Dairy leads farm confidence survey

February 4, 2013

Federated Farmers’ 2012/13 Mid-Season Farm Confidence Survey reveals any increase in farmer confidence is largely confined to the dairy sector and even that comes off a low base.

“At the mid-point in what is a tough 2012/13 season, we are seeing some improvement in confidence since the start of this season. That masks a real split between dairy and the rest of pastoral agriculture,” says Federated Farmers President, Bruce Wills.

“Undoubtedly rising global dairy prices and upward revisions in payout forecasts have helped the dairy sector regain some confidence. Then again, this comes off deep pessimism recorded at the start of the season and things are hardly buoyant now.

“Then we have the strong Kiwi dollar acting like a sea anchor on all export returns.

“What dairy farmers are saying is that they are less pessimistic but this is not the breaking of a new dawn. The good news for the economy is that dairy farmers expect to increase production and spending, with only a small drop in those expecting to reduce debt.

“On the other hand, in the sheep, beef and grain sectors, confidence continues to sink. Meat and fibre farmers have seen prices reverse while the high dollar erodes what they ultimately get paid.

“Beef had been treading water but just this week dropped ten cents per kilogram.

“Sheep farmers are feeling the heat because lamb prices are down around 35 percent on the same time last year. Wool is also struggling and this has seen meat and fibre farmers become even more pessimistic about their profitability.

“That pessimism continues into the wider economy, with a growing sense of frustration about filling skilled vacancies.

“All farmers agree they are struggling to find skilled and motivated staff and this seems odd given unemployment figures. Skilled and motivated dairy staff are especially hard to find so is there a mismatch between where people live as opposed to where the jobs are?

“And these jobs are not low skilled or low paid either. I can say that having reviewed Federated Farmers Farm Remuneration survey we send to our members.

We’ve always had less trouble finding good people for sheep and beef farms than for dairying.

However, the good ones we’ve got in dairying are very good – enthusiastic, motivated and skilled.

“Unlike last season, the mild El Nino means sheep and beef production will likely be down this season. Sheep and beef farmers cannot increase production to offset lower prices and the high dollar.

“As the survey was in the field in the first half of January, the current dry spell will be of mounting concern. We are also aware the ‘dry’ is now biting into dairy production in the North Island especially.

It’s been raining off and on in North Otago all morning which is very welcome after the hot weather of the last couple of weeks.

“While some dairy farmers expect to increase debt most do not, however, more meat and fibre farmers expect to reduce spending and increase debt to get through. It is a concern as agricultural debt approaches $50bn, then again, households now owe over $191bn.

“You can summarise the big issues of concern to farmers as the increasing cost of farming staples, including the cost of regulation and compliance, what we are getting paid for our products and of course, that high Kiwi dollar.

The high dollar also means imports, including big ticket ones like fuel, fertiliser and machinery, are less expensive.

When debt servicing is a major cost, low interest rates are also benefiting farmers.

“It underscores the need for the Government to focus its spending on those things that will increase production while simplifying and streamlining regulation. It may not be ‘sexy’ but it is what the economy desperately needs.

“Tackling the high dollar starts not with a printing press, but by central and local government cutting back on borrowing. While some agriculture debt is about survival, government still has an entrenched ‘borrow and spend’ culture that needs to change.

“Cutting seems to be the policy option ‘that dare not speak its name’ in some quarters.

“Our 2012/13 Mid-Season Farm Confidence Survey shows pastoral farming to be in two speeds. It is encouraging that dairy farmers are more positive than six months ago, but the deepening pessimism of meat and fibre and our grain farmers is concerning.

“We can only hope the second half of the 2012/13 season turns around because the global demand is there and the recently announced Primary Growth Partnership for red meat must deliver what Federated Farmers has striven for; unity,” Mr Wills concluded.

Survey results are here.

 


Rural round-up

July 29, 2012

New dairy chairman wants unity – Andrea Fox:

Fonterra chairman-elect John Wilson says ensuring there is the smoothest of board leadership transitions and uniting the farmer-owned co-operative after the rigours of the internal TAF debate are his priorities. 

    The Waikato farmer-elected director will take the reins of New Zealand’s biggest company in December from Sir Henry van der Heyden, who steps down after 10 years in the job. 

    Wilson, 47, will take his seat at the top of the table just after Fonterra is scheduled to have introduced share trading among farmers, or TAF, as it has come to be better known after more than two years of debate. . .

Biofuels and energy production dominate Europe’s landscape – Allan Barber:

After a week in England and a month touring central Europe by road, rail and river, I have gained a superficial impression of the predominant types of agricultural activity in the region. I am talking about Austria, Bavaria, Rhineland and some of the old Communist countries – East Germany, Poland, Slovakia and the Czech Republic.

While these observations cannot claim to be comprehensive or even accurate in the matter of detail, they will provide a fairly accurate point of contrast with New Zealand’s agricultural landscape.

In particular they indicate a totally different set of political, economic and environmental priorities in Europe. . .

Farming bears – Bruce Wills:

In 12-months you could say we have gone from farming forward to farming bears, such was the sentiment in Federated Farmers new season Farm Confidence survey.

While agriculture will generate $21.7 billion in revenue over 2012, more than half, $11.9 billion, will go on the goods and services farmers consume.

Much of this intermediate consumption is spent locally on everything from number eight wire to builders and injects billions into the provincial economy’s heart.

Being intermediate consumption, it does not include the wage bill for 151,000 primary workers, interest or taxes either. . .

Time to break free of “No 8 wire” mentality – Jon Morgan:

Our pride in our heritage of being useful, practical people who can turn our hands to anything is holding us back, says Claire Massey. 

“That No 8 fencing wire mentality is now at a point where it’s hampering us,” the newly appointed Massey University director of agri-food business says. 

“We say ‘We can do anything’ when we can’t. We’ve got to break free of that. It was useful, but now we need to find the experts.” 

The irony is that it is not only an image we have of ourselves but that others have of us, she says. . .

Ngai Tahu Holdings CEO leaves -

Christchurch’s Ngai Tahu Holdings Corporation chief executive Greg Campbell is leaving the job to take up the reins at big fertiliser co-operative Ravensdown. 

    Ravensdown, 100 per cent owned by 30,000 farmer shareholders, announced today the appointment of Campbell as its new chief executive to replace Rodney Green when he retires on December 31, 2012. 

    Campbell has been chief executive at Ngai Tahu for three years. . .

Lincoln farm in drive to be more efficient – Gerald Piddock:

The Lincoln University Dairy farm finished the 2011-12 season well ahead of its production budget. But it will now seek ways to become even more efficient. 

    The farm produced 297,740kg milk solids at 471kg per cow, well ahead of its budget of 281,600. This was achieved with 5 per cent fewer cows. 

    “We ended up with 12.5 per cent more production per hectare than last season and 15 per cent more profit,” farm manager Peter Hancox said at a field day at Lincoln. . .

Quest for lower nitrate leaching - Gerald Piddock:

Work is underway at Lincoln University to determine ways of reducing the environmental footprint of the wintering systems on dairy farms. 

    Lysimeters are being used to simulate the nitrogen levels within trial plots of three different wintering systems. These plots are early and late sown kale crops and a fodderbeet crop planted at the Lincoln University Dairy Farm’s wintering site, Ashley Dene Farm. . .

 


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