Friday, March 29, 2024

Quality can sell grain

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New Zealand grains are in a league of their own and should be marketed as such, industry leaders say.
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Heavy reliance on the dairy industry had affected arable growers’ returns so they suggested other principle markets should be explored.

Market trends, challenges and opportunities were the focus of a grains forum held in Canterbury on Thursday.

Facilitated by the Grain and Seed Trade Association (GSTA) in conjunction with the Foundation for Arable Research and Federated Farmers, the forum stimulated thinking around plans for future action in the grains sector.

Speakers addressed opportunities and actions that could aid future development of the industry at a time when there was considerable uncertainty, especially with the low dairy demand for feed grains.

Tying in with dairy, grain prices remained quite depressed and because of continued high stocks globally, pressure on 2016 prices would continue brewing, Rabobank analyst Emma Higgins said.

“We have to go back to the early 2000s to see the same high stocks as we are seeing now,” she said.

The global glut was driven by very high corn crops and the significant volumes of wheat coming out of the Black Sea region.

The strong US dollar was affecting competitiveness and production, particularly in Russia where the value of the rouble had dropped 50% since 2014, Higgins said.

Global wheat production was looking at a record 2016-2017 harvest with the large volumes weighing on global pricing.

That on top of the dairy slump and the high NZ dollar comparative to low commodity prices made for a strong headwind.

“Dairy prices directly reflect on the grains industry recovery and it is currently a situation of short term rally versus sustained recovery.

“The real test will be over the next two months,” Higgins said.

The good news for arable was that dairy farmers’ confidence had lifted off the bottom shelf.

But grain growers wanted better than that.

“We tend to be placing too much emphasis on dairy prices rather than on other end-users as the principle market for our products,” Darfield cropping farmer Syd Worsfold said.

Farmers, who had taken a 20% drop in price in the past 12 months and a 30% drop over the past two years, had minimal influence on prices, Federated Farmers arable industry vice chairman Brian Leadley said.

“We are small players so we don’t have much influence on the global scene.

“Farmers are forced to search out options to make their businesses viable and sustainable and to do that we need clearer accurate signals from our brokers so we can make good decisions and grow the crops to meet the markets that will reap good returns,” Leadley said.

That fact that there was 41% less barley in the ground for the 2017 harvest was a clear message that prices were unsustainable.

“We need to be looking at niche markets with the likes of special blend biscuit flours because the take or leave it approach to mainstream contracts is unlikely to work for NZ farmers in the future and certainly that attitude does nothing for business relationships and market supply.”

As growers they had invested heavily in their businesses with machinery, irrigation and infrastructure and relied heavily on good agronomic advice and research, Leadley said.

“It’s difficult to judge true value of products in a suppressed trading environment so the earlier farmers can get good indication the better for the whole industry in terms of production, supply, meeting market demand and being able to realise alternative market opportunities,” he said.

GSTA general manager Thomas Chin said global grain trade trends and the impact on NZ, demand for consistency of quality and the need to deliver reliable quantity were top of mind for the industry.

It was well placed to supply the local feed market and without a doubt NZ grown grains were right up there internationally.

“Ultimately the grains sector would like to see the livestock and milling industries substitute imported grains for more NZ-grown product sourced from top yielding NZ-bred varieties,” he said.

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