Challenge cocktail bombards arable farmers as bird flu looms on horizon

Arable farmers preparing for the backlash from a bird flu outbreak have to deal first with costly spring planting. Resumed conflict in the US-Iran war after a brief ceasefire has put the heat on shipping again through the Strait of Hormuz, bringing more fuel and fertiliser price hikes. Spring prices for fertiliser have yet to be released, but some growers have locked urea in at about $1400 a tonne, compared with mid-$900t last year. The uphill battle of rising costs combined with sub-par harvests and low returns — only lifting slightly lately — have pushed some arable farmers to get out of growing. Environment Canterbury has approved 64 dairy effluent consents since the start of 2015 where land use — much of it on arable land — is changing to dairy. Last year, 38 consents were approved and the regional council has granted 26 consents so far this year to June 17. A decision has still to be made for another 17 consent applications. Federated Farmers arable chairman Chris Dillon said there had been constant talk about how bird flu might play out for the arable industry. “We just hope it doesn’t get into any of the major poultry stores. South Otago, Canterbury and Southland grain ends up in Mainland Poultry at Waikouaiti and Central Otago grain as well so it could have a big impact on a small percentage of growers if it was to get into one of those places.’’ Unlike the North Island where more grain was imported, Mainland was a big customer as local grain was used for chicken feed, he said. New Zealand’s largest egg supplier, producing nearly 40% of the total market, has made the pre-cautionary move of putting free-range hens indoors. Mr Dillon said this was among several challenges facing growers. Growers preparing for spring sowing were trying to budget with difficulty as fertiliser and fuel costs were almost certain to increase. “You are sitting there with all of these unknown costs going forward and sort of stuck in the system. When crops were [last] planted we did not know fertiliser was double what it was going to be. We thought it would be up a little bit, but not double and just the uncertainty is making it difficult. To grow a good specialised crop you can’t cut those fertilisers back. There are time applications and without them you are going to fail so it’s very tricky.’’ Growers with large investments in grain driers and machinery were always balancing the harvesting, storing and sale of a crop between the planning and planting of the next crop so were exposed to sharp price rises. He said much of the autumn sowing was completed under good weather in the south and before fuel prices jumped to their peak. Unlike other farming types or industries it was difficult for the arable sector to pass on increased costs, he said. “A lot of the gains we’ve got with slightly higher [grain and other] prices is being gobbled up by transport. They are on the increase but it’s only just covering the transport costs.’’ Growers were unable to simply increase returns by growing more specialist seed crops than grain. “The seed one is a bit tricky too as the price doesn’t always reflect the risk and the risk has been high the last couple of years. So there’s probably more a swing of putting livestock into the system or develop a rotation that involves livestock, horticultural crops and arable crops, but in a risk-adverse way.’’ Finishing lambs was also problematic as farmers needed to make a margin on high store lamb prices. Mr Dillon said the arable industry was key to finishing many of the lambs coming from the high country farms. Dairy and other farming systems worked within arable growing and a thriving industry was needed. He said Federated Farmers was working with government and industry groups on “small gains’’ such as establishing closer markets to get the sector back on track. Dairying’s beef production was increasing and this gave growers options such as supplying calf meal, trading and grazing beef cattle or finishing them as well as providing silage and straw to dairy farmers, he said. “We really need to co-exist with the dairy farmers and there are not many dairy sheds which don’t have in-shed meal feeding systems nowadays. We have also got the NZ Grain trademark that shows on products they are made from NZ grains and that’s starting to get traction.’’ Grain contracts have risen to between $560/t to $580/t , while milling wheat is at about $615/t. For grain growers such as him, a third-generation farmer on the family’s 860ha operation at Riversdale, in northern Southland, higher transport costs from rising fuel prices had to be factored into the slight price increase. Mr Dillon said the problem with the grain contracts was many of them were for delivered product and not an on-farm price. “It’s the cost of delivery that is the problem. A good milling contract to deliver to Christchurch is no good to me because the freight price would be so high.’’ He said arable land being converted into dairy was concerning. “There’s still a bit going on up there, probably limited a little bit by the availability to get sheds built from now, but there could be another run of them next year. You don’t fix your industry by half the people pulling out of it. You need critical mass and the support industry. It’s not the way forward for the industry to have the last man standing.’’ He said some of the farm sales were a result of ageing farmers selling up and not being paid for the risk they took to grow crops, as well as high dairy returns. Mr Dillon said ongoing talks were needed with flour merchants and firms to get a level playing field with imported products, but they were starting to recognise growers were struggling. He said a thriving arable sector was needed for human food and livestock feed security.

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