Friday, March 29, 2024

Food shortages on the horizon

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The forecast loss of Ukrainian wheat supplies and the boycott of Russian crops point to shortages of grain globally, along with falling food production and fruit harvesting problems elsewhere.
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ANZ agriculture economist Susan Kilsby says grain prices are now about 25% to 40% stronger than a year ago.

The forecast loss of Ukrainian wheat supplies and the boycott of Russian crops point to shortages of grain globally, along with falling food production and fruit harvesting problems elsewhere.

ANZ agriculture economist Susan Kilsby, in the April issue of her bi-monthly Agri Focus newsletter, said food commodities are in short supply.

New Zealand will export less than normal as most commodities are affected in different ways.

Milk output is predicted to be down 5% this season, that has less than two months to run, and meat production has been cut by lower livestock numbers and delays in processing because of labour shortages.

Kiwifruit yields look to be very good, but recruitment of people for picking has taken an edge of desperation and it appears some apples will go unpicked for the second year in a row.

The kiwifruit industry estimates a 25% shortage in the 24,000 seasonal workers needed in orchards and packhouses.

Grain and grape harvesting have been impacted by bad weather and absenteeism due to the Omicron variant of covid-19.

Feed wheat and barley are over $500 a tonne and Australian milling wheat land in NZ is $600 or more.

“Grain prices are now about 25% to 40% stronger than a year ago,” Kilsby said.

“The largest increases have come in the higher-grade varieties, which are in short supply locally due to the poor weather at harvest time.”

China is also facing its worst grain harvest in decades and may outbid imported supplies that would have gone to other Asian and Middle Eastern countries.

She said the lamb kill season-to-date is about one million behind last season and the average carcase weight has been down slightly because of poorer quality pasture, as lambs take longer to reach target weights.

Fortunately pastures and crops are in good supply everywhere except Southland, enabling farmers to hang on to works consignments while the meat companies catch up.

Schedule prices are above $8/kg and store prices around $4.

“Lamb returns are certainly very strong and record average farm gate prices for lamb will be achieved,” she said.

Kilsby predicts that farm gate prices for all classes of beef cattle will remain elevated during the year, with a less-than-normal dip in winter.

As the cow cull kicks in, processing for other cattle classes will be pushed back to winter.

“Demand from China for beef is not expected to let up anytime soon,” she said.

“A poor grain harvest means they will have less feed than ever for their own cattle and the cost of producing beef within China will also rise.”

The high costs of feed and the Ukrainian war are holding down milk production in the United States and Europe and the recent easing of dairy prices, coming off very high levels, is a good thing, on balance.

“It was clear these high prices would be unsustainable for consumers, so an easing was expected at some point,” she said.

ANZ has a farm gate milk price forecast of $9.70/kg milksolids, increased by 40c in mid-March.

She said some easing of dairy commodity prices was factored into that prediction.

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