Varying Economic Outcomes For Arable Farmers

18 July 2001

Climatic Contrasts Led To Varying Economic Outcomes For Arable Farmers

Weather conditions caused an unseasonal growing environment for arable farmers in all parts of the country, with problems of unscheduled maturity in crops and disease in many of the main brassica crops and squash.

This is according to the Ministry of Agriculture and Forestry Arable Farm Monitoring Report released today.

Farm monitoring is a process whereby MAF monitors the production, finance, trends, issues and sectors concerns in New Zealand farms. The expectations of farmers, and those servicing the sector are analysed and presented as a model farm. The report highlights the 2000/2001 seasons and forecasts the 2001/2002 season. The views reflect those of the sector, and not necessarily those of MAF.

There are nine farm monitoring reports this year. Five of these are sector specific (deer, sheep and beef, dairying, arable, and horticulture). Four are regional (South, Central South, North and North Central).

A mild winter during 2000 caused many farmers to become concerned about the possibility of another dry spring. This was turned around by heavy rainfall in September over most of Canterbury which caused problems, but on balance set up a good growing season.

Harvesting conditions were frustrating, particularly for farmers in the coastal areas, as moist atmospheric conditions continued into February. However, better conditions eventually arrived and overall the harvest was described as better than most. The dry conditions persisted for a little too long and began to affect 2002 year’s crop programme and plans for winter livestock activities.

These climatic contrasts led to varying economic outcomes. When contracts for the 2001 harvest were filled, the New Zealand dollar was considerably higher against the United States dollar than it is now. Predictions were that the $NZ would recover during 2001. However, the New Zealand dollar fell to its lowest point in October 2000, from which it has only slightly recovered. Contract product prices were locked in when the $NZ was high and resulted in lower farm gate prices. But input prices rose with influences from both the exchange rate and higher global fuel prices.

The area planted in potatoes and onions for the year ending December 2000 was down on the previous year due to poor market returns in the previous season. Prices received for onions and potatoes have improved from the very low levels of the previous season, but the income received by growers for both of these crops is still below the level paid for 1999.

On future cropping intentions, arable farmers reported that they expected to grow less wheat in five years than they do now. None said they would grow more. Some were shifting to feed from milling, but mostly those who were reducing cereals were moving to silage or livestock activities. Small seed, high value specialist vegetable crops and pulses were a mixed bag, with similar numbers of growers expecting to increase, decrease and maintain current areas.

None surveyed were expecting to reduce their livestock trading and grazing activities, with half the sample intending on doing more. Equal numbers were expecting to increase or decrease their livstock breeding activities.

Farmers felt the arable industry continues to be subjected to external pressures, over which individual players have little influence. They said however, that within this environment were some very good opportunities, which involved some shift in approach and investment beyond the on-farm production system.

MAF Farm Monitoring Reports can be found on the MAF website at www.maf.govt.nz

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