Farming CyclesSaturday, Aug 25, 2001
How short each cycle of higher farm gate prices now seems to be.
The evidence is mounting that some farm product prices may be starting to point downwards.
Wool especially the finer types appears to be receiving price resistance when a month or two ago predictions were much more optimistic for some price improvement.
Lamb, especially to UK appears to be heading for a turbulent marketing period for the next nine months as the disruptive effects of the foot and mouth outbreak is worked through the European market.
Dairy & beef of all the main products is currently showing the steadiest of outlooks.
However the unpredictable element in all export sales is the factors that affect our exchange rate.
Just how widespread the international recession may be, is in the hands of the big economies. But there is certainly pressure on for the US dollar to fall in value, causing a realignment of the currencies of the countries with which NZ trades.
Predicting what may happen may seem an impossible task, never the less it is now a major responsibility in terms of the successful individual farm business.
The dairy industry has placed a collective responsibility on its treasury to purchase exchange forward which assures an exchange pricing level to dairy producers for this season but diminishing benefits in subsequent seasons.
There is limited opportunity for other producers to do the same so most farmers are left to handle the pricing fluctuations as they are delivered. It is this element of every day farming that each farm business manages in their own way.
Just as daily management of the physical aspects of production has become much more sophisticated there is good reason to also improve the farms product marketing by devising ways of diminishing the effects of these short higher price cycles for the commodity products produced.
It is only as a result of demand that new ways of interfacing farm production with the market will be developed.