A ‘just in time’ attitude to sending market signals to New Zealand’s arable growers won’t cut the mustard in the current climate, Federated Farmers Arable Chair Colin Hurst says.
“Harvest only happens once a year so really it’s a case of ‘get your orders in early’.”
The 1 July AIMI (Arable Industry Marketing Initiative) survey showed that sowing (and intending sowing) of milling wheat crops was down 27% on the previous season. It appeared that uncertainty over restrictive new buying practices, and the strong prices being paid for animal feed wheat, was behind that trend.
High prices for feed grains are continuing. One report for the last week of September said prices paid ex-farm for feed wheat was an average $500 a tonne in the Manawatu and $458 a tonne for feed barley.
Now there are other pressures coming to bear.
International prices for milling wheat are on the rise. A recent report from the United States Department of Agriculture showed the current US wheat crop was the smallest since 2002/03, and wheat stocks as at 1 September were at a 14-year low. Similar results were coming out of Canada.
“With international prices up, imported prices are going to be a whole lot more expensive than New Zealand-grown grain, not only for bread wheat but also for maize grain and wheat and barley fed to livestock,” Colin said.
Federated Farmers Vice-Chairperson Maize, Dion Fleming, said maize planting should be well under way in the North Island but due to wet and cold weather conditions some regions are yet to open a bag of seed, with days of cultivation and ground preparation ahead of them before they will get the chance to get crops in the ground.
“While the planting season is not yet a disaster, growers are worryingly watching the days pass with no clear forecast to hang their cultivation and planting hopes on. As time passes by the yield potential of these crops starts to lessen and harvest dates are pushed back in what is already looking to be a very tight few months ahead.”
Feed suppliers are rationing available stocks as making the seasons’ ends meet is looking increasing difficult, especially with the slow grass growth the dairy sector has been dealing with which has had end users going through higher than usual tonnages, Dion said.
Nationally, an estimated 1.2 million tonnes of maize silage is grown annually along with a maize grain harvest ranging between 190,000t to 250,000t, with similar tonnage of imported maize grain to fulfill demand. While this imported tonnage, along with other bulk feed commodities, would usually go a long way to relieve the looming feed pinch there seems to be no reprieve in sight as supply of product, ship availability and huge cost increases have almost priced imported stocks out of the market, if it’s available at all.
“In prior years, if a farmer was in need of extra supply of feed beyond their contracted quantities, it wouldn’t have been too difficult to source additional product, this season is looking to be very different,” Dion said.
Everyone is being affected by the pain point of rising bulk shipping costs, no doubt driven by COVID-19 fallout. One recent example cited to Colin was a hike in cost from $24 per tonne to $75 per tonne for a 30,000 tonne cargo shipping into New Zealand. If anything, the hike in price for smaller, more boutique container freight shipments to our shores are even higher.
Farmers across the board know all about these shipment shocks because of the impact on fertilizer. The price of urea is some 53% higher now than last year. A shortage of glyphosate and rising prices will also add to arable farmers’ costs.
Colin says he was recently invited to a Flour Millers Association gathering and was asked what could be done to increase levels of New Zealand-grown milling grain.
“That horse has bolted a bit, really. Basically, they need to pay growers more.
“The price for locally produced milling wheat dropped lower than what it was the year before and growers voted with their feet. They’ve got alternative options.”
Growing seeds for export is one of those options and with livestock prices up, there are probably more arable farmers expanding their livestock finishing.
“Naturally we try and target the most profitable avenues, just like everyone else.”
Of everything New Zealand arable farmers produce, about 70 percent is used domestically. Growers normally need to know by March where the demand is for the crops they’ll harvest the following February. There is room for growers to increase production, “if we get the right signals,” Colin said.
“Essentially, we haven’t had those signals [from wheat grain buyers] and the result is where we’re at now.”