SHEEP and beef farmers could well be in catch-up mode on returns compared with neighbour dairy farmers, but increased costs for the latter’s high input systems had closed the gap on their milk payouts in Canterbury.
Ramifications for farmers of the extremely high inflation had not been thought about much, said Kevin Geddes, senior policy advisor for the Ashburton office of Federated Farmers.
He expected the level of input costs would be cut back on farms this year and dairy farmers in particular would have to mine their herd’s fertility to maintain productivity.
The same dollar will be spent on inputs but it will deliver a lot less.
The four Fs — fertiliser, freight, fuel and food — are the biggest culprits for the 25-26% increase in this season’s budgets for on-farm costs of dairy, sheep and beef.
Among the difficulties predicted will be ongoing price increases for fertilisers and supplements.
Farmers will need to plan well in advance to ensure supply for when they need it.
Owners who had already converted and bought supplements early were considered to be better placed than those now trying to source feed.
Many purchasers were balking at freight costs for feed they want transported in.
Bouncing fuel prices had forced some freight firms to add a fuel surcharge on to cartage and some had portioned their new road user costs out at 1%.
Other firms have increased charges generally by 7% to 17% in Canterbury.
Feed costs vary. Currently baleage was sold for whatever price a grower set.
Grain prices were up $100 a tonne on last year which brought the trade price for wheat this July to $520-$530 a tonne and barley to $480 a tonne.
For the past seven out of nine years, consumption of grains and cereals had exceeded production, said Ian Morton, chairman of Federated Farmers Grains Council for South Canterbury.
Normally, when there is a two-year shortage of production, arable producers can expect a price spike but during seven out of the past nine years, it had not happened.
Last year was the first that some classes of grain had become unavailable, which was why the price was dearer.
Ashburton farm consultant Neville Prendergast said while there was probably still a lot of grain available, it required willing sellers.
He believed growers would sit on it until later this year because they knew from past experience the demand would be there and prices would increase.
There was potential for shortages of supplements if extreme events such as heavy snow which hangs about for days, or floods, create demand over and above normal winter feeding volumes.
“Supplements exist, the problem is the increased transport costs and invariably what you can get is in the wrong place,” Darfield farmer Andrew Gillanders said.
“We are all hoping for an early spring.”
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