- Key points
- Climatic factors affecting production
- Production figures and forecasts
- Financial position of the arable cropping farm
- Issues and Trends
3 Canterbury arable cropping
The Canterbury arable cropping farm
The Canterbury arable cropping model represents about 500 properties larger than 100 hectares located throughout Canterbury, of which about half are in the Mid Canterbury region.
The farms generate more than 50 percent of their income from growing crops. They are generally either more than 75 percent irrigated, or are located in normally reliable rainfall areas. Most properties grow a combination of crops, which are grouped in the budget into cereals, small seeds (including grass, clover, and vegetable seeds), process vegetables, silage, and other crops. Most have some type of stock enterprise as an integral part of the system, e.g. grazing, trading, and/or breeding stock.
The model is derived from a sample of 20 farms. The model farms’ stock policies involve trading lambs and running a two-year ewe flock for lamb production. Half the ewe flock is replaced each year.
Table 3.1: Canterbury arable model summary, 2005/06
| Effective area | 282 ha | Total crop area | 209 ha | |
| Wheat | 57 ha | Grass seeds | 41 ha | |
| Barley | 31 ha | Clover seeds | 18 ha | |
| Other cereals | 3 ha | Other small seeds | 8 ha | |
| Pulses | 14 ha | Vegetable/brassica seeds | 15 ha | |
| Silage crops | 9 ha | Process/fresh vegetables | 13 ha | |
| Opening stock wintered | 1 024 su |
Table 3.2: Key parameters of the Canterbury arable model
| 2002/03 | 2003/04 | 2004/05 | 2005/06 | 2006/07f | |
|---|---|---|---|---|---|
| Effective area (ha) | 265 | 268 | 282 | 282 | 285 |
| Effective cropping area (ha) | 187 | 195 | 214 | 209 | 204 |
| Total crop sales ($) | 475 700 | 468 700 | 435 100 | 499 000 | 510 900 |
| Sheep opening stock units | 1 025 | 974 | 1 030 | 1 024 | 1 010 |
| Lambing (%) | 129 | 125 | 127 | 125 | 130 |
| Average lamb price ($/hd) | 71.70 | 67.40 | 75.80 | 79.20 | 62.50 |
| Gross farm revenue ($) | 631 300 | 603 600 | 673 100 | 653 800 | 652 500 |
| Farm surplus ($) | 239 400 | 191 600 | 201 100 | 152 000 | 137 600 |
| Net trading profit ($) | 201 800 | 146 700 | 152 000 | 96 500 | 81 900 |
Symbol
f Forecast
Key points
- The 2005/06 growing season was good for most crops although variable throughout.
- The harvest was good although cereal yields were down.
- Gross revenue did not meet forecasts and costs were up so the net trading profit fell 37 percent.
- The forecast for 2006/07 is a further 15 percent fall in net trading profit compared to 2005/06.
- Farmers are focusing on reducing costs and improving efficiency to counter this trend.
Climatic factors affecting production
The 2005 winter was very dry. Canterbury’s three climate stations received only 25 to 35 percent of the average winter rainfall, and at Lincoln in central Canterbury rainfall remained below average until March. All locations had a very cool October and March, and a warm December and April. These factors shaped the 2005/06 arable cropping season, just as the very wet May and June will have an effect on the 2006/07 season. Table 3.3 contains information on the climate from three locations across Canterbury from June 2005.
Crops established successfully in the autumn of 2005. The warm dry winter weather favoured good crop growth and minimised nutrient leaching. Soil nitrogen levels were very high in the spring, encouraging strong growth and lowering the need for spring nitrogen. However, the warm conditions also suited aphid survival. This was expressed as high levels of Barley Yellow Dwarf Virus (BYDV) infection across both barley and wheat. This infection was significantly greater in autumn-sown wheat crops. This, in combination with moisture stress, amplified the effect of the BYDV, resulting in yield reductions in affected crops. The level of infection was not readily apparent until late in the season.
