Grain imports cause angst

Arable farmers are appealing to their dairy farmer colleagues to buy their grain rather than import it from overseas.

Federated Farmers arable spokeswoman Karen Williams complained about the lack of a level playing field regarding grain sales.

She was commenting on Federated Farmers’ latest banking survey showing that 30 per cent of arable farmers felt under pressure and only 60 per cent felt satisfied or very satisfied.

‘‘We need the dairy industry to take note of this. Arable farmers have stocks of grain but they don’t know how much they are going to get paid – it’s not a good business model.’’

Williams said farmers in the United States had governmentbacked insurance in case of a crop disaster, while the impact of greenhouse gas emissions was not taken into account for imported grain.

On the other hand, New Zealand arable farmers were facing increased costs for a number of environmental issues.

Typically farmers can buy imported grain for about $40 a tonne less than the New Zealand equivalent, although costs to get it onto the farm can make the figure balloon out to $80 a tonne less.

Federated Farmers’ commerce spokesman, Andrew Hoggard, said various reasons explained arable farmers’ gloomy outlook.

‘‘This might reflect a combination of some poor to average recent harvests, competition from cheap imported grain reducing demand and prices, and the fact arable farmers, because of the very nature of their businesses, have very lumpy farm incomes and thus need bigger overdraft facilities compared to other farm types. Banks generally want to see overdrafts reduced.’’

The banking survey shows the total number of farmers across all sectors who are feeling the squeeze has risen from 16 per cent to 23 per cent.

It follows the latest Reserve Bank financial stability report last week which highlighted continuing concerns with dairy debt.

That report showed arable debt was a minor proportion of overall farm debt, at 3.1 per cent, compared with dairy debt which accounted for two-thirds.

‘‘The sector has a high debt-toincome ratio at 350 per cent, with 30 per cent of debt held by highly indebted farms,’’ the central bank report said.

Sharemilkers have in the latest survey expressed higher than average satisfaction rates.

Hoggard said one factor was that the average sharemilker interest rates were now only marginally higher compared with other farming groups.

The current average mortgage rates across the more than 1300 survey respondents and all farming types decreased 0.4 percentage points to 4.6 per cent between May and November.

Sharemilkers’ rates decreased from 5.3 per cent to 4.8 per cent.

Farmers were looking forward to the Reserve Bank’s December 5 announcement on its bank capital proposals because it would provide some certainty, and possibly extend the transition period from the proposed five years to 10 years.