Friday, March 29, 2024

Harvest brings grain glut

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Canterbury is awash with feed grain, forcing cropping farmers to pay for off-farm storage for the surplus.
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But despite treading water over the next 12 months the industry was confident it had the resilience to ride out the glut, Federated Farmers arable chairman Guy Wigley said.

The strong harvest this season, combined with a lot of grain carried over from the previous year meant farmers had to account for significant quantities of uncommitted grain.

Dairy industry grain consumption was limited as farmers cut costs wherever they could.

Exactly how much feed grain was on hand was unknown, Wigley said.

“But solutions have been found and farmers are no longer concerned about storage,” he said.

While some farmers had secured off-farm storage, at a cost, others had resorted to giant storage bags.

Commonly used in South America and Australia, the long white plastic tube-like grain bags were relatively inexpensive and provided temporary, portable storage.

A lot of North Island maize had been stored in bags, Wigley said.

Despite the overabundance of grain there was confidence it would all find a home in due course, he said.

“We are still supplying the poultry and pig industries and we are still delivering to the dairy industry, just in a lot less volume.”

Wigley estimated grain volume for the dairy industry this season would be down about 30% on recent years. 

Demand for feed grain was virtually non-existent with trading activity basically ground to a halt.

The lack of transactions made it difficult to accurately price the market but on average feed grains across Canterbury, Southland and Manawatu were back about $100-$120 a tonne on this time last year.

There was a wide gap between seller expectation and the price of offers, with some buyers making very low offers in the hope someone would be desperate enough to sell. 

But for the time being most sellers were holding off on accepting those offers.

Higher international stocks and cheap grain in the United States were influencing pricing and indirectly impacting on New Zealand arable farmers, Wigley said.

“The cheaper grain prices have fuelled the increase in dairy in America and that in turn has affected the NZ dairy industry and indirectly reduced demand from dairy farmers here for our domestic grain.

“In effect this international competition remains a threat to NZ arable farmers.”

Cropping farmers were now focused on new plantings for next season, Wigley said.

Markets for all types of grain were oversupplied, making it difficult to know which planting options would deliver the highest returns.

Some extra rye grass was expected to be sown for the seed market and vegetable seed crops were also a likely option as some farmers avoided cereal feed crops at all costs.

“For some farmers it will be business as usual while others will take a more aggressive approach to the changing market conditions,” Wigley said.

He acknowledged that growing for the spot market would be a risky option.

“But we are a nimble and diverse industry and we can change our mix of cropping options as good opportunities arise and obviously we will be looking for opportunities that will give us a return.”

While oilseed rape, grass seed crops and autumn wheats were being planted now, it was too early know how much of what would go in the ground for next season.

“It’s a long way to go from planting in 2016 until we need to find a home for the next harvest in 18 months,” Wigley said.

NZ growers needed to look at ways they could add value where overseas competitors couldn’t.

That came down to really understanding the business needs of end users and providing an exemplary service. That was more likely to convince buyers to pay a premium.

“There is cautious optimism that the arable industry will continue to work its way through these relatively difficult times and come out the right way up,” Wigley said.

 

Turkish trade possible

A VISIT by influential Turkish seed company owners could lead to new trade between New Zealand and Turkey, NZ Grain and Seed Trade Association president Barry McCarter says.

The 27-strong delegation of seed breeders and producers will be in Canterbury this week as part of a study tour organised by the seed trade association and plant breeding research association to encourage trade between Turkey and NZ.

The group’s four days in Canterbury would give the delegation an insight into how various high-quality forage, cereal and vegetable seed crops were grown, processed and exported from NZ.

McCarter said the study tour was an opportunity for the local seed industry to showcase itself as a premier seed producer and help international customers gain a greater appreciation of the processes and investment the industry had in contract seed production and multiplication.

“NZ’s expertise in seed multiplication is highly regarded globally and our production is in huge demand,” he said.

The delegation would view various production crops, visit seed cleaning and seed treating warehouses, meet key officials from the Primary Industries Ministry and look at crop isolation systems for protecting vegetable seed crops from cross-pollination.

Canterbury was NZ’s leading producer of seed crops and one of the best in the world, McCarter said.

NZ growers supplied ryegrass, clover and more than 50% of the world’s supply of hybrid carrot, radish and beet seeds. 

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