Early spring was also warm and encouraged crop growth and development. However, late spring was very cool and hampered the establishment of later-sown temperature-sensitive crops, such as maize and sweetcorn. Five to ten centimetres of snow in September and late frosts in South Canterbury and inland Mid Canterbury damaged some ryegrass and brassica crops at flowering time. In isolated cases, the damage was considerable.
Coastal Canterbury was very dry from early summer through until May 2006. The dry weather was compounded by a number of wells in shallow aquifers failing in spring/summer due to the dry winter providing very low shallow aquifer recharge. In Mid Canterbury, the previous good autumn rainfall resulted in the Rangitata Diversion Race (RDR), which supplies 64 000 hectares of irrigation, using only 57 percent of its consented (scheme) water. The 43 percent unused allocation would normally be a major source of recharge for shallow aquifers nearer the coast, but this year these wells suffered from low water levels. A significant number of older and shallower wells, particularly in the Greendale and Darfield areas, had their pumping capacity reduced because of the low groundwater levels. The amount of water applied was cut by as much as 50 percent in an already dry season. Inland regions, in particular Methven, had good localised rainfall through the grain and seed filling period, resulting in good yields and grain quality.
Hail storms associated with late summer southerly storms created havoc along a localised path in Mid and South Canterbury. Yields were reduced by 25 to 50 percent in some crops such as wheat, brassicas, maize, and sweetcorn. A number of crops were not harvested. A small tornado in South Canterbury damaged crops and buildings near Waimate.
Overall, the harvest season was very good. Extended low humidity ensured that most crops were harvested in optimal conditions.
Rains occurred in autumn 2006 just in time for crop planting before winter set in. Some grass seed and clover crops had establishment problems and appear patchy. Grass grub damage is also evident. Early-sown wheat has established well, but with some variable strike as heavy showers arrived in May followed by heavy snow in early June. Until then, the warm autumn conditions were again increasing the risk of high aphid survival. The wet May and June has delayed late sowings of cereals, meaning that cereal cultivar options will be revised in spring. A number of crops were not sown, something that hasn’t been an issue in the last few years of dry winters.
Table 3.3: Canterbury weather data, 2005/06
| Jun | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar | Apr | May | Annual | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Lincoln | |||||||||||||
| Rainfall (mm) | 15 | 18 | 14 | 39 | 41 | 45 | 33 | 36 | 38 | 52 | 53 | 121 | 505 |
| Mean (1972–2005) | 58 | 63 | 66 | 44 | 51 | 50 | 53 | 49 | 42 | 51 | 51 | 51 | 560 |
| % of mean | 26 | 29 | 21 | 89 | 80 | 90 | 62 | 73 | 90 | 102 | 104 | 237 | 90 |
| Air temp (oC) | 6.1 | 7.7 | 9.3 | 9.9 | 11.3 | 13.3 | 17.2 | 17.2 | 16.8 | 12.7 | 13.9 | 9.3 | 12.0 |
