Brighter days coming for farmers

Inflationary pressures, regulatory changes, climate change and sluggish demand are hurting farmers, but things will get better. By sonita chandar.

It is no secret that some agricultural sectors are having a tough time, but industry leaders say there are signs of recovery. The latest Federated Farmers’ survey of more than 1000 dairy, sheep, beef and arable farmers found their confidence at a record low.

Federated Farmers president Wayne Langford says farmers have a lot on their plates now, which is causing uncertainty and stress. Federated Farmers has concerns about farmer wellbeing and what this might mean for farming families, rural communities and the wider economy.

“Farmers are dealing wit halo tat the moment, with high interest rates, huge inflation and a steep decline in both meat and milk prices they receive for their products,” Langford said.

“We’re also facing an unprecedented level of regulatory change that is heaping on costs, undermining profitability and creating huge uncertainty for farmers .”

Farmers across all sectors are feeling the same pressures and uncertainty.

“The key one at the moment is that farmers are caught in a pincer move with global market demand putting pressure on prices and revenue and there are high costs behind the farm gate, which is affecting farm profitability ,” says beef+ Lamb new zealand chief executive sam Mcivor.

He also says inflationary pressures and ever-changing rules and regulations are putting the squeeze on them and, along with the downturn in beef and sheep prices, things are tough. “China has not bounced back as quickly as we would have hoped after Covid-19 and high stocks of sheep and beef on the Chinese market are putting pressure on prices in-market, which is not always favour able to new zealand farmers .”

B+LNZ exports to 120 markets and there are positive signs pointing to opportunities and ch an ge,mc iv or says. “One of the great things about this industry is our ability to diversify into markets and meet the demand in those markets.

“The red-meat sector was pleased with the UK-NZ FTA, which is very high quality and should lead to an increase in our beef exports there, which were nonexistent previously because of the UK’S prohibitive tariffs. The EU-NZ FTA was not as good, in particular because there was no commercially meaningful access toourbeef.”

But history and New Zealand’s reputation for producing grass-fed, hormone-free, disease-free and antibiotics-free types of production is attractive to discerning buyers.

In the long term, these attributes in NZ products and systems work in its favour as more and more consumers become discerning about the products they are consuming. “We’re fortunate, however, we have a good history of working with these markets and the government and MFAT are working hard to open new markets for the industry.

‘‘India is a work in progress and we are keen to sit down with the government to talk about a strategy to get negotiation with them going. The big opportunity here is sheepmeat as India has a 25% tariff on this,” Mcivor says.

“We are also working to get into markets where the population are moving away from white meat towards the red-meat market. On the international stage, we will have doubled our production by 2050 and, although there are alternative products, fundamentally, red meat will grow.”

Climate change is a hot topic among farmers at the moment andmc iv or says B+lnz believes the focus should be on establishing a robust on-farm measuring and reporting framework and there should be no price set until the current methane targets have been reviewed, there are widespread technologies in place and farmers are getting proper recognition of their sequestration.

“We are starting to see emerging changes in our carbon footprint. Emissions are low when compared internationally, which is also positive for the industry. And our farmers are the best in the world for low-carbon and emissions production.

“That’s been proven and, in my view, they are the best at adapting to changing markets and climatic changes that are affecting the industry. The sheep and beef industry is meeting the challenges of climate change and doing it sustainably.”

B+LNZ will continue to drive productivity while remaining sustainable. Something Mcivor says it has managed to do very well so far.

“Fundamentally, in terms of supply and demand for new zealand sheep and beef, it is looking good for the long term but not looking so good in the short term,”hesays.

In the dairy sector, after the forecast payout for the 2023-24 season slumped well below break-even when demand dropped, things are also looking up with Fonterra’s revised forecast.

In August, the co-operative reduced its 2023-24 season forecast of $6.25-$7.75kg MS, with a midpoint of $7.00kg MS, to $6.00-$7.50kg MS with a midpoint of $6.75kg MS as demand and GDT fell.

This month, it raised the forecast Farmgate Milk Price range to $6.50$8.00kg MS, with a new midpoint of $7.25kg MS. This could mean break-even or close to it for many farmers.

Fonterra chief executive Miles Hurrell says the improved outlook reflects both supply and demand dynamics.

“Here in New Zealand we’re forecasting collections to be slightly below last season, while aggregate milk growth in key export countries is expected to be below average for FY24.

It is not yet clear whether the stronger demand from China will be sustained.