Federated Farmers Southland arable chairman Stephen Wilkins said southern grain growers had become reliant on the dairy industry in the past few years and the current downturn was hurting them badly.
“Grain growers are a tough bunch of people but it’s challenging times. We’ve still got some of last year’s harvest sitting around and we still have to sell this year’s. What happens from now is anyone’s guess.
“It’s a two-year process growing feed grain. It takes a year to grow the crop and then that is to supply the dairy industry for the next year so trying to see what is going to happen two years out is difficult. It’s easy to get caught out.”
He said although grain growers could store this autumn’s harvest, cashflow was becoming the big problem.
“Some farmers are growing green feed crops for short-term cashflow but they will still have to sell that into the same market.”
Options were sending grain out of the region or even to the North Island but with the grower paying the freight costs it wasn’t an attractive solution, he said.
Foundation for Arable Research director of business and relationships, Ivan Lawrie, said the biggest challenge for arable farmers was the reduction in demand, especially for feed barley grain and for maize and wholecrop silage.
“The price impact according to ProFarmer New Zealand Grain Report in early March is a drop in barley price of about $90/tonne from a year ago and there are no signs of improvement,” Lawrie said.
“It is putting pressure on cropping farmers to find viable crop options looking at the new season.
“For the long-term contractual relationships that have existed between dairy farmers and cropping farmers it’s important that good conversations take place as there should be a good understanding from both sides of the new reality.
“Once farmers change activities for lack of demand, it will take a long time to rebuild those links and return to crops that service the dairy industry.”
However, Lawrie said, it was not all doom and gloom for arable farmers.
“With conversions to dairy now reducing or completely stopped, land for cropping can allow for a more stable supply of high-quality grains for the internal market and substitution of imports for other end-users of crops such as flour milling and feed manufacturing.
“Also, environmental regulations will encourage growing crops to use up nitrogen on dairy soils and there are encouraging signs from recent research to indicate that this integration will be of service to both industries.”
Sheep and beef farmers who had switched part or all of their operations to dairy grazing in recent years were also struggling, with winter feed crops almost ready in the south and in many cases no stock to graze them.
Rural Livestock Otago livestock manager Rob Fowler said dairy grazing, both May-to-May yearlings and wintering cows, had “easily halved” in the past few months.
“A lot of dairy farmers are going to try to winter on and keep their young stock at home,” he said.
“There are always comings and goings but this year it has been a radical and sudden shift and dairy graziers have been caught out.”
He said breeding ewe and beef calf sales in the south had been strong in past months with the top pen at the first beef weaner calf sale, at Owaka in mid-March, topping $1300 an animal, echoing what had already happened in the North Island.
“Last year the top pens were reaching $1000 an animal.”
He said many sheep and beef farmers had to borrow to buy stock to replace dairy grazing and cashflow would be an issue, with ewes bought in February not returning an income until the first lambs went at Christmas. Beef calves could take 18 months until they were ready.
“There will always be farmers ready to take on dairy grazing but I think some of them will remember this and won’t do it again.”
AbacusBio farm consultant Kevin Wilson said a good growing season in the south for fodder beet, kale and swedes had made the situation worse for dairy graziers.
“There’s certainly a lot of feed around and not a lot of stock to eat it.”
Wilson said he had heard winter grazing had dropped about $1 or $2 a cow, and graziers were trying to help dairy farmers and continue what were in many cases long-term relationships.