| Mean (1987–2000) | 6.8 | 6.0 | 7.7 | 9.4 | 12.3 | 13.1 | 15.5 | 16.0 | 16.8 | 14.8 | 12.0 | 9.4 | 11.7 |
| dep from mean | -0.8 | 1.7 | 1.6 | 0.4 | -1.0 | 0.2 | 1.7 | 1.2 | -0.1 | -2.1 | 1.9 | -0.2 | 0.4 |
| Soil temp (10 cm) | 5 | 5.7 | 7.2 | 9.3 | 11.6 | 14.5 | 18.4 | 18.3 | 17.3 | 12.1 | 12.3 | 8.5 | 11.7 |
| Mean (1987–2000) | 4.8 | 4.0 | 5.0 | 7.3 | 10.2 | 12.8 | 15.4 | 16.5 | 16.5 | 13.7 | 10.4 | 7.2 | 10.3 |
| dep from mean | 0.2 | 1.7 | 2.2 | 2.0 | 1.4 | 1.7 | 3.0 | 1.8 | 0.8 | -1.6 | 1.9 | 1.3 | 1.4 |
| Winchmore | |||||||||||||
| Rainfall (mm) | 11 | 22 | 29 | 52 | 62 | 61 | 47 | 70 | 54 | 34 | 65 | 97 | 604 |
| Mean (1947–2005) | 55 | 64 | 65 | 50 | 61 | 62 | 64 | 62 | 55 | 67 | 64 | 62 | 721 |
| % of mean | 20 | 34 | 45 | 104 | 102 | 98 | 73 | 113 | 98 | 51 | 102 | 156 | 84 |
| Air temp (oC) | 5.7 | 7.2 | 8.5 | 9.6 | 10.6 | 13.2 | 16.9 | 16.7 | 16.6 | 12.7 | 13.6 | 8.5 | 11.6 |
| Mean (1949–2000) | 5.7 | 5.2 | 6.6 | 8.8 | 11.1 | 12.7 | 14.7 | 16.1 | 16 | 14.2 | 11.4 | 8.3 | 10.9 |
| dep from mean | 0.0 | 2.0 | 1.9 | 0.8 | -0.5 | 0.5 | 2.2 | 0.5 | 0.6 | -1.5 | 2.2 | 0.2 | 0.7 |
| Soil temp (10 cm) | 4.3 | 5.1 | 5.4 | 8 | 9.6 | 13 | 16.6 | 16.1 | 15.6 | 11.7 | 11.4 | 7.3 | 10.3 |
| Mean (1949–2000) | 3.9 | 3.1 | 4.1 | 6.8 | 10.0 | 12.9 | 15.1 | 16.3 | 15.6 | 13.4 | 10.2 | 6.7 | 9.8 |
| dep from mean | 0.4 | 2.0 | 1.3 | 1.2 | -0.4 | 0.1 | 1.5 | -0.2 | 0.0 | -1.7 | 1.2 | 0.6 | 0.5 |
| Timaru airport | |||||||||||||
| Rainfall (mm) | 4 | 29 | 11 | 21 | 92 | 40 | 69 | 73 | 27 | 17 | 55 | 71 | 509 |
| Mean (1990–2005) | 40 | 47 | 40 | 45 | 53 | 53 | 53 | 52 | 48 | 48 | 40 | 34 | 552 |
| % of mean | 10 | 62 | 28 | 47 | 174 | 75 | 130 | 140 | 56 | 35 | 138 | 209 | 92 |
| Air temp (oC) | 5.0 | 6.1 | 7.0 | 8.8 | 10.2 | 12.3 | 16.2 | 15.4 | 15.8 | 12.1 | 12.1 | 7.9 | 10.7 |
| Mean (1990–2000) | 5.5 | 4.9 | 6.4 | 8.3 | 10.9 | 11.7 | 13.8 | 15.5 | 15.7 | 13.7 | 10.8 | 7.9 | 10.4 |
| dep from mean | -0.5 | 1.2 | 0.6 | 0.5 | -0.7 | 0.6 | 2.4 | -0.1 | 0.1 | -1.6 | 1.3 | -0.1 | 0.3 |
| Soil temp1 (10 cm) | 3.6 | 4.6 | 5.2 | 9 | 11.1 | 14.1 | 17.3 | 16.3 | 16.5 | 12.4 | 11.4 | 7.9 | 10.8 |
Note
1 H41424 Timaru 2 site.
Source
NIWA.
Figure 3.1: Rainfall for Lincoln, Winchmore and Timaru, 2005/06
Source
NIWA
Production figures and forecasts
Cereal yields overall were down for the 2006 harvest due to the combination of BYDV and lack of moisture to finish crops. The Foundation for Arable Research (FAR) reports that its yield trials were back about 20 percent on last year. One flour mill notes their intake expectations are 28 percent below what they were expecting in November, creating a problem for them through having to purchase additional tonnages overseas. Methven and foothills crops, where insect control was carried out, were better with yields similar to the previous season. Wheat quality is generally good with protein levels up, reflecting smaller grain size although screenings are about average. Rejection rates are lower this year than last, although flour mills report that the dough strength has been variable.
