New Zealand : Price shocks halt maize planting plans
Inadequate pricing of maize contracts is causing Gisborne and Wairoa growers to reduce planting this spring, fearing financial losses. With contracts offered at $460 per tonne, farmers would need a 10t yield just to cover costs. High growing expenses, including drying and transport, make profitability uncertain. Weather risks and limited crop options further exacerbate the financial challenges faced by maize growers.
Inadequately priced maize grain contracts have resulted in Gisborne and Wairoa growers pulling back on the amount planted this spring for fear of financial losses.
The only people planting maize this spring are doing so because they have to make farm machinery payments, Gisborne Federated Farmers arable chair Allan Newton said.
“Financially it’s disastrous. Anyone growing maize in the Wairoa area is really only growing it for love and to make enough money to pay their gear off,” he said.
With contracts being offered at $460 a tonne, farmers would have to achieve a 10t yield just to cover the costs of growing it.
“Even at $460, it’s really only a subsistence existence on the east coast.”
At $460 delivered to Waikato, it will cost 9-10t to the hectare of product to break even, he said.
Once drying and transport costs are removed, the actual amount growers would get could be as low as $320 a tonne.
“The cost of growing is around $2800 a hectare, so there’s not a lot of fat in the system.”
If the weather turns bad and the yield is poor, it will be an easy way to make a loss.
There are few options for other arable crops because of the lack of supporting infrastructure, he said.
Newton plans to plant 20ha of his farm in maize this season.
In the past he has planted as much as 200ha in maize but he has reverted it to grass and will graze cattle this season.
“I can’t afford to take the risk of making a loss with maize.”
In Waikato, growers have had a dream run for planting in terms of weather and ground conditions, Waikato Federated Farmers Arable chair Don Stobie said.
Maize silage sales have been steady, and with the forecast slightly reduced planted area he does not think there is much spare left to be sold at present.
Maize grain contracts were few and far between earlier in the season, he said.
“The two main reasons for this have been the grain volume carried forward from last harvest and the lack of gas supply to the two main grain drying companies, PGG Wrightson and Viterra.
“They were holding off from putting out contracts until they could secure enough gas supply to run the dryers in the autumn.”
Both of these issues have been slowly resolved, with contracts now being offered to growers, he said.
While the gas issue may have been resolved this season, companies are going to have to find long-term solutions to provide certainty to growers, he said.
“As a maize grain industry, we cannot do business year to year with the sort of uncertainty around gas supply that occurred this year.”
H&T forage and cropping adviser Grant McDonald said Gisborne, Waikato, Hawke’s Bay and Manawatū are back in terms of planting intentions both for maize grain and maize generally.
Inventories are low with grain buyers having sold all of the grain they had dried after harvest.
“I have a customer still sitting on 1200t unsold, waiting for the price to get over $500.”
While some growers were burnt last season from dairy farmers not honouring feed contracts, the prospect of a dry summer along with the higher forecast has seen some already inquiring about securing supplementary feed, he said.
To read more about Maize News continue reading Agriinsite.com
Source Link : Farmers Weekly
Recommended for you
