Prices and Productivity
The low prices continue for dairy, beef is okay and lamb and wool are not that flash.
Rather than a little blip, this is the reality and sadly it has been thus for much of my life. Some great years of high prices followed by many more average to poor years. Last month I suggested we should all look to capitalize on the organic premiums in the market or, as I prefer to call them, the sustainable farming premiums.
All of us who are involved in agriculture have to learn how to prosper in the down years and pay off debt in the good years. Easier said than done, I have to say!!! What we tend to do is expand in the good years and contract back in the lean ones and that is a natural reaction by most business owners. We have all grown our businesses in this way, but it is really stressful.
What gets us into trouble is building higher costs into our businesses in the good years which we cannot get rid of in the bad. That leads to real financial problems and issues with our bankers. What has annoyed me though is this; in the last run of good prices the advice coming from advisors and others in the farm support business has encouraged farmers (mainly dairy, but not exclusively) to adopt high cost production methods. Fertiliser New Zealand and my advisors have been doing the opposite by advising farmers to be cautious in their applications of huge amounts of nitrogen, superphosphate and tonnes of costly off-farm supplementary feed. I cannot ever recall advising a farmer either personally or through my Reps to go for increased production at any cost. In particular, capital cost, cow barns and feeding platforms are great and necessary where there is wet and puggy ground but if you don’t need them then save the money.
I do not advise on financial matters but mention them only to point out that we believe that farming for profit is what your hard work is all about. In my experience over many years, the biggest profits I see are generated by those farmers who are able to feed a grass diet and keep their costs down. Most of my clients are still making money even when prices are low. An all-grass system has been proven over many years; it is simple and what we are famous for worldwide. It is also much easier on the farmer, the farmer’s family and the farmer’s staff. I am sometimes accused of having a vested interest in providing advice when I own a fertiliser company but I do so proudly knowing that it is in my interests to have my clients making good money. I expand my business by expanding my client base, not taking advantage of the wonderful clients I have had for years. It is called having skin in the game and I wish a few entities whose advice fluctuates like the wind had a bit of skin in the game too.
John Barnes, Managing Director, Fertilizer New Zealand.
When we at Fertilizer New Zealand talk about the urgency of managing nitrogen fertiliser use, we know we are in good company.
Nitrate losses to the environment were identified as “a key challenge for farming” in the 2004 findings presented by the Parliamentary Commissioner for the Environment, Morgan Williams, in his report ‘Growing for Good: Intensive farming, sustainability and the New Zealand environment’. Williams drew on the words of Australian CSIRO researcher Barney Foran to an International Grasslands Conference in Palmerston North more than a decade previously:
The biggest challenge at the moment is to produce a vision of why we produce products from grasslands. If we are worried by the energy consumption of our developed economies, then we must develop low-energy, integrated pasture systems that give high-quality products with no downstream pollution effects – a “cradle-to-grave” concept.
Our experimental methods must now be redesigned to reflect product quality rather than product quantity. We must re-examine why production per hectare is seen as the Holy Grail. In many areas, land is overvalued in terms of its productive worth, rather than limiting in amount. We could do better by helping to crash land prices rather than developing technologies to run the land harder to make it pay.
Grasslands give much more than production. Using our grasslands are people who are real, and have life goals. Many of our landscapes are beautiful and biodiverse, and our technologies must accommodate these other uses.
Eleven years on, Williams reinforced Foran’s synopsis as being “even more pertinent”. “Unfortunately,” Williams adds, “New Zealand has made glacial progress in addressing (or even fully acknowledging the issues, opportunities and needs…in particular, the need for a new vision and to redesign farming systems seems to have gained little traction”.
“We cannot continue to respond so slowly and in such a piece-meal fashion.”
Williams says the redesign of farming “ranges along a spectrum from tools for remedy and mitigation of adverse environmental impacts, to the development of new farming systems which deliver environmental sustainability and economic wealth (i.e. sustainable agriculture), to approaches which promote sustainable agriculture and seek to integrate farming into the wider environment”.
“Hear, hear,” you will hear from us at Fertilizer NZ. Just like Barney Foran and Morgan Williams, our aim is to help farmers towards sustainability and wealth. We do it by providing them with products designed to keep the soil nutrients in balance, and, therefore, keep the soil healthy.
We know that healthy soil produces healthy crops and healthy pastures, which, in turn, produce healthy animals and healthy products, and, ultimately, healthy humans.
One of the secrets to Fertilizer NZ’s success is our access to special microbes that are renowned internationally for their ability to bring added value to soil.
These microbes – mycorrhizal fungi – have been shown to increase plants’ ability to absorb soil nutrients. There is a best balance of micro-organisms for each type of plant. If it’s right, the plant lives at its healthiest, and often yields to higher levels.