Farmers make hay while sun shines

FARMERS WEEKLY – farmersweekly.co.nz – January 17, 2022 9 Farmers make hay while sun shines

LAST month’s rain has meant farmers in most parts of the country welcomed the new year with a good supply of feed, although while some areas are quickly drying out, others could do with more sun.

In Waikato, December rain enabled pastures to maintain growth into the early part of January. It had now turned hot and dry and dairy farmers were starting to extend their rounds and bring in supplementary feed into the herd’s diets, DairyNZ North Island head Rob Brazendale said.

“It’s a wee bit drier than normal, but not exceedingly so,” Brazendale said.

Pragmatic farmers were now making decisions around their summer management.

“I suspect most farmers will try to keep as many cows in-milk as possible to try to make the most of the high milk price,” he said.

Farmers will also be mindful of heat stress in their stock after the hot temperatures of the past few weeks. Their minds will also be turning to facial eczema management as summer turns to autumn.

At Owl farm in Cambridge, demonstration manager Jo Sheridan said managing heat stress among the dairy herd was their most pressing challenge.

“The last few weeks have been two degrees hotter than last year and while we have had a bit of a reprieve this week, we’re expecting another few hot weeks and the cows are really struggling in the heat,” Sheridan said.

Staff have been providing the cows shade wherever possible and using sprinklers to provide relief for the animals during milking.

Whereas previously the farm was looking “quite green”, Sheridan said the writing was on the wall as soil moisture levels rapidly began to fall away in the summer heat.

It’s a similar situation in Hawke’s Bay, with the region quickly drying out after good rain at the beginning and the end of December.

Federated Farmers Hawke’s Bay president Jim Galloway says that could change depending on the impact of Tropical Cyclone Cody.

“If we get a good dumping from that it could set things up again,” Galloway said.

WeatherWatch head forecaster Philip Duncan says the cyclone was expected to arrive on Sunday night, with rain in Coromandel forecast to spread across Bay of Plenty, East Cape, Hawke’s Bay and down into Wairarapa on Monday.

Federated Farmers ManawatūRangitīkei president Murray Holdaway says the area is greener than it usually is at this time of year but it’s drying out rapidly.

He says it’s been a good growing season, with farmers making the most of a lot of surplus feed, although a shortage of quality staff has hindered that.

“The issue from a farmer perspective is that much of the feed we are conserving will be poor quality because of delays in conserving it,” Holdaway said.

AgFirst Manawatū-Whanganui consultant Erica van Reenen says contractors are run off their feet making supplements, however, pasture growth rates have dropped quite a bit in the last week or so.

She says there is still some damage in parts of the region from last month’s flooding, but warm weather since then has meant it dried out pretty quickly.

Wet weather in the second half of November and through December meant not a lot of irrigation was needed in Canterbury during that time.

Mid Canterbury Federated Farmers president David Clark says that helped kick growth into gear after cold, dry conditions earlier in spring.

“There’s a fair bit of grass around now, so things have sort of caught up and there’s been quite a bit of silage made,” Clark said.

He says from an arable crop point of view, flowering crops like white clovers desperately need sunshine.

“Especially up country, a lack of sunshine hours, a lack of heat, has been a problem,” he said.

“Potentially three weeks ago there was a very good harvest ahead of us, but I think the edge has been taken off that now.

“There’s still potential for quite a good arable harvest, but we also equally need some heat from now on.

“Canterbury tends to run six-week weather cycles and I’m working on the theory that we’ve had six weeks of wettish weather, so we could well go into six weeks of hot and dry, and if that’s what happens that will be awesome.”

Further south, summer pasture growth for most of Otago and Southland is proving to be one out of the box.

Farm consultant Deane Carson of Agri Business Ltd says most of Southland is looking pretty favourable, which is reflected in the quality of stock.

This has been helpful given some farmers still had cull ewes to kill.

He says most of Southland has had regular rain, but areas in the northern part of the province could do with some.

It is a similar story in the Otago high country, where the province’s Federated Farmers high country section chair Andrew Paterson describes the conditions as comparable to some of the better seasons.

“Everyone has filled their silage pits and haybarns,” Paterson said.

But the growthy season has compromised pasture quality and stock are not doing as well as desired.

A LARGELY favourable summer is enabling meat companies to cope with stock flows.

Silver Fern Farms supply chain manager Dan Boulton said it is fortunate feed covers in general have been favourable, which has helped take pressure off any processing delays caused by labour shortages.

The processor is watching the impact of recent warmth on feed levels potentially leading to pressure to move animals off-farm.

“This season we are seeing a relatively late kill profile and we are conscious that any major dry period from this point on, coupled with our labour-related capacity reductions, will create significant challenges onfarm for some,” Boulton said.