Barley yields were down compared to previous years but acceptable for irrigated and inland farms. Dryland coastal properties or those with substandard irrigation produced low yields and higher than usual screenings due to the effects of soil moisture deficits. Barley is often the crop that is sacrificed by growers when conditions become too dry or water supply is too limited to keep all crops fully irrigated.
Grass seed production across the region was generally very good, with yields comparable with last year (although without that season’s few very high yields). Hail damage reduced yield significantly in some crops. Early flowering ryegrass yields were acceptable, but some late flowering varieties were lower yielding due to moisture stress in the early summer. Frosts were blamed for light seed in a number of inland crops, although industry suggests this too may have been the result of higher temperatures combined with moisture stress. Yields in South Canterbury were variable, with some down significantly on previous years. Seed quality, as measured by germination, appears to be very good across all ryegrass crops, a relief after the previous year’s disaster.
Clover production was very successful with many irrigated crops achieving record yields. Mid-altitude farms without irrigation, but on good soils, were affected by the dry weather in early summer.
Pea production was generally successful. Some crops were slightly down on yield, but the quality of marrowfat peas was excellent due to lack of wind. Early vining peas yielded below expectations, but later-sown crops did well following several poor years. Process companies reported a reasonably good harvest, but on reduced areas. Southern Processors and Talleys reduced their area by 40–90 percent as a result of poorer international markets and a higher exchange rate.
Vegetable seed production met targets in most cases, but with the typical high level of variation that can be experienced with these high-risk crops. Overall, seed yields were much better than last year’s poor results, but not as good as the very good year in 2003/04. Some crops remain highly variable and final yields are not yet available as many of them are still being dressed.
Dairy support programmes continue on many irrigated farms. Good feeding conditions in the 2005 winter minimised pugging, which allowed for early establishment of crops with minimal cultivation. Cereal silage crop areas have reduced and been replaced by maize silage in warmer climates. Spring grass silage sales were down from the previous season as the warm winter meant many dairy farms had carried over silage and required less feed. Feed was limited in the 2006 autumn for those establishing greenfeed and buying lambs, but winter feed growth rates in May were outstanding. Rain in mid-April helped improve winter feed yields just in time for the 2006 winter. However, snow in early June resulted in the loss of greenfeed quality and lower utilisation of crops.
Autumn wheat areas for the 2006/2007 season appear to be higher than last year. Prices for both milling and feed wheat have lifted by $15–$20 per tonne, encouraging some farmer confidence in grains. Increased grain areas are likely to replace lower grass seed crop areas.
Barley areas for 2006 are budgeted to remain the same with the expectation that prices will increase by $5 per tonne.
Grass seed areas are well back as a result of the merger of PGG, Wrightson, and Agricom. Collectively these companies have been the mainstay of proprietary ryegrass seed production in Canterbury. With the merger, the collective stocks of seed available are high, meaning that 2006/07 production is not required at previous seasons’ levels. Areas have been cut accordingly, concerning farmers whose crop rotations have been unbalanced. Increases in turf grass and Nui ryegrass areas for export have been noted. The lower grass seed area is hopefully a one-year issue only. In tandem with the merger, some ex-employees have set up plant breeding and multiplication companies in partnership with offshore plant breeding company equity.
Clover areas have been maintained. However, contract prices have dropped by 50 cents per kilogram on many varieties. Some farmers are growing uncontracted Huia clover for the 2007 harvest if areas of proprietary cultivars are down.
The area planted in early process vegetable crops was lower, but an increase in later-sown crops has maintained the area grown. Areas next season are expected to rise with anticipated increased demand in South Canterbury from McCain Foods following the closure of their Feilding plant. The profitability of exporting processed vegetables is expected to improve, with the lower New Zealand dollar against most major currencies creating a greater demand.
The model farm shows a decreased crop area for 2006/07 due to the lower area of small seeds. In addition, wet weather and snow have stopped further cereal planting until spring. The implications of this will depend on the economics of spring options such as peas, barley, and the specialist crops. Feed crops in particular may be in higher demand due to the general rundown in feed supplies after the snow in June.
