22 minute read
Arable farmers wary of lambs
Annette Scott annette.scott@globalhq.co.nz
A LACK of certainty in the market has Mid Canterbury cropping farmers cautious about stocking up with their normal quota of store lambs.
Federated Farmers arable vice chairman Brian Leadley said market uncertainty means cropping farmers are not confident to buy in the usual numbers of winter finishing lambs.
“Most farmers are still buying in some lambs but in pairing up operating costs to secure an income for next year there’s a lot of unknown so cutting back in lamb numbers comes for a multitude of reasons.
“Talking to farmers it’s looking like there’ll be up to 30% less lambs coming onto Mid Canterbury cropping farms this season,” Leadley said.
Where 10,000 lambs might have been the order of the day that is now more likely to be 7000-8000, amounting to tens of thousands of lambs that will not find a home in Mid Canterbury this season.
“While it’s dry here there is feed available, masked by irrigation, but there’s not quite the same abundance of feed
FEWER MOUTHS: Mid Canterbury arable farmer Brian Leadley says the number of store lambs going on to cropping farms will be down significantly this season. Photo: Annette Scott
and given the huge uncertainty in lamb markets there are other options for farmers to consider.”
Market value is of concern as the schedule for lamb continues to drop because of weak international demand.
Kill sheets are reading about the $6.45 a kilogram mark with a further 15c cut signalled for this week, bringing pricing 60- 70 cents behind the same time last year.
Farmers are also nervous given the lack of processing assurance to get lambs off farms in time for spring cropping.
“The past couple of seasons there’s been good markets for heavier 21-27kg lambs and with meat companies not able to give signals around pricing there’s real concern where these markets might sit in three to four months’ time.”
Most cropping farmers rely on a winter income. They are doing their budgets and it is very risky with the amount of capital involved in lambs, Leadley said.
“Yes, it’s been a good harvest but there’s no immediate cashflow as it’s sitting in seed stores and silos not yet converted into cash.
“Buying in store lambs is expensive and the banks are putting the brakes on.”
As a result, more earlier winter wheat and barley crops are being planted with selling grazing also an option farmers are pondering.
Leadley acknowledged the lesser number of lambs going into Mid Canterbury will have a knock-on effect.
“Many of these lambs at this time of the season are coming from Southland so there will be a knock-on effect down the chain for farmers in these regions getting rid of the last of their store lambs.”
But it’s not a case of not wanting lambs forever.
“This is not about a massive lack of appetite from farmers wanting to do lambs. It’s about balancing the budget in the environment in which we are currently operating.”
Some yards will see action
SOME selling will return to certain sale yards under level three but a return to normal is still some time away.
New Zealand Farmers Livestock said it will resume selling livestock at Frankton, Stratford and Rongotea.
Those yards already have livestream facilities operational and general manager Bill Sweeney said farmers will be able to actively participate and bid at livestock auctions streamed live from those yards as well as some on-farm auctions.
The Frankton sale yards will host the first sale on Wednesday with dates also set for Stratford and Rongotea.
“We are also looking to roll it out to other sale yards associated with NZ Farmers Livestock, such as Stortford Lodge through Redshaw Livestock.”
The Ministry for Primary Industries’ regulations for level three say stock sales are permitted but the public must not attend.
Carrfields livestock general manager Donald Baines said “While we respect the position that New Zealand Farmers Livestock have taken we are seeking greater clarification from MPI before proceeding as there are still too many grey areas.”
PGG Wrightson general manager Peter Moore said “Our number one priority is to help eradicate covid-19 and to try and run a traditional sale under level three would be very difficult when having to adhere to such restrictions as social distancing.”
CLICK & COLLECT WITH US
Farming never stops and we don’t either. You can now order online with Farmlands and collect from your local branch – all at your own convenience.
Place your order online Collect from your local branch
To shop with us visit www.farmlands.co.nz
Farmers must bide their time
Annette Scott annette.scott@globalhq.co.nz
THE probability of a global recession is growing along with the likelihood of reduced consumer spending in all red meat markets.
