Financial Factors
Revenue
Process crop prices increased for the 2002/03 season due to competing demands from alternative land uses, but are expected to remain static in 2003/04 due to an easing of prices for alternative crops.
Export returns for onions and potatoes recovered from last year, when there was concern that some crops would have to be dumped. Exports of potatoes to the Pacific Islands, and onions to Asia, are strong despite the higher exchange rate. The volume of large onions to Japan recovered to normal levels of about 13,000 tonnes from 2,500 tonnes last year. Onion prices for the 2002/03 year are not finalised as exports to the United Kingdom (UK) and European Union are on a consignment basis and final payments have not been made.
The lack of demand for export vegetables in Japan and Asia following the SARS outbreak is of concern to specialist exporters.
Asparagus prices were up to $2.50/kg from the normal prices of $1.00-$1.50/kg. Export crops received up to $3.00-$4.00/kg for late harvest crop after Australian exports fell away. About 60% of New Zealand's asparagus crop is canned.
Expenditure
The higher exchange rates should reduce input costs but, in practice, costs have remained fairly stable for imports such as fuel and agricultural chemicals. The increase in carton and packaging costs concerns producers. There is an increase in the use of returnable crates, but growers are concerned that most returnable crates are supplied by one company and if they raise the price the situation could change again.
The potential for rolling electricity cuts in the winter could cause problems for covered structure producers. While most use coal for heating, electricity is needed for coal augers, fans, and temperature monitoring and control. In addition, producers believe that government policy as a result of the Kyoto Protocol could add 20% ($15,000-$16,000 for an average producer) to the cost of heating indoor crops.
Net Result
The high exchange rate is reducing growers' and processors' profit, and it will make them less competitive in the export markets. Table 2 shows the vegetable and arable gross margins.
Table 2: Canterbury Vegetable and Arable Gross Margins 2002/03
Price |
Yield |
Gross Margin | |
Vegetables: |
|||
Snap beans |
210 |
16.0 |
1,686 |
Freezer peas |
320 |
6.5 |
1,133 |
Sweetcorn |
155 |
19.0 |
1,975 |
Potatoes |
275 |
42.0 |
7,043 |
Onions |
320 |
35.0 |
4,272 |
Arable: |
|||
Feed barley |
270 |
7.0 |
839 |
Milling wheat |
340 |
7.5 |
1,249 |
Cereal silage |
150 |
14.0 |
1,079 |
Lamb fattening |
$20/hd |
28 lambs/ha |
579 |
Source: Agriculture New Zealand Ltd
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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