Inflation is hot news all over the world at the moment – with the New Zealand rate hitting 7% for the first time in 30 years – so realistically anyone under 45 will not really have seen or been affected by the like in their lifetimes. And it seems the rate of inflation in the ag sector is running even hotter.
The old, wise and grey heads in the sector will remember the rampant inflation of the early 1980s – spiking at 18% in 1980 and the record high interest rates farmers were subjected to.
My first dairy farm job was in the summer of 1984 and the young first farm owners I milked for in eastern Taranaki were struggling with interest rates around the early 20% mark – while I milked the small herd through the little old eight-bail walk-through shed the farm owner rushed around the district baling hay for other farmers, trying to make enough extra cash to cover his mortgage and feed his young family.
Our special report this issue warns farmers against the danger of complacency about cost inflation with a record high payout forecast. Chris Lewis of BakerAg says in these strange times of Covid and the Ukraine war and their affects on the world economy and supply chains, when fuel, fertiliser and feed costs have had a fire lit under them, profit margins will be squeezed by the higher costs.
We have drilled down into feed, fert and people costs and come up with ways for farmers to help protect their profit margins from the wrecking ball of cost inflation. (page 46).
Stu Davison, in his Market View column, covers off the effects of a 4% drop in NZ milksolids production, from a range of adverse climatic conditions around the country. He puts into context that 4% is only two container ships of our product – out of the roughly 42 that shift a total season’s production, but the chaos in Europe has also led to declining production there and in the United States, so the price is being supported by less product.
Harriet Bremner encourages farmers to get their team off farm during the quiet time to get to know them while doing something fun and different – she took her crew to an escape room challenge.
Reading articles from both here and overseas has made me feel like I was living an escape room challenge this week – from stories of Dutch farmers protesting nitrate directives that will see many of them paid to quit their dairy herds (pg17), to Kiwi journos asking if we should be looking at meat and dairy like tobacco and calls to remove cows from the Canterbury plains…
We need to keep reminding ourselves there are farmers all around the country evolving towards building wetlands, planting waterways, concentrating on highly efficient cows in their herds and being smart about nitrogen application. Evolution certainly beats revolution, we need to keep making changes towards more sustainable ways of farming.
