However, as Annette Scott found out, record stockpiles of global grain has the local industry implementing an innovative promotion to meet a target market.Another unprecedented global wheat harvest is tipped for this year and for New Zealand grain growers that will mean another year of reduced prices.
The total amount of wheat grown worldwide was predicted to reach 730.8 million tonnes this season, the United States Department of Agriculture (USDA) said in its World Agricultural Supply and Demand Estimates latest report.
If these production levels were reached it would be the third successive record wheat crop, following last year’s 727m tonnes and 726m tonnes the previous year.
The USDA upgraded US wheat production by 4% on last month’s report to 56.5m tonnes and the Russian crop was also tipped to rise to 64m tonnes.
The lift in stocks and production was expected by the market, however recent rain in Europe meant much of it would be downgraded to feed grain.
Federated Farmers arable industry vice chairman Brian Leadley said the global stockpile was the stumbling block for NZ growers.
While the NZ grain industry was not reliant on the international scene for marketing it was impacted by international pricing.
The NZ feed and grain market did not react quickly to international prices, given that most of its production was consumed domestically.
“That’s the tough part, the glass-half-full part, for growers here (NZ). We don’t sell on the international market but ultimately our pricing reflects what is happening on the global market and while there are good global stocks, prices will not lift,” Leadley said.
“So in that respect it puts us on a global front when it comes to pricing and at the moment it’s looking like it will take a disaster somewhere in the world to turn that around.”
The USDA said a 3.4m tonne jump in global consumption would partially offset the bigger wheat crop, partly driven by the lower wheat price.
On the home front Leadley said the risk of stockpile on farms was starting to reduce with the pork and poultry industries continuing to use good volumes of grain and with the lower pricing NZ grain had closed the parity gap on imported feed prices.
“Sellers, while not giving it away, are starting to meet the market and we are hearing some offers out there, not that a lot is actually moving yet.”
The talk was around the $240-$250/t for feed barley and $270-$290/t for feed wheat, dependent on conditions of delivery, Leadley said.
While milling contracts had been secured, feed contracts were seriously lacking for grain in the ground.
“Milling contracts haven’t been great but in terms of the global market I would say fair, but very few feed contracts have been secured for what’s in the ground for this season.”
Leadley said the grain industry remained a viable option for feed supplements and moves were afoot to formulate a marketing strategy to promote NZ grain into the feed supplement market.
“We have always said we have the grain and it’s available, and it is – but we need to do better, we need to promote the benefits of why in terms of quality and pricing.”
NZ grain would be promoted with a focus on its traceability and quality assurance programmes that ensured it was the best quality product taking in the balance of nutritional value and pricing.
“We haven’t quite got anything on paper yet but that will happen very soon and we will be formally promoting and marketing our own product to the local market,” Leadley said.
Grain growers were working with the Foundation for Arable Research (FAR) in their formalised marketing approach and co-ordinating with Dairy NZ, Beef and Lamb NZ and the pork and poultry industries.
“It will be all about communicating and so long as we know what the industries want farmers can produce to meet the market,” Leadley said.
Meanwhile, harvest 2016 had turned out to be average or better in most cases despite the particularly dry spring and even though farmers’ margins had been trimmed significantly, the arable industry was well placed to tread water during the current more challenging times, industry chairman Guy Wigley said.
The industry had welcomed the Government’s introduction of stricter biosecurity rules to try and stop unwanted pests and diseases arriving in NZ.
The rules, which come into force in December, would apply to the 5800 approved transitional quarantine facilities that ranged from large commercial operations near ports to small businesses that imported one or two containers a year.
As part of the major shake up the Ministry for Primary Industries (MPI) had indicated some facilities may be deregistered.
Wigley said the industry had expressed concern about several breaches this year, including the invasive weed velvetleaf which had been imported with fodder beet seeds.
The Feds had been worried about the transportation of seed, as well as the storage of local alongside imported products.
“We were particularly concerned about some transitional facilities and how they were run and so we’ve been lobbying MPI for the last year. This (shake up) is a good result for the industry going forward,” Wigley said.
