Arable on the Rise

From the Ministry for Primary Industries
For immediate release

Arable on the Rise

Arable farming is on the rise again, on the back of good prices and consistently good profitability.

The Ministry for Primary Industries (MPI) has released an analysis of arable production and profitability as part of its annual Farm Monitoring Report series. The report is based on a model of a Canterbury cropping operation and an overview of typical financial performance, based on information gathered from a sample of growers and industry stakeholders.

MPI’s report shows arable farm profit before tax increased 136 percent on the previous poor season, to $448,700 for the year ended June 2012. This was driven in part by good yields, with wheat yields reaching 10.6 tonnes per hectare on average in Canterbury, and also cereal and seed crop prices were up.

Arable farmers are planning to restore cropping area back to more typical long-term levels. This, along with a rise in small-seed crop prices, is expected to lift revenue for this season. A large crop carryover from 2011/12 will also help with cash flow.

Forward contract prices for wheat and barley have been going up in recent months because of severe drought in the United States.

These factors should help them achieve high profit levels again in 2012/13.

For the longer term, arable farmers are cautiously optimistic as world food demand increases, while locally the opportunities for dairy support increase.

Many croppers consider that investment in irrigation, either in new systems or upgrading existing systems, is essential to maintain their business viability. The general trend has been for farmers to invest in irrigation rather than more land.

To view the full report, go to the Publications section of the MPI website, www.mpi.govt.nz

This report is one of a series of Farm Monitoring reports which are being released currently.

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