Farmers gloomier with good reason

August 13, 2019

Federated Farmers’ latest Farm Confidence Survey shows why farmers are gloomier:

Climate change policy and the ETS has topped the list of farmers’ biggest concerns for the first time since 2010, according to Federated Farmers’ latest Farm Confidence Survey.

Nearly a quarter of the 1,432 farmers who responded to the July survey said it was their No 1 worry. The second greatest concern was regulation and compliance costs (19%), followed by debt, interest and banks (10%).

“That result is hardly surprising, given analysis coming through that significant numbers of dairy and sheep and beef farms will be uneconomic if the government continues to pursue methane reduction targets that are far more stringent than are necessary to ensure there is no additional global warming,” Federated Farmers economics spokesperson Andrew Hoggard says.

“That’s coupled with concern that the targets, and government incentives for forestry, is driving blanket planting of pines on productive farmland, with huge long-term detriment to rural communities.”

Pertinent to the concerns about production losses to meet climate change targets, and costs if agriculture is put in the ETS, is that only 55% of farmers said their businesses were currently making a profit (similar to the January survey, 56%). The proportion of farms making a loss increased slightly by 2 points to 11.3%. And looking ahead, slightly more farmers expect their profitability to worsen than improve.

The July survey, conducted by Research First, found that the proportion of farmers who consider current general economic conditions to be good (24.9%) has decreased slightly over the last six months. The proportion who consider conditions to be bad remains lower, but not by much (21.3%).

Looking forward, the survey found the lowest level of confidence in the economy since July 2009, in the wake of the Global Financial Crisis.

“On that front, we’re no different to the gloom being expressed by the wider business community,” Hoggard says. “For us there is particular concern about the global uncertainty and instability arising from fallout from Brexit and US-China tensions and how that will impact on our key markets and export returns.”

All regions expect farm production to increase over the coming 12 months but they are mostly less optimistic than six months ago, with large falls in expectations for Auckland-Northland and Taranaki-Manawatu. Slightly more farmers expect to increase their spending rather than reduce it over the coming 12 months but this is also down on January’s survey.

And farmers continue to find it hard, if not harder than ever, to find skilled and motivated staff.

Climate change policy in the Zero Carbon Bill is based on emotion and politics rather than science; ignores the Paris Accord’s stipulation that mitigation shouldn’t come at the expense of food production; and will come at a high economic, social and environmental cost.

Regulation and compliance costs are rising.

Interest rates are low but banks are putting a lot of pressure on farmers to reduce debt.

Dairy and arable farms, orchards and market gardens have been struggling for good staff for years, sheep and beef farms are also having problems now.

Add to that the concerns shared by the wider business community and farmers have good reason to be gloomier.

The full survey report is here.


Rural round-up

August 4, 2018

Property rights are being forgotten – Gerry Eckhoff:

William Pitt the elder (1708-78) got it right with a famous speech in which he said – in part – ”The poorest man in his cottage may bid defiance to the Crown. It may be frail. The roof may shake, the wind may enter, the rain and storm may enter but the king of England may not – nor all his forces dare cross the threshold of that ruined tenement”.

While Hunter Valley Station hardly qualifies as a ”ruined tenement”, the principle of security of tenure and the right to exclude the Crown and by association, the public, holds as true today as it did in the 18th century

And so the debate begins, yet again, 240-odd years later. There are those who seek access to every corner of this fair country but who choose to ignore the common courtesy of seeking permission of the owner. During the last tenure of the previous Labour government, Helen Clark sought to pass legislation to force a right of entry to all rural land which included freehold, Maori, and leasehold land, but especially pastoral lease land. . .

Kiwifruit Industry ‘New Zealand labour just not there’ – Kate Gutsell:

The kiwifruit industry is facing a shortfall of 7000 workers as it predicts it will double in value in the next ten years.

The industry body, Kiwifruit Growers Incorporated, has released a report which estimates the $2.1 billion industry will generate $4b of revenue by 2027.

Kiwifruit is already New Zealand’s largest horticulture export and the report is forecasting production will jump by 54 percent, from 123 million trays to 190 million by 2027. . .

Westland Milk to review ownership as it strives to boost returns – Tina Morrison:

(BusinessDesk) – Westland Milk Products, whose payments to its cooperative shareholders have lagged behind rivals, may change its ownership structure as it looks at ways to improve returns.

Hokitika-based Westland said today it has appointed Macquarie Capital and DG Advisory to consider potential capital and ownership options that will create a more sustainable capital structure and support a higher potential payout. All options will be explored in the process expected to run for several months, it said. . .

Economic outlook the sour note in farm confidence survey:

Pessimism about the economic outlook is a sour note among the otherwise generally positive indicators in the Federated Farmers July Farm Confidence Survey.

This is the 19th time the twice-yearly survey has been conducted and for the first time farmer optimism has increased in all areas except their continuing negative perceptions of the economy, Feds Vice-President Andrew Hoggard says. . .

Farmers worried as Government increases costs:

Agriculture Minister Damien O’Connor confirmed in Parliament’s Question Time today that farmers will face ‘additional costs’ under his Government, National’s Agriculture Spokesperson Nathan Guy says.

“Mr O’Connor has previously signalled a climate tax for farmers, slashed the Primary Growth Partnership fund and won’t fund any new water storage projects,” Mr Guy says. . .

The European Union rejected genome edited crops – Matt Ridley:

The European Court of Justice has just delivered a scientifically absurd ruling, in defiance of advice from its advocate general, but egged on by Jean-Claude Juncker’s allies. It will ensure that more pesticides are used in Britain, our farmers will be less competitive and researchers will leave for North America. Thanks a bunch, your honours. 

By saying that genome-edited crops must be treated to expensive and uncertain regulation, it has pandered to the views of a handful of misguided extremists, who no longer have popular support in this country. . . 

Tell your story by entering the Ballance Farm Environment Awards:

Farmers and growers are being encouraged to enter the Ballance Farm Environment Awards for 2018/19. The awards are organised by the New Zealand Farm Environment Trust, a charity set up to promote sustainable farming and growing.

The Chair of the Trust is Joannne van Polanen, who farms in Mid-Canterbury. Joanne says “There’s a lot of discussion about the need for the primary sector to tell our stories. The awards provide an opportunity for farmers and growers to share the positive actions they are involved in with their local community and a wider audience.” . . 

Pact Group launch first rPET bottles for NZ milk producer:

Pact Group subsidiary Alto Packaging has announced the launch of the new 750ml and 1.5litre milk bottles made from 100% recycled plastic polyethylene terephthalate (rPET) for Lewis Road.

Malcolm Bundey Managing Director and CEO of Pact Group says “Pact is proud to have designed and manufactured these bottles. We are excited to be in partnership with Lewis Road and part of their journey to become New Zealand’s first milk producer to switch to using entirely recycled materials for these two products.” . . 


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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