Most arable farms had good performance and margins from trading, breeding, and finishing lambs through the 2005 winter and early 2005 spring. Many of these farms lamb early in July and were able to finish winter store lambs and early spring lambs before the dramatic drop to the lamb schedule. Most farms are continuing with lamb breeding and trading for the 2006/07 season. Margins are not as high as the 2005 winter, but more typical of previous seasons (for those who sold before mid-September).
Financial position of the arable cropping farm
Review of 2005/06
Revenue
At $2,390, crop revenue per hectare was similar to 2004/05, although from 209 hectares of crop compared to 214 hectares the year before. However, farmers were somewhat disappointed with this, as it was lower than the 2005 Farm Monitoring forecast of $2,530 per hectare. The main reason for this lower than expected return was lower cereal yields, although returns from livestock activities were also lower than expected. As a consequence, gross farm revenue is down $19,300 for the 2005/06 year, a fall of 3 percent. More critically, the result was 5 percent down on the 2005 forecast.
Expenditure
Costs increased by $100 per hectare, or 8 percent, over the 2005/06 year and were up 5 percent on the forecast budget expectations. Fifty percent of the increased costs were due to fuel and energy expenditure increases. However, while these along with fertiliser were the major increases, there was general cost creep across almost all expenditure categories.
Electricity expenditure increased 44 percent due to a combination of increased irrigation hours with the dry conditions, and increased per unit costs compared to the previous season. Fertiliser unit cost and spreading costs both increased, although usage is thought to be down as farmers pay more attention to crop needs. Many found that after the very dry 2005 winter, considerably less nitrogen was needed for wheat and grass seed crops. Weed and pest costs continue to rise, although competition among generic chemical suppliers is holding them in check.
There was an increase in expenditure on vehicle repairs, mainly due to the increased costs of tradesmen and imported parts. While there is a lot of relatively new machinery on farms, it is more expensive and specialised to service. Many older machines are becoming unserviceable, so farmers are resigned to facing higher costs in this area.
Interest costs also increased due to increased debt and higher rates as fixed term mortgages are re-established. Drawings were also higher, continuing the trend of the last several years. Capital and development expenditure dropped back by a combined $22,000 for 2005/06, reflecting a tighter year financially. Industry report that big ticket machinery items like tractors have borne the brunt of these falls, but irrigation and other items that show a high return on the capital expenditure through efficiency gains have held steady. Bankers and accountants also report an increase in hire purchase arrangements for these items due to very favourable terms being offered by machinery dealers.
Net result
The dual effect of lower gross revenue and higher expenditure was a 37 percent fall in net trading profit compared to 2004/05 for this model. While taxation was somewhat lower than forecast, the disposable deficit was $20,000 greater than the previous year.
Forecasts for 2006/07
Revenue
For 2006/07, farmers are forecasting a rise in returns from crops to $2,500
per hectare, up $11,800 for the model compared to the 2005/06 actual. However,
lower livestock returns, countered a little by increased grazing returns, will
result in slightly lower gross farm revenue overall.
For individual crops, falls in small seed prices are already the reality, offset
a little by slightly better cereal prices. Yields are forecast to return to
2004/05 levels for cereals.
Expenditure
Farmers forecast modest increases in expenditure, increasing costs by 1 percent to $1,410 per hectare. Industry people felt this low estimate was optimistic given the price pressure flowing throughout the economy from a falling currency and tight labour market, as well as continuing energy cost increases. The ratio of cash farm expenses to gross farm revenue is forecast to be 62 percent, which is back to the level experienced in the late 1990s.
Development and capital items are forecast by farmers to be almost halved for the 2006/07 year in recognition of the tight budget. Given the relatively high levels of capital replacement in recent years, this is not expected to cause any productivity issues for these farms.
Net result
The model budget is forecasting a further fall in net trading profit of $14,600 for 2006/07. This means that the model farm profit will have fallen from $201,800 in 2002/03, a fall of 59 percent. At the same time, gross revenue will have risen by $21,200, showing the enormous rise in costs farmers have faced over this period.
