The price of hay has tripled to up to $14 a bale in areas hardest hit by last summer and autumn’s drought and baleage has more than doubled from $70 to $160.
Agribusiness consultant David Baker said dairy farmers, who have received record payouts, could afford to pay big prices being demanded for winter feed, and had pushed cash-strapped beef and sheep farmers out of the market.
“Those with dairy cows are paying, in some cases, as much as $21 to $28 per week per head of cattle for grazing.
“Those with beef cows just can’t match that, and many are being forced to get rid of their capital stock at the freezing works because the costs just do not stack up.
“There is a real sense of greed growing out there, as those with the land available for grazing deliberately set out to get top dollar from dairying at the expense of the beef and sheep farmer.”
When does a sensible commercial decision to take the best price become greed? Those with hay are in business too and know the wisdom of making money from hay while the financial sun shines. And dairy farmers won’t pay any more than they have to because the high price for milk is being tempered by rising prices of wages, fuel, power, fertiliser, feed and other inputs.
The lack of feed and the huge prices being asked is biting into farmers’ incomes.
For the past three years, Wairarapa hill country farmer Stu McKenzie has taken a financial battering, and the crisis on the farm on the back of double droughts is far from over.
Mr McKenzie, like other sheep and beef farmers in the worst hit areas in Waikato, Taranaki, Wairarapa and Hawke’s Bay, say the escalating feed prices had eaten into any profit.
He has lost more than $300,000 a year over the past three years. “I am paying up to $8 per head per week, where $3 was once the asking price. It does impact when you are talking about hundreds of cows being sent out, and it is not easy finding somewhere for them to go as dairy farmers snap up most of what is available.”
According to the Agriculture and Forestry Ministry, the drought will take away $1.24 billion from the farm gate this financial year.
It is difficult to sustain a big loss from one season, even if it is cushioned a little by capital gain. When it happens three years in a row it will be eating into equity and will out pace the rise in the price of land.
Farmers in areas where dairy conversion or support are options are doing the figures and getting out of sheep and beef or selling up altogether, but those options aren’t possible everywhere.
Making matters worse is below average rain in many of the drought affected regions. When we drove from Auckland to the fieldays paddocks which had been bare when we passed through in February, were looking good. But locals told us it was a green drought – there had been enough rain to give a bit of green but not to provide much cover.
As recession bites the dry weather and low incomes won’t just affect farmers and their communities, it will have an impact on the national economy too. But not all sheep farmers are struggling. Four of the last five tractors sold be a machinery dealer in Gore have gone to sheep farmers.