The covid-19 pandemic has shifted demand for red meat away from food service to eating at home, Beef + Lamb chief economist Andrew Burtt said.
Just how long that will take to reverse will depend on how long it takes people to be comfortable to eat out in restaurants again.
The key for New Zealand across the supply chain will be maintaining integrity, reliability and consistency.
“That will stand us in good stead to be able to deliver longterm.
“Maintaining the normal supply of livestock while keeping transport and shipping as normal as possible with case-ready retail product to meet new consumer demand will be the new norm, at least for the short term.
“Producers, processors and exporters will need to change to meet the new demand of people now buying at retail.”
Burtt said food services are down phenomenally with beef most affected.
“Beef is the most sold with a higher reliance on the food service sector, the tenderloin and steak cuts markets have just died a death and the United States has made a start on grinding more middle cuts into beef products.”
With a backlog of domestic product, the US Department of Agriculture has also introduced a new country-of-origin labelling law, which, at least for the short term, is mandatory for US product at retail sale.
The new law does not apply to the food service sector.
With lamb there is greater opportunity for NZ to have an input.
“For us with lamb we can act as an intermediary between the food service and retail as with customers in both camps we can help make the shift and that ties
TAI HO: Farmers need to slow animal growth and wait for the opportunity when demand increases, Beef + Lamb chief economist Andrew Burtt says.
back to our abilities to provide product to meet demand.
“Big box retailers such as Walmart and Cosco are doing phenomenal business at retail.”
Andrew Burtt B+LNZ
NZ exporters are working with their partners on options for reaching consumers and exploring channels with an increased emphasis on retail options and the logistics of timely shipping.
“From what we are seeing it looks like our processors will have sufficient capacity to cope and I believe they are doing all they can to maintain connections and integrity of their supply chains to the market.”
Burtt said while dealing with the significant upheaval of covid-19 and short-term volatility no-one is so brave as to speculate on the long term.
The situation around swine fever in China should not be dismissed, Burtt said.
“There’s a real indicative there of what protein demand is in China and there’s strong international demand for red meat – of course, with some short-term volatility and competitive element with both competing meats and noncompeting meats.
The short-term impact from the closure of 17 US processing plants has seen US pork production drop 10%.
“Here farmers need to keep their eye on what’s happening in international markets.
“We need to be mindful animals are still growing and of how we slow that growth while we wait for markets and slaughterhouses to open again.
“The cattle and pigs that left the farm this week could be the last for some time.
“We could have a three to sixmonth timeframe, we really just do not know.
“It’s about putting livestock on a slow growth feed system to keep them ticking over while waiting for the opportunity to export them.”
This opportunity could well be with China.
“We could be in the race to contribute more to China’s protein shortage and as well see a flow through to new opportunity for NZ on the Euroopean Union scene.”
In the bigger picture post covid-19 there is a positive stick for NZ’s red meat markets.
“It’s not all doom and gloom for the next 12 months.
“NZ needs to get the right balance keeping eyes on the shortterm volatility but also having an eye on the longer term.
“If the world is going into a depression, food consumption and production is a basic need for all of us and the NZ red meat sector is in a good business for that.
“We have got good diversity of country markets and then also within each individual country’s market segments.
“If we keep our reputation of integrity, reliability and consistency in quality and supply we will come out the other end.
“There will be humps and bumps and global volatility as we traverse through these unprecedented times of covid-19 but we will come out of this,” Burtt said.
Calciprill
leaves all other limes for dust!
Application rate guide (kg/ha)*
Soil type Topdressed 0.5 pH increase Direct drilled or air seeded
Sand/loamy sand 300 75 Sandy/silt loam 500 125 Clay/loamy clay 625 150 10-15% organic matter 750 175 +25% organic matter 1000 200 *Omya recommends you soil test recularly and seek advice from independent agricultural professionals
A 2-6mm lime granule made in Waikato from fi nely ground high purity limestone. • Cost effective • Low in dust, easy to spread • Breaks down rapidly in moisture • Can be applied using your own equipment • 95% < 75 microns
Working from home
From our workplace to your workspace. We’re driven to get you what you need.
