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Tough times for arable farmers, but outlook bright

Tough times for arable farmers, but outlook bright

The Ministry of Agriculture and Forestry’s (MAF) 2004 Farm Monitoring report into arable production details a hard current year for growers but better times on the horizon.

MAF’s Policy Group runs the annual monitoring process to examine the production and financial status of farms in terms of the cash income and expenditure. Trends, issues and sector concerns are also monitored.

The model farm depicted in the report is representative of intensive mixed arable farming in Canterbury. The information for the model was drawn from 20 full-time farmers and discussions with a wide cross-section of agribusiness. In addition, there are sections in the report on vegetable growing throughout New Zealand and maize grain and silage growing in the Waikato and Bay of Plenty.

The report’s author, senior policy analyst Murray Doak, says up until December 2003, it appeared arable farmers were going to have two excellent growing seasons in a row.

“However during December of that year there was virtually no rain in Canterbury where most grain and seed crops are grown,” he says. “In the last few weeks of 2003 and the first few of 2004, temperatures soared and strong north-westerly winds blew, resulting in severe moisture stress of most crops, even under irrigation. Then to add insult to injury, moist cool conditions in February created harvest difficulties and quality loss in many crops.”

Murray Doak says that had these two climatic events been around the other way, the harvest may well have been similar to the record 2002/03 season.

“The impacts on individual farmers have been variable, with some unfortunately suffering six-figure reductions in farm income.”

The report, however, is not all doom and gloom. It finds that while the results for the sector are down on the previous year, they’re not disastrous.

“Farm businesses are generally financially sound and equity growth has been very high in the past few years, so in most cases harvest losses will not impact drastically on viability,” Murray Doak explains.

“Farmers have been watching their expenditure carefully, with capital spending down on recent years.”

The report finds the North Island maize industry also suffered a wet February this year, which reduced silage yields, although seems to have had little effect on grain yields. Net returns for both crops were down compared to 2003 due to price falls.

Murray Doak says the outlook of arable farmers for 2004/05 is generally positive, aided by a mild autumn, volatility in world grain market prices and a generally good outlook for other farming sectors that purchase seeds and feed. There are, however, signs that costs, particularly for fuel and fertiliser, may increase more than anticipated by farmers surveyed in this report.

The farmers interviewed had a number of concerns including developing new irrigation, water allocation and compliance costs.

“The effects of intensive land uses in general on water quality are also increasing in importance. This debate poses some issues for arable farming that need sound science-based information to solve. Industry is currently gathering this information,” Murray Doak says.

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