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Last Updated: Tuesday, 11 March 2008, 10:57 GMT
Australia's food bowl lies empty
As the BBC looks at the impact of rising food prices around the world, Sydney correspondent Nick Bryant reports from Australia on how the worst drought on record has slashed its exports of wheat.

Dead tree on parched land in Australia
Much of Australia is suffering the worst drought in living memory

Though located in a remote corner of the planet, the fields of Australia's food bowl are central to the worldwide price of wheat.

In this part of rural New South Wales, water-starved farms and cavernous empty grain silos have the potential to create a ripple effect which spreads around the globe.

And that is precisely what is happening right now.

Low yield

After America, Australia is normally the second largest exporter of grain, and in a good year it would hope to harvest about 25 million tonnes.

But the country remains in the grip of the worst drought in a century, which is why the 2006 crop yielded only 9.8m tonnes.

Global wheat stocks are at their lowest levels since 1979, and the ongoing Australian drought is one of the reasons why.

To get a sense of the scale of the problem, I visited the Tottenham, a small agriculture community in rural New South Wales about a five-hour drive from Sydney, which is home to a massive grain storage complex.

Its most impressive silo looks like a space-age dome and has an interior the size of a medieval cathedral.

Now it feels like a giant echo chamber.

Almost empty

Normally at this time of the year it would be half-full of grain, much of it waiting for export.

But now it is virtually empty.

A hand holds a few grains of wheat
Many farmers have experienced their second failed crop in a row

The grain scattered on its floor would not even fill a single bag.

There is a bunker outside which is the size of two football fields, which boasts an even larger capacity.

Again, it is only a tenth full.

It provides a vivid snapshot of the problem confronting Australian farmers and their customers around the world.

At the very moment when the emerging giants, India and China, are looking to this part of the world to satisfy their food needs, the Australian food bowl is unable to deliver.

Losing money

George Grieg has been farming the land near Tottenham for nearly 50 years, and has rarely known it so bad.

Last year's crop amounted to a third of his normal harvest.

The year before was even worse - a sixth.

For the past two years he has not even managed to recoup the costs of planting and nurturing his acreage.

The sums simply do not add up, and many farmers are being forced into greater debt at a time when interest rates in Australia are at a 12-year high.

At least a wet southern summer has given them hope of a better crop this time round.

Selling the farm

And given that global wheat prices are so high, it is tempting for farmers to borrow more in their hope that their gamble pays off with a bumper harvest.

"It really is back to the bank manager," says George, explaining how that conversation will now go: "'OK, this is THE crop. Everyone is talking it up. Let's have a go at it.'

"But it's borrowed money that's doing it. And if it doesn't come off and there are too many more [poor years], then you have to sell the farm."

But who is going to buy the farms?

"There are already two or three farms in the district which are up for sale and should have been sold. But people just don't have the money to buy them," explains George.

With global wheat prices at record highs, one bumper crop would alleviate much of the financial burden and help many local farmers pay off their debts.

But their hopes have been dashed before.

Last year saw one of the best starts to a growing season for years, but dry weather in recent weeks has forced the Australian government to slash its crop forecasts by 30%.

Australian farmers on the lack of grain


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