Alliance Group manager of livestock and shareholder services Danny Hailes said the company is not yet seeing any extreme dry conditions.

“We are encouraging farmers to send in their livestock as soon as they are at an optimal weight and condition so we can meet our important Easter chilled lamb programme requirements for the UK and Europe, where we can capture greater value for the co-operative,” Hailes said.

News Chinese power limits production

FARMERS are being advised to consider alternative cropping options as prospects for an easing of agri-chem shortages dim, thanks to Chinese energy restrictions and the global shipping crisis rolling into the new year.

Agcarm chief executive Mark Ross says he has been advised by chemical suppliers that 2021 was merely a “dress rehearsal” for 2022 in terms of supply problems.

This has been exacerbated by quarantine issues developing in mainland China, with authorities clamping down on ship crew isolation requirements.

Chinese factories producing agri-chemical products in the Jiangsu and Guangdong districts are facing the greatest impact from power shortages, brought on in part by the Government’s efforts to try and reduce carbon emissions from coal-fired power stations.

“They have found there are a lot of power plants that are not up to scratch,” Ross said.

China’s efforts to reduce its coal reliance, which generates almost 60% of its electricity, tie in with its aims to become carbonneutral by 2060, and this requires controlling electricity supply until more sustainable options are developed.

Ross says limitations on the number of days Chinese chemical companies and materials suppliers can manufacture is expected.

Glyphosate manufacture is concentrated in the Jiangsu, Guangdong and Sichuan regions and are among those most affected.

Over the spring planting period a global glyphosate shortage arose thanks in part to existing transport and logistic problems brought on by covid.

Strong global commodity prices have also driven up the price, as farmers rush to get more crops in the ground to capitalise on returns.

“The recent Chinese requirement for seagoing ship crews to quarantine for seven weeks at the end of their rotation was only likely to make delivery issues worse in coming months,” he said.

The country’s increasingly strict covid-zero policies even affects vessels that have refreshed their crews elsewhere, requiring them to wait two weeks before being allowed into Chinese ports.

Bloomberg has reported China now having the highest proportion globally of congested ports as of late November.

The restrictions require mainland crews to quarantine for three weeks before their return to China, another two weeks at the port of arrival and two more weeks in their province before reuniting with family.

Regulations to achieve covidzero are also expected to ramp up even further in coming weeks as the country gears up for the winter Olympics.

Ross said glyphosate in particular was one of the most well-used treatments experiencing issues. He was urging farmers to start considering “plan B” options, should supplies remain tight heading into autumn planting rotations.

“We saw a big surge in demand, possibly with people stocking up on it,” he said.

He advised farmers to talk to their merchants about what alternatives may be available. They could look at integrated pest management plans that incorporate crop rotation, local pest resistant or tolerant varieties and varying planting or harvesting dates to dodge pest infestations where possible.

Ploughing was a non-chemical option in some cases for pest control, but Ross pointed to the irony that this released more carbon to the atmosphere, and increased fuel costs for farmers.

One rural supply agent confirmed significant cost increases being borne by farmers included glyphosate increasing from $7000 for 1000 litres to $17,000.

He said the problem was exacerbated by NZ’s relatively small-scale, pastoral-focused market, with little incentive for manufacturers to do limited production runs of specialist treatments like grass grub pesticide.

“In general, most fungicides are available; they may not be your first choice brand there, but there are still alternatives,” he said.

Foundation for Arable Research general manager for business operations Ivan Lawrie said farmers were increasingly aware of the hikes in costs experienced for treatments and fertilisers, but were now beginning to be concerned about treatment shortages.

But he cautioned there was the risk of encouraging resistance by reducing treatment dose rates to make limited chemicals go further.

“And when it comes to disease and weed control, not all chemicals used are necessarily interchangeable,” Lawrie said.

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A LACK of MIQ space means it is now likely that desperately needed foreign machinery operators will not be available until March at the earliest.

Rural Contractors NZ chief executive Andrew Olsen said despite the best efforts of the Ministry for Primary Industries’ staff to help find MIQ beds for the approved operators, the indications now are that few, if any, will be available until March at the earliest.

“This will mean many of them will pass on the option to bring workers in. It’s just too late, too hard and too stressful for contractors who are working their guts out trying to help farmers get in crops and ensure animals can be fed,” Olsen said.

RCNZ and Federated Farmers, supported by MPI, have done everything they could to help contractors meet a crushing labour shortage, he said.

“We understand and respect that the resurgence of another covid variant and border entry changes have put the squeeze on MIQ. That said, those risks would have been part of the assessment when we had Ministerial approval just a month ago to bring in the desperately needed 200 machinery operators,” he said.

“Now, rural contractors whose work is essential to food production and our export economy, find themselves towards the back of the MIQ queue.”

