There has been a lot of talk about how good sheepmeat prices were in 2011. But can they have been all that good when farmers were getting around the same price per kilogram 25 years ago!
There’s been a great deal of talk about 2011 being the time when all the planets lined up for a near-perfect year for farming.
There is little doubt that export markets, growing nations with expanding middle classes hungry for our produce, tightening supplies and even the weather gods all smiled upon the agriculture sector during the year – meaning 2011 will be one that most farmers will look back on kindly.
2011 saw dairy’s good run continue. Fonterra’s final payout of $8.25 a kilogram of milksolids rose by $1.30 over the season ending up being the highest in the co-operative’s 10-year history. Total dairy sector revenue – with Fonterra counting for more than 90% – will have topped $20 billion.
The year also saw red meat producers making good money selling lambs. A 17.5 kilogram lamb made $7.25/kg in the last few months of the year instead of $5.85 the same time a year earlier. Rising returns also spilled over into beef and deer farming. Beef prices were up from a year ago and venison prices were around $9/kg for a 55-60kg stag – up from the five-year average of $7.39.
Arable producers have seen higher yields and promising grain prices which, making it a good year for them. Strong wool remained above a clean price of $6.50/kg rising from around $4 in September 2010.
However, 2011 was not all the utopian Nirvana for the agricultural sector that many of the more excitable and ill-informed commentators are claiming it was. Sure, 2011 will go down in record books as one of the better farming years, but it needs to be put in perspective.
There is little doubt the dairy sector went from strength to strength in 2011. Fonterra’s record payout of $8.25/kg of milksolids – the highest in the co-operative’s 10-year history – was more or less mirrored by the smaller dairy companies and sent total revenue for the sector to north of $20 billion. However, growing pressure about the environmental impact of dairy and mounting antagonism to the industry from an increasingly vociferous environmental lobby will mean a tougher year in 2012.
Meantime, 2011 will not be a year looked back on favourably by the horticulture sector – an important component of our primary industries. Apple growers continue to struggle with a high NZ dollar. And while entry for NZ apples was finally gained into Australia – after 100 years of trying – our trans-Tasman cousins are still making it very difficult for shipments of kiwi apples to be given clearance to enter the lucky country.
Meanwhile, kiwifruit growers on-going annus horribilis, as the devastating Psa disease all but wipes out the future of the once profitable gold variety in this country, goes on. So far some 933 – or around 30% of kiwifruit orchards – have being impacted by disease. MAF says the loss of vines could take production of gold kiwifruit down from 30 million trays in the 2011/12 season to 20 million or even 10 million trays in the 2012/13 season.
Wool’s performance may have been good during the year, but it was off a very low base. Meanwhile, decade long attempts to unify the much divided industry have gone nowhere. The capital raising plan by Wool Partners International to get farmers to commit half the country’s strong wool clip to a grower-owned co-operative went down like the proverbial cup of cold sick with growers. The idea died a slow and painful death like numerous other wool unifying proposals before it.
Although lamb and sheepmeat were good, the prices per kilogram farmers were getting in 2011 are around the same as they were receiving in 1986. There would not be too many other businesses celebrating the fact they are earning the same amount for their outputs today as they were 25 years ago. Meanwhile, the costs of key inputs like fuel, fertiliser, machinery and labour have not stayed where they were quarter of a century ago.
So yes, all in all, 2011 was a good year for New Zealand’s agricultural sector – but by no means a great year.