Nutrients, agchem, animal health and seed products are available. Your co-op team is working hard and smart to keep product delivery and pickup, safe. To order call the Customer Centre. Online ordering is also available through HawkEye ® or My Ravensdown, or call your agri manager to discuss.
Smarter farming for a better New Zealand ®
Big rigs to miss virtual Fieldays
Gerald Piddock gerald.piddock@globalhq.co.nz
FIELDAYS’ new virtual event could go ahead without some of the country’s big farm machinery dealers.
The online event has been created as a replacement for Fieldays, which takes place in June. That event is now indefinitely postponed.
In a just-completed survey by the Tractor and Machinery Association 90% of members said the virtual event does not interest them.
“Most already have an online presence and they can’t see it having much value,” association president John Tulloch said.
The association has 42 members in the tractor and machinery industry.
The survey found three-quarters of members want a refund on their exhibitor fees already paid for the non-event.
Other exhibitors outside the farm machinery sector also want their money back.
The owner of a Merino clothing company told BusinessDesk while she didn’t want to give up her site it would be a tough ask to absorb the $4000 she’d paid for the June 13 event.
“I’ve been at the event for 40 years and it’s important to my business but I don’t think it will be held this or possibly even next year so the event should be cancelled and funds returned as they did at Central Districts field days.”
Site prices start at about $1000 with large exhibitors and brand partners such as banks, car companies and Fonterra known to pay more than $100,000 across combined marquees.
Fieldays chief executive Peter Nation said the not-for-profit society has absorbed significant costs preparing for the event.
“We effectively stopped doing business on March 16 and that went well beyond our Fieldays preparations and also into many of the more than 114 events scheduled for Mystery Creek.”
As a result the society has been forced to make some staff cuts and
Peter Nation Fieldays
has also received a wage subsidy of $161,680 for its remaining 23 employees.
Nation said initial reactions to the virtual Fieldays concept have been positive but he also acknowledged some exhibitors might opt out.
“We have 1100 exhibitors so it’s early days. It’s been quite surprising.
The event will run from July 13-26. It was delayed from June to allow Fieldays adequate time to build it up.
The virtual Fieldays will have a purpose-built hub where people can go online and search for products.
They would then be directed to an exhibitor site to browse or interact with the exhibitor online. They will also be able to access videos of products on the sites.
“A number of exhibitors or suppliers in the market now are quite mature in their digital material. Others aren’t and we have a digital team that will be able to work with some of those people and help them build what will be in some cases their first digital stuff they have ever had,” Nation said.
Fieldays partnered with digital production company Satellite Media to deliver the online event.
Nation also acknowledged not every farmer will be able to access the hub if they live in an area with poor connectivity.
“We’re fully aware that some parts of New Zealand have poor broadband. They will be unlucky but it will be built in such a way that you can search it on your phone, on your iPhone, iPad or computer.”
Nation said staff are also working hard to duplicate the exchange of knowledge in the rural sector that is such an important part of Fieldays.
“We are thinking about the innovation area and the Health Hub and the other educational stuff.”
That includes designing a platform to allow discussions with officials or other industry leaders, which could also appeal to international visitors.
NOT INTERESTED: Some of the country’s agricultural machinery companies have indicated they might not take part in the planned virtual Fieldays in July.
Limited hunting can resume HUNTERS will be able to hunt on private land with special restrictions when New Zealand moves to covid-19 level three but not on public conservation land, Sport and Recreation Minister Grant Robertson and Conservation Minister Eugenie Sage say.
The shift to level three on Tuesday morning will allow hunters to hunt locally.
“We know that hunting is an important part of life for many New Zealanders and in some cases a critical source of food,” Robertson said.
Hunters must stay in their region and their bubble. They must hunt on foot and overnight trips are not allowed. The use of quad bikes, off-road bikes, helicopters and other motorised vehicles is prohibited.
Conservation Minister Eugenie Sage said hunting on public conservation land is not allowed till alert level two. The start of the duck hunting season is being postponed from Saturday May 2 to start on the second weekend after level two. The season will also end later, Sage said.
We’ll weather together
GlobalHQ keeps you up to date with the latest news, data and market information.
