Cost cuts soften blow of lower prices

South Canterbury farmer Colin Hurst would be keen to see more rain land on dry paddocks. Photo:...
South Canterbury farmer Colin Hurst would be keen to see more rain land on dry paddocks. Photo: supplied
Canterbury growers staring at lower prices for wheat crops this season are grateful farm costs are also coming off highs.

Feed wheat prices are back by nearly 15%, while milling wheat contracts going out to farmers are about 11% down from last season’s peak of about $620 a tonne to $630 a tonne.

Softening this blow is the drop in many fertiliser, agri-chemical and fuel prices.

Federated Farmers vice-president Colin Hurst said farmers had enjoyed high prices last harvest, but they needed to be "way up" because of cost increases.

Higher fuel and agri-chemical costs had coincided with fertiliser products lifting as much as 50% over the 2022 growing year and 2023 harvest, but had since eased, he said.

"The prices have come back, but also the costs have come back. For example, urea was something like $1380 a tonne and it’s come back to down to $800 a tonne and popped up a bit to $880 a tonne currently. So that’s come back a lot and agri-chemical prices are coming back a bit and certainly glyphosate has come back a considerable amount. So it’s the circle of commodity pricing, I suppose, and we are just in a bit of a downward spiral at the moment."

He said fuel prices appeared to be trending down after their roller-coaster ride.

"It’s just my observation, but everything seems to follow the price of oil and if oil’s up grain prices seem to be up and sprays and everything else do the same. When oil comes down the others follow and it’s a commodity cycle."

Unchanged were higher interest rates hitting farmers coming off lower fixed rates. Farmers had to unfairly pay higher terms than homeowners, he said.

Grass seed prices offered to growers had risen, but feed wheat prices were down.

Feed wheat returns ranging from $550 a tonne to $580 a tonne for the harvest ending at the beginning of the year are at $470 a tonne to $500 a tonne for the 2024 harvest.

Mr Hurst said he had been more ruthless with input spending for sprays and fertiliser at their mixed arable farm in the Waimate district to ensure it was justified.

Less fertiliser going on crops the past few years because it was so expensive had probably lowered productivity, so they were mindful of striking the right balance, he said.

They had increased variable rate applications based on satellite imagery showing areas needing more or less fertiliser.

This had been a low-cost measure of improving the accuracy of applying fertiliser with the only down side of getting a fix in between cloudy days.

Technology built into fertiliser spreaders then allowed them to apply it at variable rates across paddocks.

"It’s good for the bottom line and it’s also really good for the environment because we’re putting the fertiliser in the right place and at the right time. So we’re saving money, but we’re doing the right environmental thing."

South Canterbury growers hope farms leaning on the dry side get another dollop of rain and then plenty of sunshine to finish crops off before the harvest.

Operations further north in Canterbury have received more rain with November downpours helping to keep soil moisture levels up.

Mr Hurst said his farm had been reasonably dry throughout the winter and into spring.

"So we have picked up the rains through November and things are looking good. We are probably just on the dry side and another good rain would finish crops off nicely. November rains are very valuable for us and we have been flat out irrigating here. Further up in Canterbury they’ve had a lot more rain than us and there will be irrigation going on, but not to the same degree as us."

Promisingly, his autumn-sown wheat crops flowered early in mid-November.

"It’s probably 10 days earlier than normal, which I’ve never seen in my 30 years of farming, and I probably put that down to the warmer winter we’ve had ,so that’s all looking good too and no complaints. We’re just hoping we don’t get any late frosts."

He said they were growing more biscuit wheat than normal rather than feed wheat.

"It’s something we’ve always done down here. I’d rather feed New Zealanders than animals."

Milling wheat yields were less than feed wheat, but plant breeders had been lifting yields. There were more quality parameters for the likes of protein, sprouting and grain size, but returns were higher than feed wheat.

The previous year milling wheat growing had slipped, but growers had been in amicable talks with buyers about sustainable prices and felt the market appreciated the need for a grower base in the South Island, he said.

Mr Hurst said milling wheat prices being offered to growers ranged between $530 a tonne to $580 a tonne from last season’s $620 a tonne to $630 a tonne.

A further cash-flow consideration is that growers store sold milling wheat in their own silos until buyers — who cover storage costs — need it during the year.


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