Figure 3.2: Canterbury arable cropping profitability trends
Symbol
f Forecast
Issues and trends
Arable farmers’ confidence has reportedly dropped after the good harvest. This is probably due to the realisation of the result depicted in the model budget, increasingly poor cashflows, and the struggle for contracts for small seeds for the 2006/07 season. Farmer perceptions of the medium-term prices for produce are positive but they are very concerned that if this is as good as it gets, there will be problems maintaining the industry as the rising costs of production are more than eroding the gains. Internationally, there is an overhang of inventory in many crops so the medium-term prospects are subdued.
Farmers are therefore focusing on reducing costs and becoming even more efficient. Energy and labour costs are of greatest concern. Many farmers are updating irrigation systems primarily to save labour. Minimum and one-pass cultivation equipment is being purchased as the trend towards minimum tillage practices continues. FAR has a number of research programmes aiming to support this drive for productivity improvements, particularly in machinery use, cultivation and irrigation practices, and the possible application of bio-fuels. However, the industry meeting had some doubt about the system’s ability to cut costs further.
The short-term pressure to take arable land out of high-value crops to grow lower return but lower risk crops, especially brassicas, is of particular concern. These crops will contaminate the land with seed and in doing so make it difficult to meet isolation requirements for high-value hybrid seed crops.
Cereal production remains significant and is driven by world commodity prices. The industry would struggle in terms of critical mass and sustainable crop options without cereals in the rotation. The Australian supply situation is still the key influence. North Island feed markets are slipping due to transport costs and the use of cheaper imported products such as PKE by dairy farmers. Use of these products is increasing in the South Island also. World grain prices are trending upwards as demand for bio-fuels keeps grain prices higher than in recent years.
There was some disagreement about the future of farming in general in the Mid Canterbury area, where this model farm type is more dominant. Reportedly, the number of school leavers from the Ashburton district going on to tertiary education in agriculture-related areas is higher than it has been for a number of years. But at the same time, there is concern that few want to come back to their farming roots.
The trend for larger and better growers to expand further continues. However, some are finding that the economies of scale are not real because of the importance of highly skilled labour in realising the required efficiency gains. There doesn’t appear to be any trend to different structures, such as equity partnerships. Lifestyle is becoming increasingly important for this group also, who are reluctant to reduce costs at the expense of lifestyle.
The impact of the merger of Wrightson, PGG, and Agricom has been met with indifference by arable farmers despite the drop in grass seed contracts available. Many farmers are hoping that control of grain and seed stocks in the new company will improve with the merger. South Canterbury farmers feel that small seed production is under pressure with the closing of the local seed stores by the merged company. However, they anticipate these areas will be replaced by an increased demand in process crop areas.
The number of overseas companies interested in setting up seed multiplication ventures in New Zealand has increased since the merger. In the past this work has been carried out on contract by several companies, including one of the three involved in the merger. Long term, overseas companies, especially European ones, are expressing interest in starting breeding programmes in New Zealand. This is a reflection of the globalisation of seed production, implying that crops will be produced in other places if the economics stack up.
On the positive side, Canterbury is still regarded internationally as the most reliable and consistent place to produce quality seeds. However, the margins are high in New Zealand, and overseas companies are here to reduce these margins. There is a risk that the industry here is not big enough to play this game sustainably. Other southern hemisphere competitors whose costs are lower than ours, notably Australia, need to be watched.
Land prices continued to climb over the past year, but appear to have reached the peak, as indicated by there being little interest now in purchasing land parcels next to established farms. Demand is from local specialist process vegetable farmers, North Island vegetable farmers forced south by urban spread, and English immigrants with similar motivations. Return on capital has dropped considerably, and lease rates are low for all crops apart from the high value but high risk or high impact (in terms of depletion of soil structure or fertility) ones.
Central Canterbury arable farmers are noting an increase in land demand from large-scale market gardeners, typically for lease. These leases match current profitability and are an attractive alternative for ageing farmers wanting to retain their land.
