Better prices needed to safeguard future

Recently crowned New Zealand arable farmer of the year David Birkett says farmers need better prices for their crops if there’s to be any future for the industry.

While dairy, sheep and beef farmers have seen prices climb steadily over the past decade, Birkett, who farms in Canterbury, says the same isn’t true for arable farmers who’ve seen hardly any improvement over that period.

‘‘Fifteen years ago dairy was down at $4-$5kg and sheep $5-$6kg; now they’re up towards $10. We were about $300 a tonne for grain and we’ve just got to $550-$600; that’s only happened since the war in Ukraine. Last year we were still on $400. Those other sectors have almost had a doubling in product price whereas the arable industry has been pretty static for 10 years.’’

While the recent increase in grain prices is welcome, Birkett says not all arable farmers have benefitted. ‘‘Farmers who contracted in spring, this time last year, at $400-$450, aren’t getting the higher prices but there are people with free grain, selling it at $600-$650. There’s almost the haves and have-nots this year which is quite sad because there’s such a big difference in price.’’

The answer, Birkett and fellow arable farming leaders believe, is for prices paid to farmers to better reflect real production costs. They’ve been putting their case to seed companies, both in NZ and abroad. It’s not enough to set prices simply on the basis of the direct cost of producing a crop and its gross margin, Birkett says; all farm overheads have to be included in the calculation.

‘‘We’ve seen some big growth in overheads, whether it’s rates; insurance was up 20% this year; the time and money we spend on compliance is ever increasing, born by every hectare on the property. They’re a true business cost, they hit your bottom line so we have to have a think about it from a true business perspective. It’s a bit of a shift away from looking at gross margins; all they’re good for is determining which crop you should grow, comparing crops against each other, whereas the net margin is the profit you may make, or not.’’

Birkett says seed companies have been surprised at how high production costs are for farmers. ‘‘We’ve worked through them with groups of farmers and some of the companies to make sure we’re not out of line so we’re all in agreement and it’s been a real eye-opener for us as farmers.’’

He says arable farmers considering contracts now at least have a better idea of how much it will cost to grow a crop and what prices they need to make it worthwhile. (A spreadsheet link can be found at fedsnews.co.nz)

‘‘That will help you make that decision. If the offer’s too low, you can say, ‘That’s below my cost of production, are you asking me to grow a crop at a loss so that you can then make a profit?’.’’

While Birkett appreciates that everyone in the chain from paddock to consumer has to make a margin, he says there’s too little return finding its way to growers, especially as they’ve endured one of the worst harvests in 50 years, thanks largely to a very wet summer and autumn. ‘‘When the weather events arrived, they were big ones and it was challenging. We only got about 20% of our normal white clover crop and our other crops were all down too.’’

So poor were the crops that there is now virtually no white clover seed available in NZ and as one of the world’s largest producers, there’s a global shortage too, after Oregon growers had poor crops two years in a row. ‘‘With nitrogen regulations coming into the pastoral industry, with the 190kg/ha limit, you’d think clover is going to become a more important component in the pastoral system so not having any available is a real challenge.’’

Birkett also produces ryegrass seed, barley, wheat, peas and beans, both for processing and seed, and seeds like hybrid radish which are higher value but also higher risk. Much of the barley and wheat is turned into malt for the craft beer industry. Peas and beans produce a crop for sale, and return nitrogen to the soil, reducing the need for urea.

Birkett says he’s always focused on the soil and for 25 years has incorporated residues to improve soil structure, and followed many of the principals espoused by regenerative farmers, before they became fashionable. ‘‘When you look at the five principals of regen ag, we were doing a lot of them anyway. We were keeping residues on the surface to try and make sure we don’t have erosion, we’d integrated livestock into our system, we were doing reduced tillage with minimum tillage and direct drill where we can and we haven’t ploughed for 10 years; probably 20 years since we did any mass amount of ploughing.’’

Over the past 10 years he’s reduced fertiliser and pesticide use by 30%, only spraying when needed. ‘‘We’re monitoring and saying, ‘Actually there is no pests in here so we won’t put anything on it. I don’t think I could do it without those agrichem inputs but I can do it at a lower scale and still maintain production.’’

Fertiliser use has been reduced largely thanks to understanding how much nitrogen comes from the high organic matter in the soil, again without losing production. ‘‘We run a ‘mass budget’ for crops so we know what the crop needs and what the soil will release during the season; the bit we need to put on is the gap. We’ve been able to reduce the input component by 30%; a lot when nitrogen’s at $1400 a tonne for urea compared with $600 last year.’’

David Birkett.