Our content is easily acessible. Sign up for our eNewsletters at farmersweekly.co.nz/e-newsletter or download the ISSUU app for easy reading on mobile
AgriHQ reports are delivered direct to your inbox. Sign up at agrihq.co.nz/reports-and-tools
Farmers eager to fix milk prices
Let us help you to make the most of 2020/21 asset deductions on the farm.
Shop online and use discount code ‘farmers15’ to get an amazing 15% discount when you upgrade your compressor or water blaster.
www.spraytech.co.nz/product/
Spraytech New Zealand spraytechnz LK0102042© FONTERRA’S fixed milk price of $6.32/kg for next season was massively over-subscribed in April and farmers who applied were allocated only 13% of their target quantities.
The co-operative received 57.8 million kilos in applications for the 7.5m kg available from 756 farms or about 7.5% of the total farm shareholders.
Uncertainties about the effects of covid-19 on world dairy markets and milk output from the main producers were behind farmers’s desire to lock in prices on at least some of next season’s volume.
The April offer was the second before the start of the 2021 season – the March offer was for a fixed milk price of $6.80 net of the 10c service fee.
Some 238 farms applied for 15m kg and were allocated 5m kg collectively and therefore each application was scaled back to 33%.
Following the April offer Fonterra’s Farm Source director Richard Allen said the significant oversubscriptions in consecutive months highlight the benefits of the financial tool for farmers.
The offer prices are derived from an average of the daily settlement price of the NZX Milk Price Futures contract for three days following the first GDT auction of the month.
That offer price is advised to all Fonterra farmers on Saturday morning and they have Monday and Tuesday to make applications.
The next application window is on May 11 and 12.
Preliminary forecasts by dairy analysts for next season’s farmgate milk price have ranged from $5.60 to $6.50/kg, a steep drop from what is expected to be an average of $7.30 this season.
As a result farmers swamped the March and April offers with applications, a complete turnaround in the short history of the scheme.
In the 2019 inaugural applications over seven months were collectively undersubscribed by a third of the offering.
Nonetheless, about 10% of Fonterra’s farmers used the scheme to fix high milk prices.
Last year the company made seven offerings of 15m each time and this year its offerings so far have been much reduced, being 5m and 7.5m respectively.
“We can only offer a certain amount based on our ability to offset this with forward contracts with customers,” Allen said.
That shows a reluctance by international customers to commit themselves to forward contracts at a time of great covid-19 uncertainty.
Under the FMP rules Fonterra is limited to 5% of its total collection or about 75m kg in a season of 10 monthly offerings, an average of 7.5m kg an offering.
Farmers can apply to fix up to 50% of their own anticipated seasonal production.
New Zealand farmers have also made good use of NZX milk price futures and options markets during the covid-19 months.
In mid January some prescient farmers locked more than 700 lots at $7.20 for the 2021 season.
From mid February the milk price futures offer prices started to fall and daily contract numbers increased, peaking at 349 lots on March 24.
The average number of contracts a day on the active trading days in the past month has been 147.
The market now sits at $6.10/ kg settlement price, less the brokerage payable.
A single contract or lot covers 6000kg milksolids so 25 contracts would be needed to fix the price over a season’s milk production of the average-sized dairy farm.
But most users fix only a portion of their season’s output.
The first two trades have been made on the 2022 season, of 50 and 14 lots at $6.30.
NZX analystics head Julia Jones said the use of FMPs and milk price futures and options by dairy farmers is heartening for the industry.
These products are complementary and give some certainty about future milk incomes.
“But please don’t spend your time worrying about what are just forecasts and put your energies into what you can control,” was her general advice to farmers. Listen: farmersweekly.co.nz/podcasts
Hugh Stringleman hugh.stringleman@globalhq.co.nz
Budgets need high alert level MILK prices next season predicted at $6-plus are going to drop into break-even territory for dairy farmers, AgFirst Waikato agricultural economist Phil Journeaux says.
The break-even level as a combination of farm working expenses, debt servicing (interest-only), depreciation and living expenses is aboout $6/kg milksolids, he said.