Immigration Minister Kris Faafoi and Agriculture Minister Damien O’Connor announced on December 12 that 200 skilled machinery operators were to get border class exceptions as they “are vital for the arable and horticulture sectors to get harvests in”.

These exemptions would also be granted 40 shearers and 50 wool handlers.

Olsen said getting MIQ space is like peeling an onion.

“It’s layer after layer and it brings tears of frustration for our members who are already working impossibly long hours and as yet have not even been able to lodge expressions of interest for staff positions which ministers had approved to come in,” he said.

RCNZ members seeking to bring in staff under the next Time Sensitive Travel Allocation need to submit to MPI by January 19 for endorsement. The application closes on January 21 for spaces in March and April.

Olsen said he’s still encouraging his members to make an application for a space in this allocation but it says it can be an onerous process.

“That’s especially so when rural contractors are flat tack and also facing the likely reality that any skilled machinery operators they might get in won’t arrive until March or April. Add two weeks of MIQ space to that and much of the autumn harvest period will be over before they can get anyone behind a wheel.”

Olsen said the Government had to meet the urgency of the situation.

“We received approval December 12 and now more than a month on we’re looking at another two months before the first arrivals. It’s not good enough. The primary sector needs more support, now, and frankly the current situation our members find themselves in doesn’t cut it,” he said.

The controversy over UK musician DJ Dimension testing positive for Omicron had killed off any chance of these workers being able to isolate on farms, he said.

Federated Farmers employment spokesperson Chris Lewis said MIQ spaces had to be made available whenever the Government announced more workers were being allowed into New Zealand.

Compounding the situation was the likelihood of an early maize harvest in Waikato starting in mid-February, due to outstanding growing conditions.

On his own farm at Pukeatua in Waikato, he was expecting the crop to yield another half to a trailer load per hectare of silage, meaning eight to 10 hours more work for contractors.

“There’s going to be more tonnage on every job and it’s going to take them longer,” Lewis said.

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News Strong start for rural companies

WHILE its farming customers worked over the ChristmasNew Year holiday period for the majority of New Zealanders, PGG Wrightson’s share price rose by nearly 20%.

It capped a very strong calendar year for the rural servicing company during which its share price rose 50% and its performance reflected the strength of the primary sector, especially dairying, sheepmeat and beef.

On December 6 at the annual general meeting, chair Rodger Finlay announced an upgraded earnings guidance to $59 million in the current financial year, compared with $56m in FY2021 and with $53m as the previous guidance.

He observed that total shareholder return for the financial year ended June 2021 was 30%, including a dividend of 28c a share, a yield of 6% and the rise in share price.

“This represents impressive value creation for shareholders and reflects well on the health of the business and our trading performance,” Finlay said.

He spoke as the share price sat at $4.40, having been around $3 at the start of 2021.

It has since put on 75c between December 6 and January 12 and is now around $5.15.

PGG Wrightson will report on its first half towards the end of February and Finlay has already commented on the excellent spring trading period and the resilience of the company’s staff members in adapting to everchanging covid-19 protocols.

Equities analysts said the PGG Wrightson earnings upgrade was further evidence of good performance from a rural agency now sticking to the basics and serving farmers and orchardists well in a buoyant primary sector.

Elsewhere among the listed primary sector companies during the holiday period, Scales Corporation also upgraded its guidance to the upper end of a net profit range of $32m to $37m.

Directors announced an interim dividend of 9.5c to be paid on January 14 and a repeated commitment to no less than 19c fully imputed for the 2021 financial and calendar year, to be confirmed towards the end of April.

They said fruit prices were expected to be steady on 2021, adequate labour would be available at harvest and that demand for pet food would continue to grow.

Fellow horticultural company Seeka made a guidance of net profit towards the upper end of a range $22m to $24m, assuming the Crown kiwifruit settlement would be paid.

It will report its FY2021 results towards the end of February.

In the meantime, it has proposed spending $21m to bring Gisborne-based post-harvest company NZ Fruits Ltd into the Seeka fold during February, subject to due diligence and shareholder approval.

Local owners of NZ Fruits will be paid $78 a share, half in Seeka shares and half in cash.

It will be the third expansion for Seeka in the past 12 months, after it took over Opotiki Packing and Cool Storage and the Bay of Islands-based packhouse Orangewood.

Skellerup is another rural supplier that said FY22 has started strongly and its guidance for a net profit in the first half is 10% better than the previous corresponding period. The interim results will be out in mid-February.

Its share price has risen during the holiday period and at around $6.40 stands 70% higher than at the beginning of 2021.

Among the poorer performers has been Delegat Group, the wine company, that advised a lower profit expectation in the range $57m to $61m compared with FY21’s $65m, despite an 8% volume growth this year.

Founder Jim Delegat, stepping down as chair on February 1 to be replaced by independent director Alan Jackson, said the profit fall was caused by a lower 2021 harvest and higher grape prices.

