Press Release – Bayleys
Arable prospects ploughing ahead.
Good seasonal prospects, stronger markets and an increased variety of crop options are putting the cropping sector on a good footing after a two tough years, with farmers optimistic returns will be buoyant for some time yet.
The industry’s latest survey the Arable Industry Marketing Initiative has given farmers and investors an insight to their sector’s success, with the sector appearing to be significantly more positive than only two years ago.
The report indicates stock levels of unsold grain are relatively low through the sector, with unsold cereal grain crops down by 65% over the July- October period of the survey.
Federated Farmers arable sector vice chairman Brian Leadley said the fact stock levels were so low was a good indication growers were generally happy with where prices were at. This was further reinforced by the 2% increase in cropping area committed for this growing season.
This comes after last years’ plantings increasing 17%, driven mainly by feed barley and feed wheat sowings.
“Generally we are looking at some sound pricing over the $400 a tonne mark for all grain types. This is really where we need to be to have a reasonable return on operations. There are some cost increases that have been coming through, including fuel which hit us twice, once in farm operations and again as freight costs.
“Urea has come up a bit in recent months, and we are also seeing farmers wearing higher environmental costs. The cost of doing a farm environment plan is up at about $10,000 a report, and that comes straight off the bottom line.”
These prices compare highly positively to only two years ago when growers were barely clearing $300 a tonne, leaving significant shortfalls in farm cash-flows and putting an industry already shrunken by dairy conversions in a precarious position.
“We have realised standing still is a hard game to play, we risked losing critical mass and want to see an increase in the amount of domestically grown grain. It appears the milling industry is right behind us on this too.”
The industry has recently been encouraged by moves by Countdown supermarkets to use locally grown grain in all their pre-mixed loaves, rolls, buns and scones that are baked in house.
Leadley says the quality message behind New Zealand grains is spreading, not only among consumers but also among dairy farmers sourcing grain for feed.
“They are recognising there is a real biosecurity risk behind supporting imported grains, with weed incursions not only an arable sector problem, and they can buy local, quality grain knowing those issues just aren’t there.”
The canning of the Hunter Downs irrigation project and the precarious state of the Hurunui project further north are unlikely to put a dampener on the sector’s plans to expand.
“It will mean there are some farms that won’t be able to grow more than they are, but I believe we still have plenty of capacity with the rest of Canterbury’s land area to grow more cereal crops.”
The vitality of the sector has also been buoyed by an increase in the crop options arable farmers have to choose from. Pressure on land in the Auckland region means more companies are choosing to grow potatoes in Canterbury, sometimes leasing land for plantings, while high value vegetable crops are one of the key export growth prospects for the horticultural sector.
“Cereal crops generally fit in well with the rotations with some farmers growing three or four different crops, others as many as 13.
“Having the ability to rotate cereals in and out means we are also able to reduce the risk of resistance developing in all our crop treatments, keeping those treatments more sustainable for longer.”
Bayleys mid and south Canterbury manager Jock Fulton has welcomed the positive news coming out of the arable sector in the past 12 months, boosted by the diversity that Canterbury enjoys in crop type and farmer ability.
“We have not had a lot of sales in the past six months, but if you go back over 12-15 months, prices have been pretty solid, sitting around $40,000 a hectare for quality irrigated cropping country in Canterbury,” he says.
Canterbury has also enjoyed a strong symbiotic relationship between dairy and cropping sectors, with dairying enjoying good grain, green feed and straw supplies, while cropping farmers can fill out of season income gaps with winter grazing and drystock options.
“Those who are still cropping and sheep farmers are now seeing rewards for their hard work with sheep, crop and beef prices much improved from past years.”