Should the Drought be Blamed?Friday, Apr 20, 2001
The ten-day forecast still shows little significant rain for most of New Zealand meaning that the probability
of significant growth prior to lower winter soil temperatures is becoming remote.
Three items in today's news highlights the uneasy contradictions that will cause farmers to be anxious
about the how they should manage their farms for the next the next few months.
Winter grazing charges and bought in feed prices are rocketing away in most areas. It seems many are
trapped by the drought in the 'there is no other way' thought process brought on by an earlier feeling
that good product prices mean more can be spent to get more production.
It is times like this that farming success is derived from conservative actions rather than a flamboyant,
buy your way out approach that is driving the increased prices for feed and grazing.
Lower interest rates normally means the barriers to borrowing are lower and debt becomes an uneasy ally.
The timely reminder by a Waikato financier that income peaks are inevitably followed by troughs
and the warnings are out that all is not well in the economies of the countries in which we market
the better paying products that we produce.
Expected highest prices ever for local market beef and mutton will ensure that the cost of replacing
drought culled capital stock will be high well into the spring.
All these contradictions are within the farmers control or reaction but if, as appears to be happening,
the euphoria of high product prices, low funding costs and great paper profits from industry restructuring
has diverted farmers from the realities of farming. You pay up front for the probability
of profit in the future.
It's easy to blame the weather but experience says, its not necessarily the weather, that creates the
problem, its our reluctance to see farming as a flow system with finite inputs and outputs with
variable costs and prices.
A drought tends to show the weakness of our management approach..