Who are Doing the Sums…?Tuesday, Nov 14, 2000
Last nights TVNZ News showed the country coming to town with a parade of rural images through the streets of Christchurch prior to The Canterbury A& P Show later this week.
Commentators were busy pushing the line that this years A&P Show would presage a big spend up by farmers on machinery and equipment. A situation that I have no doubt that vendors will be praying for, but is this the reality of the current rise in farm product prices.
Certainly cereal growers do not expect improved incomes this year. Wool - up ten percent perhaps. Meat up thirty to forty percent for those marketing today but will these prices be realised by the majority of producers as the product flows in greater volumes as the season progresses. Dairy only up twenty percent due to locked in forward exchange.
Are these figures the basis of the rural boom that seems to being artificially promoted and ignores the inevitable effect of producer cost increases due to a lower dollar and sustained pressure for wage and salary increases on the farm and in the processing and supply channels.
The last sustained period of good rural income in '92-'93 was also the period of greatest increase in on farm costs. Particularly for dairy farmers - as they were seized by a desire to use higher cost inputs - producers were encouraged by suppliers and many advisors to move into a higher cost production structure using bought in feeds and costly feed supplementation systems. Where has Intrerlac and others of similar philosophy been in the past few years?
There is satisfaction in being seen as a successful primary sector but we should not let the false image of a rural boom go to our heads as there is always a day of reckoning.
We seem to need to be reminded that in the depths of each price cycle as all the finger pointing goes on and aid is sought to shore up faltering farmers financially it is the business decisions we make today that we will be responsible for in the future.
Read the signs and do the sums.