Disruptions mar season but better times ahead

SEASON AT A GLANCE

HIGHLIGHTS

Farmgate prices were encouraging and the outlook, while uncertain, is looking bright into 2022. Rural/urban divide took a step in the right direction through COVID-19, although it remains a challenge. Agritech is responding to seize on opportunities and help solve some of our challenges.

LOWLIGHTS

COVID-19 impacts were felt on many fronts – our markets, our supply chains and how we go about our daily activities. Labour shortages were felt across the sector but particularly in horticulture at peak harvest times, leaving produce on the trees. Weather affected our farmers and growers, with extreme events from droughts and flooding to hailstorms.

Farmlands’ Head of Strategy and Planning, Scott Brown, casts an eye over last season and looks ahead to a better one to come.

The food and fibre sector performed strongly in the year ended June 2021. COVID-19 had a heavy impact on most sectors. Closed borders affected tourism, hospitality and international education, which had been on strong growth trajectories. Against this, food and fibre was a standout and the driving force behind New Zealand’s economic recovery – a reminder to many of our urban cousins that the sector is the backbone of New Zealand.

Export revenue for the year ending June 2021 fell around 1 percent to about $47.5 billion, largely the result of COVID-19 supply chain issues early in the year. For the year ending June 2022, export revenue is forecast to rebound and reach a record $49.1 billion as demand begins to recover for our main export products and in our destination markets.

Farmgate prices were strong across most sectors but COVID-19 made it a mixed bag as different markets felt the effects. The shutdown of hospitality in many places around the world affected our higher-value produce but this rebounded through the year as buying behaviours changed. Customers around the world are buying higherquality produce to consume at home, with a focus on healthy food. This is showing up in rising demand for our dairy, red meat, fruit and wine. The reopening of the food service sector, with China taking the lead, points to a strong season of rising farmgate prices, although not without its challenges. Disruptions from COVID-19 have affected farmers and growers directly and indirectly, from ‘click and collect’ purchasing of key inputs to processing disruptions caused by social distancing requirements, the supply-chain issues facing exporters, and border closures driving labour shortage in seasonal industries. Weather was an issue, as always. Pasture growth was strong in most regions but individual weather events played a significant role across sectors and regions. Drought in the north and snow in the south affected lambing. A severe hail event on Boxing Day around Motueka caused significant damage to apples, kiwifruit and hops. Flooding in South Canterbury damaged winter feed and forced stock movements and the evacuation of some rural properties. The uncertainties of regulation also cast a shadow over the industry as the pace of change continues to accelerate. The sector has made huge strides on sustainability, driven by the love for our land and new products meeting the changing preferences of our consumers around the world.

The uncertainties of regulation also cast a shadow over the industry as the pace of change continues to accelerate.”

Some regulations have been unworkable; continual shifting of the goalposts has left many farmers or growers uncertain or fearful. With so much change in our industry and on-farm, mental health has been to the fore. The pace of change and its uncertainties can be overwhelming. Taking time out and seeking support and advice are more important than ever. Technology is also supporting the change, with developments being made across the sector. Key advancements are in: • Animal nutrition enhancements, with science-driven feed approaches to optimise animal performance, health, welfare and efficiency. • Soil and nutrients management, with research and development and data-led approaches to managing soil types, soil fertility and soil moistureholding capabilities. • Virtual fencing, which is enabling farmers to set up virtual fences and to shift their herd remotely. • Genomics, which continue to enhance New Zealand’s herds, with improvements in both productivity and environmental impact. • Water use improvements, with variable-rate irrigation systems.

These improve irrigation efficiency by measuring soil moisture needs at a small scale. • Data tools and aggregation, which mean important farm data is in one place, viewed on a real-time dashboard. This enables farmers to make it available to those that need it, resulting in better and more timely decisions. The 2021/22 season is shaping up to be one of the best for farmgate returns. To make the most of these strong commodity prices, farmers and growers will have to plan their way through the impacts of COVID-19 as it continues to affect the ways we operate both in business and in life. The times are a’changing – connect with your advisors, community and of course your local Farmlands teams to help you navigate the challenges that lie ahead.