A farmer wanting to make debt repayments and some capital expenditure on environmental matters would need closer to $7.
“So, any drop in payout below $6 means dairy farmers are in for another tough year.”
Though this season’s $7.30 is a good payout many farmers have burned a lot of money on supplementary feed because of the drought.
Some debt will have been repaid this year and last year but cashflows remain tight and the deferred wash-up payments from June to October will help considerably, Journeaux said.
“Watch your costs as closely as you can this financial year and try to carry forward as much cash as you can into next year.”
As a result of the drought farmers can use the income equalisation scheme by arrangement with Inland Revenue.
The discipline with which dairy farmers do budgets varies considerably despite several computer programmes making it easy.
Journeaux recommended farmers do regular budgets with updated inputs.
“But the factors are largely suppositions at this stage – noone knows what covid-19 will do to dairy prices in say six months’ time.”
Hugh Stringleman hugh.stringleman@globalhq.co.nz
Listen: farmersweekly.co.nz/podcasts
WELCOME: It is heartening for the dairy industry to see farmers using fixed milk prices, futures contracts and options, NZX analytics head Julia Jones says.
Moving day green-lighted THE Government has allowed Moving Day to go ahead this year under any alert level and has put on strict controls to prevent the spread of covid-19.
The controls restrict activities to those absolutely necessary to allow the movement of people, livestock, farm and household equipment.
That is to make sure dairy farmers and workers have safe and suitable housing and protect the welfare of their animals.
Other controls include ensuring Nait records are accurate, maintaining people’s bubbles and limiting face to face contact.
Also known as Gypsy Day, Moving Day is on June 1 when many dairy farming families, sharemilkers, contract milkers and employees move to new farms to start new jobs and milking contracts.
Agriculture Minister Damien O’Connor said the dairy industry will play a critical role in New Zealand’s economic recovery after covid-19 and it is vital Moving Day goes ahead.
“Since the alert level four lockdown was announced and dairy farming was deemed an essential service the Government has been committed to finding a way to enable it to proceed.
The Government has worked with dairy sector leaders to come up with a solution that will work for the sector without jeopardising health and safety.
“Activities need to be restricted to just those that are absolutely necessary, though, and any movement around NZ must ensure people’s bubbles are maintained.”
O’Connor says farmers are no strangers to disease eradication programmes with strict movement controls.
“There were already really strong precautions in place around Moving Day as a result of the Mycoplasma bovis programme. This gives me confidence that farmers will apply very careful behaviour to Moving Day.”
Federated Farmers sharemilkers chairman Richard McIntyre said the news comes as a huge relief to those farmers soon shifting to new jobs.
“I’m delighted. There’s a lot of tension that will be relieved as a result of this. There’s been a few thousand farmers waiting for this announcement.”
He was hugely appreciative of how the Government worked with the dairy industry to find a practical solution .
“There is far too much at stake for it not to go ahead,” he said.
The dairy industry will now work on firming up the guidelines to help sharemilkers and other workers with their shift. The guidelines should be out in the coming weeks, he said.
“But the key thing is that we know now that it’s going ahead and I know it was causing a lot of stress to farmers.”
The news pleased Mid Canterbury farmer Robin Hornblow, who is moving to a new contract milking job for the new season.
“It certainly helps put our minds at ease in what can be a stressful time.”
He had already booked vehicles for him and his pregnant wife in anticipation of the move.
“We had good plans in place already and now we just need to put them into action.”
DairyNZ chief executive Tim Mackle said it will provide peace of mind for thousands of farmers.
“It means we’ll move into the next dairy season in a way that keeps them and the public as safe as possible.”
Gerald Piddock gerald.piddock@globalhq.co.nz
LIKE TO PUT BACK IN WHAT YOU GET OUT?
THE FEELING’S MUTUAL.
Reinvesting into the land is a concept most farmers and growers will be familiar with. Well it’s not so different for FMG. As a mutually owned insurer, any profits we make go straight back into the business, not shareholders’ pockets. If that sounds like the kind of insurer you’d like to have looking after you, ask around about us. Or better still, call us now on 0800 366 466.
