Bay’s primary sector enjoys strong returns at season’s mid-point

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The Bay of Plenty is well-positioned to ride the wave of strong primary sector returns being enjoyed by horticultural and pastoral growers this season, with good rainfall pre-Christmas ensuring a positive start to the second half of the farming and orcharding season.

The latest ANZ commodity report records record 10-year highs being enjoyed in the pastoral sector, while also reporting Zespri orchard gate returns at their second highest ever.

For the Bay of Plenty’s 524 dairy farmers, Christmas will be looking particularly rosy thanks to some generous pre-Christmas tropical rainfall.

Fonterra has also raised its forecast 2021-22 mil price payout by 30c/kg milksolids (MS) to a mid-point of $8.70/kg. For the first time ever there is the real prospect that payout could reach $9.00/kgMS.

Similarly, sheep and beef farmers in the region continue to enjoy historically high global prices for their red meat, with little sign Chinese appetites are abating. Farm gate lamb prices continue to sit over $9/kg carcass weight with global supply tight, while beef enjoys a $6-plus/kg value.

Season shaping up well

Bay of Plenty Federated Farmers president Darryl Jensen says the season is looking to shape up well, with plenty of surplus feed on hand for silage harvesting heading into mid-summer.

However, he cautions while the payout figures are undeniably positive, farmers like all other businesses are facing a raft of cost increases that are now well into double digit percentages.

“There are costs coming through in all areas. I recently ordered a new topper, which was to cost $8500, only to finally arrive and be costing $15,500, of which $3500 was just the freight getting it here.”

He said a tight labour market was also hanging over the sector, and his advice was to do all possible to keep whatever good staff farmers already had, with few to choose from if they left.

This also applied to the rural contracting businesses in the region, and operators were already doing long hours to keep up with seasonal harvesting demands.

Jensen said with the heavy pre-Christmas rainfall and ensuing grass growth, those demands were only likely to grow heading into later summer.

Late November marked the final shipment of Zespri kiwifruit for the season, with a quiet sigh of relief from the industry in an export environment complicated by shipping issues.

Largest Sungold harvest ever

The 1800 tonne shipment heading to Tokyo also signalled the end of the largest SunGold harvest yet, with just over one hundred million trays sold into export markets for the first time, alongside 77 million trays of Green.

Growers were also rewarded with record payments for the 2020/21 season thanks to Zespri enjoying a 16 percent increase in operating revenue, accompanying the 10% increase in global sales volumes. Average per tray returns for SunGold were $12.46 a tray.

Market signals for the coming season remain strong, with planning well underway to mitigate anticipated continued shipping issues. Forecast orchard gate returns for the 2021-22 season have SunGold at $10.92 a tray and Green fruit at $6.34 a tray.

Zespri chief global supply officer Alistair Hulbert says along with continued shipping issues globally, the sector also faces a labour shortage of 6500 staff, requiring close co-ordination between all parties to ensure crop is harvested and shipped in a timely manner.

Colin Bond, chief executive of NZ Kiwifruit Growers Incorporated, said prospects for locals wanting to work in the sector have never been better, and a recent industry survey reports high levels of satisfaction among workers.

“There are also indications employers are more in tune with the requirements of workers, particularly around flexible working hours.”

Remuneration in the sector now has the hourly rate set against at least the living wage rate. Older workers are also filling seasonal vacancies, with those aged 51-65 accounting for 15 percent of a recent employee survey.

Bond says the 2022 harvest is predicted to be another record breaker, and work continues between the industry and government departments to attract more people to the sector. “Kiwifruit is a fantastic industry to work in. Every time we’re putting on an additional 50 ha of fruit an orchard manager is required. These are great jobs that pay over $100,000 a year in some cases.”

Among Bay of Plenty’s main primary exports, forestry has hit something of a low point with log prices dropping sharply at the wharf gate level as Chinese prices ease and high shipping costs continue to erode profit margins.

The cost of moving a log from New Zealand to China peaked at US$75/cubic metre, but has eased back to US$65/cubic metre, still a fourfold increase on values over a year ago. With prices paid equating to about US$150/cu metre, almost half the log’s value is being lost to shipping costs.

One big cloud on the horizon for all exporters is securing sufficient space for exports, and expectations are that shipping capacity will remain constrained until well into the new year until more shipping assets were commissioned.

Related: ZESPRI marks record season in 2020-21

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