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Mid Canterbury Federated Farmers arable chair, Bevan Lill, said 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.”
Lill said that the seed companies believe they could look to other areas such as Southland for seed production if Canterbury farmers turn away from it.
But that might not be as easy as they think.
“The reality is a Southland sheep and beef farmer has a greater net profit per hectare than I do. So they’re not going to want to change to an arable system that’s less profitable than their current system.
“And the dairy farmers aren’t going to let a seed company push them out of their wintering ground. They’ll pay what’s needed to do the job.”
Lill said the companies were a bit naive in their approach, and the idea that they can go without Canterbury will be found wanting.
“And in the meantime, the Canterbury arable farmers will have moved on.”
Lill said the seed industry has wanted to ignore inflation and had not moved contract pricing “in the necessary direction” for a very long time.
Either they had to share the ‘pie’ more appropriately, or make the pie bigger.
“Either way, more money needs to get back within the farm gate for farmers. Otherwise they will go in search of a better option.”
Lill said his own farm, 400ha near Methven, had a traditional ryegrass seed production focus, alongside spring break crops and autumn-grown wheat. But over the last 10 years he has incorporated more and more trading lambs into the system, now finishing about 6000 lambs.
“That’s become a critical part of our business to the point where I now have about 50ha of the farm that doesn’t go through the combine. It’s planted in kale, forage crops,
and there’s an area of potatoes as well.”
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