Recent changes in Fonterra’s policy on DDT levels (minimum levels lifting from 0.2 to 0.7 ppm DDT total), along with continuing perceived high profitability, have sparked more interest in dairy conversion among arable growers than ever before. However, the capital cost of entry to dairy farming is likely to be a limitation for many farmers given their current debt levels, unless they bring in outside equity. There is concern that some top arable farmers are now considering converting to dairying, sparking some disquiet within the industry about the long-term future. On the positive side, in other parts of the world the synergies between arable and dairy farm systems are well recognised. Some Canterbury farmers have had their feet in both camps for a few years. FAR has also recognised the possibilities and continues to work on projects that integrate dairy and arable systems.
Upgrades to improve irrigation efficiency and capacity are being carried out where possible. Farmer awareness of the costs of energy, labour, and water wastage is improving. Inland areas are banking on water storage as the solution for future irrigation. Leadership, capital, and clear and timely resource consent processing will be essential for the success for these projects.
Compliance costs, particularly for water issues imposed through Environment Canterbury, continue to be of major concern to all farms. Arable farms appear to be treated on a similar basis to other intensive farm types, when the emerging science suggests their environmental impacts in terms of water use and ability to manage fertiliser are more favourable. The industry is working closely with Environment Canterbury to ensure that any approaches adopted are fair and science-based.
Table 3.4: Canterbury arable cropping budget
| 2005/06 | 2006/07f | |||
|---|---|---|---|---|
| Whole farm ($) | Per ha ($) | Whole farm ($) | Per ha ($) |
|
| Revenue | ||||
| Cereals | 166 900 | 179 300 | ||
| Small seeds | 193 900 | 238 600 | ||
| Other crop | 51 600 | 40 000 | ||
| Process/fresh vegetables | 29 400 | 38 300 | ||
| Land leased for cropping | 6 400 | 6 500 | ||
| Change in value of crop on hand | 50 800 | 8 200 | ||
| Total crop revenue | 499 000 | 2 388 | 510 900 | 2 504 |
| Sheep income (incl wool) | 183 900 | 652 | 166 100 | 583 |
| Grazing income | 32 500 | 115 | 37 300 | 131 |
| Other farm income | 9 500 | 34 | 8 500 | 30 |
| Less | ||||
| Sheep purchases | 70 200 | 249 | 68 700 | 241 |
| Stock value adjustment | –1 000 | –3 | –1 500 | –5 |
| Gross farm revenue | 653 800 | 2 318 | 652 500 | 2 290 |
| Cash farm expenditure | 393 800 | 1 396 | 402 500 | 1 412 |
| Interest | 90 000 | 319 | 95 400 | 335 |
| Rent and/or lease | 18 000 | 64 | 17 000 | 60 |
| Cash farm surplus | 152 000 | 539 | 137 600 | 483 |
| Minus depreciation | 55 500 | 197 | 55 600 | 195 |
| Net trading profit | 96 500 | 342 | 81 900 | 287 |
| Taxation | 19 800 | 70 | 11 600 | 41 |
| Net trading profit after tax | 76 700 | 272 | 70 300 | 247 |
| Allocation of funds | ||||
| Add back depreciation | 55 500 | 197 | 55 600 | 195 |
| Reverse stock value adjustment | 1 000 | 3 | 1 500 | 5 |
| Drawings | 54 100 | 192 | 52 000 | 182 |
| Principal repayments | 31 900 | 113 | 30 000 | 105 |
