A Federated Farmers rural confidence survey found 29% of arable farmers were making a loss.
By Monique Steele of RNZ
Low product prices for arable farmers have prompted desperate calls from the often-overlooked sector for New Zealand farmers, mills and shoppers to take up local grain.
Farmers of cereals such as wheat, barley and oats have faced unstable prices and markets in recent years, competing with cheaper imports from Australia or European Union countries.
Farmer confidence soared to its highest level in more than a decade in July, but not for the arable sector, according to lobby group Federated Farmers.
While it found 81% of dairy farmers were making a profit, 29% of arable farmers were making a loss.
Nearly half of the arable farming respondents said their mental health had been affected.
Harvest volumes in the year to July were down 2% on last year across milling, malting and feed to 97,500 tonnes, according to the latest Arable Industry Marketing Initiative (AIMI) survey of 110 farms.
However, supply was matching demand, with volumes of unsold stocks up to 187,600 tonnes.
As farmers considered plantings for the 2026 harvest, volumes were expected to fall 7% to about 90,500 hectares, the survey showed.
Ivan Lawrie, general manager of business operations for the Foundation for Arable Research (FAR), said farmers’ margins were “squeezed” as commodity prices had not kept up with the rising cost of production.
“Well, it hasn’t been a brilliant year, and obviously that affects the mood.
“We’ve had some issues around a very wet harvest for most crops that affected yield and quality in some cases, and the issue of profitability lingers on.”
He said that, historically, profitable times in dairy correlated with good prices in arable, but that was not happening now.
“There’s certainly been an increase and/or maintenance of some of these feed products imported into the dairy industry, PKE [palm kernel expeller] being the leading one.
“And while not all arable products are direct replacements for that ... there are certainly things we could produce in New Zealand, both on the dairy platforms and on arable platforms to, let’s say, reduce the reliance on imports.”
Lawrie said buying local grain would support farmers and rural communities, but there was also more transparency around traceability to New Zealand’s highly efficient arable farms.
“When we import product, we do not have the same level of information as to where the crops were grown and how they were grown.”
Milling wheat, particularly, was under a lot of pressure, and levels of 100,000-120,000 tonnes were “not sustainable in the long-term”.
“So we need to increase, probably at least double, that volume of milling wheat grown and used by end users in New Zealand.
“We are under a great danger of losing it if we don’t have critical mass.”
He said FAR was developing a trademark to recognise when mills used 100% New Zealand grains in flour and bread-making, set to launch later this year.
Most North Island flour mills predominantly used imported grain for making loaved bread, Lawrie said.
They chose to import rather than have grain grown in the South Island sent up on the “not fully reliable” ferry across the “very expensive” Cook Strait.
A solution to reduce the cost of freight could unlock the use of southern grain at northern flour mills.
“We’re looking at other options, like can we boost coastal shipping in New Zealand to make more sensible bulk movement of grain.
“Can the rail and ferry combinations be upgraded to improve movement of grain from the South Island to the North, and also can we create infrastructure for storage consolidation, grain drying, and improvement of facilities on-port to be able to load grain onto ships.
“All of that is still to be done and, unfortunately, we probably had better infrastructure for that 70 years ago than what we have on Wednesday.”
FAR was in talks with the Government in the hopes of a collaborative approach between public and private sectors, but appreciated there was “not a lot of surplus”.
He said the world had seen in the past five years how cargo shipping routes and operations could be disrupted by conflicts or pandemics.
“This becomes an issue that transcends just the pure transactions. It really does become, in turbulent times globally, a potential issue for our food security.
“Ensuring that New Zealand has a backbone of producing its own staples for the ability to feed its own people is actually quite important.”
Last month, the Commerce Commission granted clearance for food manufacturing giant George Weston Foods NZ, trading as Mauri New Zealand, to buy South Canterbury’s Farmers Mill.
It was considered one of the few remaining mills using exclusively New Zealand grain, but the commission said it was satisfied the acquisition was unlikely to substantially lessen competition.
The arable sector employed around 11,300 people, earning $800 million domestically and $260m through exports.
Bevan Lill, a Mid Canterbury arable farmer who is also part of Federated Farmers’ arable industry group, said prices for contracted milling wheat had not changed in 15 years, falling behind the cost of production.
These days, there was huge diversity among arable farms, as farmers looked to other crops or activities to generate revenue. He warned there would likely be some loss of arable land.
The forage seed industry was also considering the impact of low profitability in the arable sector.
Dr Derek Woodfield, who had just retired as general manager of PGG Wrightson Seeds, spoke at the Plant Breeders Forum in Christchurch last week.
He said that, since farmers farmed for either capital gains or profit, challenges in arable were expected to flow down to the seed sector.
“Where I see a real risk for us is the viability of the arable sector in New Zealand,” Woodfield said at the industry event.
“There have been close to zero capital gain on those properties per hectare in the last 10-15 years. That is a risk for arable farmers.
“So as the moratorium or whatever on dairy conversions comes off, are we going to see a lot of our arable industry transition into dairy?”
- RNZ