Highs and lows mark farming year

"There'll be crying before bedtime, that's for sure."
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As a comment on dairy farmers’ fortunes it was verging on hyperbole, but rural contractors’ president Steve Levet aptly summed up the mood in the dairy sector after a roller coaster year in which prices rose to a record level, but in the space of eight months fell by almost half.

By the end of the year, Fonterra’s payout forecast for the 2014-15 season was $4.70 per kilogram of milksolids, down from the 2013-14 season’s final payout of $8.40. The gloom was only slightly dispelled by a rise of 2.6 per cent at the global dairy trade auction in the lead-up to Christmas.

On a national level, predictions were that at least $6 billion might be taken out of the economy in 2015.

Meanwhile, sheep and particularly beef farmers viewed their bank balances with quiet satisfaction. Beef prices have risen steadily during the year by 9.3 per cent, driven by the United States demand for hamburger meat. Prices are close to double what they were 10 years ago.

The US cattle herd is the lowest it has been since the 1930s, after several years of drought, and will take until at least 2017 to rebuild. Close to 50 per cent of New Zealand’s beef is exported to the US.

Sheep farmers weren’t complaining either, as the volume and value of exports to Asia – especially China – climbed ever higher. Wine exports forged ahead, kiwifruit recovered following the devastating PSA virus of 2010, and pipfruit sold well in Taiwan after a free trade agreement was brokered at the end of 2013.

Meanwhile, farming politicians breathed a sigh of relief at the return of a National-led Government. Prior to the election, primary sector leaders had expressed their fears at the prospect of a Centre-Left coalition taking power.

Federated Farmers national president William Rolleston said that agricultural policies had been at the centre of a lot of policy debate before the election.

«[Some] political parties had tough and unreasonable policies which would have significantly affected farming, but the public didn’t buy the rhetoric.

«It’s given agriculture the next three years to take the opportunity to show National’s policies are workable. It’s better than lurching from one policy to another,» Rolleston said.

That view was shared by Primary Industries Minister Nathan Guy who described National’s support in the provinces as «rock solid».

The primary sector had generated exports of $38b to the end of June, an all-time record.

Not sharing that rosy view were the Greens, whose Steffan Browning said there was too much reliance on China, and the Government placed too much emphasis on intensive dairying and low value forestry.

ASB rural economist Nathan Penny said the general theme of the 2014 agricultural year had been of «highs and lows and very little sideways.»

«It’s been a year of two halves for dairy. There was a record milk price and bumper production so farmers made the most of that, and as quickly as that happened, we are down to the lowest payout since 2008 – the beginning of the China era when we signed the free trade agreement with them,» Penny said.

The largest dairy price slump before this year had been in 2008 when it dropped from $7.90 to $5.20.

It had been a «long time between drinks» for the beef sector whose last record year had been in 2008, Penny said. Meanwhile, sheepmeat had showed steady improvement «without setting the world on fire».

Supporters of a wool industry levy suffered a setback in October when farmers voted against the proposal. For decades New Zealand’s leading export, wool exports are still significant to the economy, at an estimated $685m in the 2014-15 financial year.

While the NZ Merino Company, a breakaway from the producer board model, has been profitable from its inception, by the end of the year carpet manufacturer Cavalier Corp had slumped 11 per cent to a more than 20-year low of 58 cents, following a 62 per cent drop in its share price since the start of the year.

Meat Industry Association CEO Tim Ritchie said 2014 marked the point where meat companies no longer asked where they could find a home for their products, but how they should allocate the component parts of animals.

«The United Kingdom will remain extremely important for chilled legs, North America for racks, Middle East for shoulders, and Europe for legs and loins. The great thing about the Asian region is they put a different value on the animal. So we can serve those markets which put a high value on racks, and we marry that with increased demand in Asia for breast and flap for their hot pot,» Ritchie said.

While China continued to be a star performer, India was «waiting in the wings. Sheepmeat is a natural part of their diet, and only in the last 18 months have we been able to export there.»

This year also marked the return of Indonesia as a significant beef market since a drive for self-sufficiency had squeezed New Zealand out in 2010.

By September exports to Indonesia grew to more than 20,000 tonnes of beef, compared to just less than 7000 tonnes the year before.

Forestry, worth $4.27b in exports and the fourth largest export earner, recorded a slight drop of 3.5 per cent during the year on the global commodity front. A new company aimed at investors in New Zealand’s 14,000 small forests was launched towards the end of the year.

The United Forestry Group, with Australian and Chinese investment backing, is targeting owners of forests less than 1000 hectares in size to assist them in harvesting, processing and marketing.

These small forests make up 500,000 hectares out of a total of 1.7 million ha of plantation forests.

The wine industry continued to bubble along in 2014, recording the largest harvest ever of 445,000 tonnes, and pushing export earnings to a record high of $1.3b, a hike of 9 per cent from the previous year.

Wine New Zealand CEO Philip Gregan said Kiwi wines were maintaining their price differential compared to other countries’ wines. In the UK they fetched on average £2 (NZ$4) more.

«At the moment North America is going very strongly, as are some of the continental European markets. China took a bit of a step down following the austerity campaign but in recent months we’re starting to see growth there pick up again,» Gregan said.

He said that while there was a trend to corporate ownership, there were still a lot of small vineyards.

«There’s an expansion of the vineyard area going on in Marlborough, that’s probably linked to the fact people can see the day not far off when there’ll be no more land left in Marlborough to plant grapes,» Gregan said.

This year saw kiwifruit turn the corner following the devastating PSA virus. Total export returns for the 2014 season are currently forecast at $882.46m, up from $856.2m on the August 2014 forecast.

Zespri chief operating officer Simon Limmer said the volume of trays for 2014 was 93m, up from 85m last year. Just before the impact of PSA in 2011, tray numbers had been 110m, of which 30m was gold. The gold variety, which had been hardest hit by the virus, should be back to 2011 levels by next year.

«It’s fantastic news for the industry because gold has been such a strong performer. This season’s kiwifruit have shown consistently high taste and keeping qualities, Limmer said.

The apple harvest for 2014 was down slightly from the super crop of 2013 but better access to markets saw the value of exports continue to rise. Worth $475m in total, apples were enjoyed increasingly by the Taiwanese following the signing of the free trade agreement in December 2013.

 
Source: Stuff
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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