| Development | 31 300 | 111 | 10 800 | 38 |
| Capital purchases | 56 400 | 200 | 38 800 | 136 |
| Investments/inc equal deposits | 0 | 0 | ||
| Disposable surplus/deficit | –40 500 | –144 | –4 100 | –14 |
| Other cash sources | ||||
| New borrowing | 43 000 | 152 | 0 | 0 |
| Off-farm income | 4 000 | 14 | 4,000 | 14 |
| Other cash income | 0 | 0 | 0 | |
| Net cash change | 6 500 | 23 | –100 | 0 |
| Assets and liabilities | ||||
| Farm, forest and building (opening) | 4 870 000 | 17 270 | 5 357 000 | 18 796 |
| Plant and machinery (opening) | 370 000 | 1 312 | 370 900 | 1 301 |
| Stock valuation (opening) | 75 900 | 269 | 74 900 | 263 |
| Crop valuation (opening) | 317 800 | 1 127 | 368 600 | 1 293 |
| Total farm capital | 5 633 600 | 19 977 | 6 171 400 | 21 654 |
| Total debt opening | 1 125 000 | 3 989 | 1 136 100 | 3 986 |
| Equity | 4 508 600 | 15 988 | 5 035 300 | 17 668 |
Symbol
f Forecast
Table 3.5: Canterbury arable cropping expenditure
| 2005/06 | 2006/07f | |||
|---|---|---|---|---|
| Whole farm ($) | per ha ($) | Whole farm ($) | per ha ($) |
|
| Farm working expenses | ||||
| Permanent wages | 30 500 | 108 | 30 800 | 108 |
| Casual wages | 2 800 | 10 | 3 700 | 13 |
| ACC | 4 700 | 17 | 3 100 | 11 |
| Contracting (including harvesting/drying) | 13 000 | 46 | 11 100 | 39 |
| Animal health | 4 200 | 15 | 4 300 | 15 |
| Breeding | 300 | 1 | 300 | 1 |
| Electricity | 25 700 | 91 | 27 600 | 97 |
| Feed (hay and silage) | 5 600 | 20 | 4 600 | 16 |
| Feed (crops) | 0 | 0 | 0 | 0 |
| Feed (grazing) | 600 | 2 | 0 | 0 |
| Feed (other) | 1 000 | 4 | 1 100 | 4 |
| Fertiliser | 63 200 | 224 | 66 300 | 233 |
| Lime | 7 100 | 25 | 7 100 | 25 |
| Freight | 13 000 | 46 | 14 800 | 52 |
| Seed dressing | 21 900 | 78 | 23 100 | 81 |
| Seeds | 22 900 | 81 | 23 700 | 83 |
| Shearing costs (per ssu) | 7 500 | 27 | 7 400 | 26 |
| Weed and pest control | 66 900 | 237 | 67 500 | 237 |
| Fuel | 24 000 | 85 | 28 500 | 100 |
| Vehicle costs (excluding fuel) | 20 600 | 73 | 20 000 | 70 |
| Repairs and maintenance | 27 600 | 98 | 27 100 | 95 |
| Communication costs (phone and mail) | 4 200 | 15 | 4 000 | 14 |
| Accountancy | 3 900 | 14 | 4 000 | 14 |
| Legal and consultancy | 2 300 | 8 | 2 000 | 7 |
| Other administration | 2 300 | 8 | 2 300 | 8 |
| Rates | 7 100 | 25 | 7 400 | 26 |
| Insurance | 9 000 | 32 | 8 800 | 31 |
| Water charges | 600 | 2 | 600 | 2 |
| Other expenditure | 1 400 | 5 | 1 400 | 5 |
| Cash farm expenditure | 393 800 | 1 396 | 402 500 | 1 412 |
| Calculated ratios | ||||
| Economic farm surplus (EFS1) | 179 400 | 636 | 126 000 | 442 |
| Cash farm expenditure/GFR2 | 60% | 62% | ||
| EFS/total farm capital | 3.2% | 2.0% | ||
| EFS less interest and lease/equity | 1.6% | 0.3% | ||
| Interest+rent+lease/GFR | 16.5% | 17.2% | ||
| EFS/GFR | 27.4% | 19.3% |
Notes
1 EFS (or Earnings before interest and tax) is calculated as follows:
gross farm revenue less working expenses less depreciation less wages of
management (WOM). WOM are calculated as follows: $31,000 allowance for labour
input plus 1% of total capital as managerial reward. An upper limit for WOM of
$75,000 has been set.
2 Gross farm revenue.
Symbol
f Forecast
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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