Drought in the Hunter Valley has farms feeling the pinch

Cover image courtesy of ABC News

Rain last fell in Scone, the centre of the Hunter Valley’s breeding hub, in late February, but the 102.6mm deluge was not enough to ward off the impending dry spell. Very little has fallen in the two months since, and Hunter farms are bracing themselves for a winter which promises a difficult battle against the rising costs of fuel and feed.

Dust to dust

The 102.6mm deposited over two hours onto Scone was not a wide ranging storm; that rainfall was measured at the town’s airport weather station, which is 5km to the north west of the town centre, where 15-25mm fell in the same period. Aberdeen and Parkville, the adjacent towns 10km to the south and north of Scone, recorded less than 10mm for the 24-hour period.

The mean annual rainfall in Scone since 1950 is 636mm, with the mean rainfall in February, March, and April sitting between 38.6mm and 73.4mm. For the vast majority of the area, none has fallen since February.

As grassy paddocks turn to dust, the many stud operations in the area are starting to feel the pinch.

“We aren’t doing too bad at the moment, but we are very dry,” said Verna Metcalfe, who manages Alma Vale Thoroughbreds to Scone’s north. “We also lease Kitchwin Hills in Gundy, and it is even drier out there. Luckily, we have access to water for irrigation, but with the cost of diesel being what it is, we are concentrating on getting our foaling areas ready for the season.”

Gundy is 20km to Scone’s east, with Arrowfield Stud straddling the halfway mark between the towns. The region between Scone Aberdeen is dotted with other studs that missed out on the deluge, including Vinery Stud, Darley, Newgate Farm, Segenhoe, and Kia Ora Stud.

Water is a major currency, and whilst most farms have dams, bores, and water access licenses for the Pages river, the water isn’t endless, particularly with so little rainfall in the region. Temperatures are still reaching the mid twenties daily, but it won’t be long before the growing period for grass - and hay - will stop for the winter.

The February storm demonstrates how the weather can also change rapidly over short distances. One of the benefactors of recent stormclouds has been Yarraman Park Stud, 10km to the west of the town centre.

“We've been through droughts before and managed them pretty well,” said director Harry Mitchell. “We know how to do it. We got under a storm a while ago, and we’ve still got quite a bit of feed, so we're not as bad off as some people. But the storms that have come are quite small, and most people have missed out.”

“It's increasingly hard to get hay because the contractors have had a hard job making hay this year,” Metcalfe said. “If things keep up the way they have been, it'll affect us big time.”

Keeping everything running

“I do feel for some of the smaller guys because it's going to start affecting a lot of the smaller farms first,” Mitchell said. “But the price of fuel on top of the drought is a bit of a worry for everyone.”

The price of diesel peaked at $3.30 a litre in Scone at the beginning of April, only creeping back down to just above $3 within the last few days, despite the fuel tax being cut in half on April 2. The knock-on effect of the leap in price has seen many transport companies raise their prices, some by 20% or more, in order to account for the doubling of fuel prices.

That price has echoed through feed and hay prices throughout the region, with hay climbing to $1000 per metric tonne, a stark contrast to the average $350 per metric tonne for hay in the south west of the state.

“The cost of everything has gone up as a consequence of the fuel,” said Metcalfe. “All of the transport companies have increased, even for delivering grain and feed to the produce stores. So of course, their prices have to go up to cover that.”

The presssures facing farms from the cost of other services are not unique to the Hunter, but it is a growing seize nonetheless. The two largest vet clinics in the upper Hunter Valley have both been bought by private equity companies within the last three and a half years, and now only one offers out of hours services and surgery, creating little competition to manage pricing.

“Everybody wanted to put their prices up, but a lot of people can't afford to pay anymore,” said Metcalfe. “So it sort of puts you in a catch 22 position of what you do. None of us want to go broke, but I don’t know what the answer is.”

An uncertain economy

Another element is how ownership has shifted in the last five years, and how the uncertain economy has dented the lower end of the yearling sales this season. While the Inglis Australian Easter Yearling Sale recorded a record average, clearance was down, and several smaller sales have noted the bottom half of the market struggling.

“The last time we had a bad drought, the horse market was on the up, which was partially during COVID,” Mitchell said. “COVID drove the market up as people didn’t have anything else to spend their money on. It is definitely going to plateau now, if not come back a bit.”

“What’s happening overseas is affecting people’s outlook as well, maybe even more than the drought,” Metcalfe said. “I think everyone is unsure what is going to happen with the economy and where it’s going to go. I can see that having an effect on stallion farms, there might be less people breeding as they aren’t sure what’s going to happen.”

“Many of our racehorses are bought on spec by trainers who then sell the shares, and that’s usually to the mums and dads who have money to spend, but that’s not happening now. They’re backing away.”

“I think the whole economics of the game needs to be looked at,” said Mitchell. “The horse game is very healthy and the prize money is very good, but the bottom end of it is getting difficult. That's a worldwide trend because the costs often outweigh the profits.

“With veterinary costs and transport, a yearling needs to make $80,000 to $100,000 to make it viable, and as we all well know, they don’t always do that.”

The margins grow slimmer still for breeders and farms who don’t stand commercially successful stallions and who rely on a strong sales season to see them through.

“That’s where we are very lucky, we have our stallions who are going well and we have sold some nice yearlings this year,” said Mitchell. “But the combination of the drought and the fuel crisis is a concern for everyone.”

Halting the drop

The foal crop has already been declining year on year, but the combination of the drought and economic pressures creates a twofold problem.

To date, 11,342 foals were born in 2025, a drop of over 500 foals from 2024 and over 1700 since 2021. 16,918 mares were bred in 2024, down over 1000 from the 18,142 served the year before. The percentage of live foals to covered mares has remained steady around 66% in recent years, which suggests that the ratio will not improve if less mares are bred. The knock-on is smaller race fields - and smaller wagering revenue back into the industry - in four or five years' time.

The other, more immediate problem is what is done with the mares not being bred. Older mares are already more vulnerable in the market, as are their offspring.

“People don’t want to buy yearlings out of a mare who has had four or five foals that haven’t done anything, and they won’t buy a yearling out of an older mare,” said Mitchell. “They are being much more selective about what they buy.”

“Often farms like us take on these older mares when the owners can’t or don’t want to keep them,” said Metcalfe. “But we are doing so at our own expense. If the state welfare fund could expand to include horses outside of ones straight off of the track, it would be really helpful.”