Delegats welcomes former Pāmu (Landcorp) chief executive Steve Carden to the position of managing director on the same day.

The a2 Milk Company (ATM) and part-supplier Synlait will look to 2022 for performance recovery as their share prices fell by 50% and 30% respectively during 2021.

A huge transaction in ATM shares occurred on November 30 when MSCI World Index sold 50m shares at around $6.10 because the dairy marketer dropped out of its index of more than 1500 leading companies from 23 countries.

Accounting for over 6% of the issued shares, the sale was wellsignalled and didn’t depress the ATM price on the day or soon after.

VARIABLE weather and challenging growing conditions has led to Fonterra revising its milk collection forecast from 1525 million kg milksolids to 1500m kg MS for the 2021-22 season.

Fonterra chief executive Miles Hurrell said the challenging conditions across many parts of the country earlier in the season saw actual milk collections down on the same time last year.

“We were expecting conditions to improve over the Christmas-New Year period, but this has not eventuated,” Hurrell said.

“As a result, we have revised our 2021-22 forecast down 1.6% to 1500m kg MS.”

At this stage no change is needed to the volume of product Fonterra is offering on the Global Dairy Trade (GDT) platform, he said.

“Due to the high demand for offGDT sales, we had already reduced the volume we were offering on the GDT platform earlier in the season,” he said.

“We will continue to monitor the situation and carefully manage our sales both on and off-GDT.”

News EU-NZ agree on trade quotas

NEW ZEALAND has finally swallowed the dead rat of the European Union’s post-Brexit divvying up of agricultural trade quotas.

The two sides have been at loggerheads since 2017 when the EU and the United Kingdom cooked up a plan for splitting market access between themselves for outside trading partners once the UK left the 28-country customs union.

Exporters here said carving up the quota between the UK and remaining continental markets, based on trade flows between 2015 and 2017, reduced previous flexibility to switch up product flows between the EU and UK according to changes in market conditions.

Previously NZ had been able to export up to 228,000 tonnes of sheepmeat each year to the UK and continental Europe without having to pay a cent in tariffs.

As a result of the changes, which became effective on the UK’s formal exit from the EU customs union at the start of 2021, high tariffs kicked in once exports to either the UK or the continent exceeded 114,000 tonnes.

Smaller dairy and beef export quotas were also in the gun.

Exporters complained the three-year reference period used to calculate the new quotas did not fairly represent actual trade flows and were further distorted by the large volume of NZ exports shipped via the Dutch port of Rotterdam before ending up in UK supermarkets.

NZ trade officials led a chorus of criticism of the quota-splitting proposal at the World Trade Organisation (WTO) in November 2020.

The comments were endorsed by Russia, the United States, Canada, India, Australia, Mexico, Paraguay and Uruguay, who all agreed splitting the quotas in the manner proposed by the EU and the UK undermined existing market access.

Since then, the EU and the UK have gradually picked off their critics at the WTO with confidential deals.

In May Russia and NZ were the last remaining holdouts.

In October the UK agreed to a free trade deal in-principal phasing out tariffs on a range of agricultural exports only after NZ agreed to drop its objections at the WTO to its part in splitting the quotas.

And in the week before Christmas a social media post from a middle-ranking trade official at the European Commission announced NZ had agreed to drop its WTO complaint against the EU in exchange for minor quota increases for some agricultural exports.

A spokesperson for the Ministry of Foreign Affairs and Trade confirmed an agreement had been reached with the EU, but would not disclose the details of the quota increases.

It is understood the agreement increases the maximum annual amount of sheepmeat NZ can export to the EU without incurring tariffs from 114,000 tonnes to 138,000 tonnes.

Beef quota for NZ exports to the EU is increased to a mere 1000 tonnes. Increases to dairy quotas were unknown but not expected to be significant.

The new quotas were allocated based on new three-year trade reference periods nominated by NZ negotiators.

A meat industry source said NZ exporters had backed the compromise in the interests of “moving on” and with the expectation of further improvements in access for NZ agricultural exports in separate negotiations for a free trade deal with the EU expected to wrap up sometime in 2022.

While NZ maintained its original position that the EU and UK’s splitting of the quota was illegal under WTO rules, a breakdown in the global trade body’s dispute tribunals due to the ongoing American veto on new judicial appointments had left NZ with little option but to settle the matter out of court through negotiations.

A further condition set by NZ was acceptance by the EU that NZ did not believe a precedent had been set by splitting the quotas, despite NZ’s agreement to let them stand largely as they were first proposed, with only minor tweaks in the case of the remaining EU quotas.

“We have said to the EU if we sign a settlement then it is a settlement but it will be without prejudice to us saying the way you did this was not the way we think you should do it in the future,” the source said.

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