‘Everyone wants wheat’

Growing demand, especially with Russia’s war in Ukraine, is seeing improved plantings and prices of arable crops in New Zealand. By Glenys Christian.

In Crops and Forage6 Minutes

Growing demand, especially with Russia’s war in Ukraine, is seeing improved plantings and prices of arable crops in New Zealand. By Glenys Christian.

THE $1 BILLION NZ ARABLE industry has been through a growth spurt with a 30% lift in grains and pulses sold in the past three years, which looks set to continue with international shortages caused by the Russia-Ukraine war.

An estimated upstream economic impact of $2.2b last year, was up from $1.8b in 2018. That meant a $932 million contribution to gross domestic product (GDP), with exports, mostly of vegetable seeds and ryegrass, worth $260m according to a BERL economic impact report commissioned by the Arable Food Industry Council (AFIC).

The report shows 70% of production was sold to other farmers last year, most of which is made up by maize silage, where volumes have lifted 39% to total 1.18m tonnes. The remaining 30% went to feed mills, flour and malt mills and other uses.

“Everyone wants wheat,” Federated Farmers’ arable chairman Colin Hurst says.

Seed companies were predicting larger plantings this spring, and with higher prices it made a good option for farmers, who might have moved away to growing a range of 44 different seed crops including grasses, brassicas and legumes.

Last year milling wheat growers were faced with anti-competitive cartel-like behaviour from two of the major buyers, leading to a 30% reduction in plantings. The federation referred the matter to the Commerce Commission, which didn’t uphold the complaint. But Hurst is convinced it had a flow-on effect, with buying practices changing. Some pre-harvest contract milling wheat prices had lifted by about $245 a tonne to over $650/t, with feed wheat prices nearing that.

“Who knows what prices will look like a year from now.”

While increasing onfarm costs of fertiliser, fuel, compliance, rates, interest and labour were having an impact and creating uncertainty, margins were improving and looking positive.

“There’s a really good, strong trend there,” he says.

“And we’re building resilience on our own farms. Covid has taught us that.”

Two recently released Arable Industry Marketing Initiative (AIMI) reports show an increase of 38% in the area expected to be sown in milling wheat this year. This follows a drop of 30% in harvest volumes due to wet weather in much of Canterbury earlier in the year.

Feed wheat sowing intentions remained the same and malting barley was up 2%. But feed barley was down 8%, milling oats by 9% and feed oats 16% meaning estimated average yields over all six crops were likely to be down by 4% compared with last season.

The average yield of maize grain at11.6t/ha for this year’s harvest was slightly down at 3% on last season. Maize silage yields were down 1% at 21t drymatter (DM)/ha.

With the maize grain harvest 83% complete as at June , when the survey was taken, the estimated total tonnage was 195,900t, down 6% on last year due to both reduced yields and harvest areas. The maize silage harvest was estimated at 1,202,800t DM, with the average 21.2t DM/ ha. This was a lift of 2% due to the area sown going up by 3% but yields being down by 1%.

As at June 1, maize grain sowing intentions for 2022/23 were 11% up on last season, and maize silage sowing intentions were 2% down. Increased input costs meant some growers were at that time holding off making decisions about sowing for the coming season.

Seed Industry Research Centre chairman David Birkett says the industry is the starting point of most agricultural businesses. But the Leeston grower, who won arable farmer of the year at the recent Federated Farmers awards, says the industry will need to move out of Canterbury in order to expand as there’s no more land suitable for cropping. That would bring challenges such as the lack of infrastructure, like seed processing plants, in other areas.

While the sector was already diversified, this hadn’t delivered financial resilience because of growers’ lack of influence outside the farmgate.

“We’re price-takers and that has to change,” he told the recent Primary Industries Summit.

But he believed it would be a case of what not to grow rather than what to grow as demand increased for more added-value and specialist crops required for human health and pharmaceutical end uses.