Editorial: Arable Woes

Arable farmers are looking at exit strategies as grower profitability takes a hammering.

For farmers, the costs of growing arable crops has increased significantly but that hasn’t been reflected in the prices received.

As one farming leader pointed out to Rural News, the worst performing crop was grass seed and the only way for it to be viable was if they finish lambs on it before and after harvest.

Growing a grass seed and receiving $2.80/kg for a product that’s sold retail at $15 cannot be sustainable for any grower.

The arable sector is sometimes known as the invisible industry.

It is a significant part of New Zealand agriculture. While its export profile, at around $350 million, appears modest compared to dairy or meat, that understates its true economic contribution.

Arable production feeds directly into both the human food chain and the livestock sector. When domestic grain is displaced by imports, that value leaves the country rather than circulating within it.

In total, the sector contributes close to $1 billion to GDP, supports more than 11,000 jobs, and drives over $2 billion in direct and indirect economic activity.

However, arable growers have been under the pump.

Feed grains continue to operate under a pricing ceiling set not just by domestic demand but by imported alternatives, with PKE or imported grains anchoring the economics of locally grown feed wheat and barley.

At the same time, fertiliser, labour, energy, compliance, and finance costs are on the rise.

Beef+Lamb NZ data indicated that for the last six years, the average arable return on investment was about 0.8% while inflation ran about 4%. So the average arable farm was going backwards at about 3% a year.

That’s not sustainable in anyone’s imagination.

Let’s hope that the sector – seed companies and arable growers – can stitch together a plan to bring the sector back to profitability. This will be the best outcome for everyone.