread of Consolidated Pastoral Company’s business has largely insulated it from the impact of El Niño, said Mr. Setter. Other Australian ranch owners with farmland concentrated in drought-ridden areas haven’t been so lucky, as they have been forced to reduce the size of their herds.
In the past three decades, Australian ranchers have introduced a U.S. breed of cattle better suited to hot, dry weather conditions. The Brahman breed now comprises about 17% of Australian cattle, with an even higher proportion carrying some Brahman genetic material. The cattle have dark skin to protect them from sunburn, a thinner coat, don’t urinate as often and are able to feed on lower-quality feed, according to John Croaker, general manager at Australian Brahman Breeders’ Association Ltd.
Drier conditions have also challenged Asia’s coffee growers, but preparation has paid off. In Vietnam, irrigation systems gradually installed since the 1990s have helped farmers offset the effects of weak rainfall over most of 2015, said Aurelia Britsch, an analyst at BMI Research in Singapore.
About a quarter of the 1.1 million acres of coffee trees in Dak Lak province in Vietnam now have access to irrigation. Earlier this year, the government pledged to improve and expand the current systems.
Any progress would add to a World Bank program started last year to provide irrigation and drainage to around 206,000 acres of agricultural land by 2020. It has completed around 14% of this so far.
“Thanks to the good irrigation systems that have been developed over the last 20 years and the fairly good management of the irrigation, farmers have been able to manage through the recent dry conditions,” said Cuong Hung Pham, who oversees various irrigation projects for the World Bank in Vietnam.
Even with these systems in place, the Vietnam Coffee – Cocoa Association said it expects output to fall 10% over the year to Oct. 1, partly because of dry weather.
The palms themselves weren’t developed specifically for this purpose. Rather, they were intended to produce a higher yield of fruit that contains more oil in standard weather conditions, according to Jean Pierre Caliman, head of Smart Research Institute, a subsidiary of Golden Agri-Resources Ltd.
“It appears that there is also some level of higher yield, compared to past planting material, when weather conditions are less favorable to oil palm, including drought,” he added.
Yet even with these trees and other measures to mitigate drought, Malaysian conglomerate Sime Darby Bhd. expects its yield to fall 8% to 10%, primarily in Indonesia, in the 12 months through June 30 because of El Niño, according to a company spokeswoman.
Many farmers are unable to do anything to prevent plants wilting before harvest or crops failing throughout the region. The Food and Agriculture Organization of the United Nations already expects global rice production to contract in 2015 due to the weather and it could fall further depending on El Niño’s impact over the coming months. The Australian government had to downgrade expectations of a bumper wheat crop after a lack of rainfall in the weeks before harvest hit yields.
