Sunday, August 14, 2022

Decline in harvest sends message to seed companies

Malting barley and feed barley yields were down 13% and 4% respectively as prices deter growers.
Mid Canterbury Federated Farmers arable chair Darrell Hydes says soaring inputs costs have many growers considering options.

The Arable Industry Marketing Initiative (AIMI) July report highlights a 4% decline in final harvest yields as growers send a clear message that they have options if contracts are not offering decent prices. 

Milling wheat yields were back 3% with the total tonnage down 37% at 59,900 tonnes, while feed wheat yields were down 1% with total tonnage increasing 4% at 341,000t.

The harvest area for milling wheat is predicted to decline 10% over the 2021-2023 period. 

Malting barley and feed barley yields were down 13% and 4% respectively, and feed barley increased 14% on a final tonnage basis with 304,500t harvested. Malting barley on the other hand was down 31%, to 39,300t. 

Unsold stocks of feed wheat have remained steady from last year, though prices paid for feed wheat have gone up in the past year with the national average increasing 49% to a spot price of $625 a tonne. 

More significant is the average contract price of feed wheat sitting $35/t higher at $660/t, up $25/t more than the current contract price for milling wheat.

Despite unsold stocks having not moved much since the previous year, farmers are holding onto their product to get the best price after the year of input cost inflation severely denting budgets.

Southland has promising winter weather for spring planting, but the rest of the country has been battered by wet weather, gale force winds, heavy snow and flooding over the winter season. 

Reports out of Southland show winter has been a relatively normal season with farmers in the region suggesting that the temperate weather should set the region up for successful spring planting. 

With the recent heavy rain in Canterbury, this is welcome news for the local cereal market given the flooding. Saturated soil in Canterbury is currently a concern with expectations that the wettest July on record will have impacted crop growth, with the scale of that impact yet to be confirmed.

Meanwhile seed growers are carefully evaluating their options for next autumn’s plantings.

Mid Canterbury Federated Farmers arable chair Darrell Hydes said soaring inputs costs have many growers considering options.

“I have long considered myself a seed grower who grows some grain mainly as a break crop in my seed rotation and has some livestock on farm as an extra income stream and crop management tool.

“But with diesel, fertilisers and chemical prices soaring, interest rates looking to be around 5% soon and other costs still rising, unless we get a significant rise in seed contract prices for next autumn’s sowing, I along with many others will be looking at some of the options we have available,” Hydes said.

Grain, growing winter feed for lamb finishing or dairy support all look better than seed crops at current prices.

Hydes said an independent group of local growers has met with several seed firms and presented them with the details of the true full production costs, so they understand the full costs of running farms, not just the agronomic costs on which they base their prices.

The herbage sub-section of Feds is in discussions with all major seed firms with a similar message and preparing a presentation of the figures to the New Zealand Grain and Seed Trade Association at its annual meeting in November.

Meantime, Hydes said growers need to carefully consider their options for next autumn’s sowing.

“We need to do our sums on what prices we need to get to stay viable.”

One number cruncher has come up with at least $3.50/kg for perennial ryegrass seed to be sustainable.

“I have done some calculations using my own figures and came to the same conclusion and doing the same for other main seed crops I grow gave me the required prices of $8/kg for white clover, $3.50/kg for forage brassica and $6-$7 for cocksfoot.

“Please do some figures using your own costs and yields to see what sort of prices you need to make a decent return,” Hydes urged fellow growers.

“The firms will no doubt be out early this season trying to secure areas because they have serious shortfalls in contracts for the past three years compounded by a poor harvest.

“Remember to let them know that we have our options if they don’t offer decent prices.” 

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