It's proving hard to get a maize contract. Photo: Dairy NZ
Growers are thinking twice about planting maize with wholesalers withholding contracts ahead of a looming natural gas supply shortage.
New Zealand’s natural gas production is declining with reserves dropping by 20 percent in the year to January 2024.
The shortage means the likes of wholesalers PGG Wrightson Grain and Viterra are not offering contracts to growers.
“PGG Wrightson Grain and Viterra both use gas to dry grain with,” said Federated Farmers Waikato Arable chair Donald Stobie in his September report.
“At the moment they both say that they currently cannot get a gas supply contract for next year. They also both say that the lead time is too short to change to a different fuel source to use at drying time.
“It is proving very hard to get a maize silage or grain contract, with end users holding off to see how the season ahead plays out. It will be interesting to see how much maize silage and grain gets planted.
“That question will come down to the financial situation of each grower.
How much finance do they require to grow these crops? Will a lender provide that money without a contract at planting time?”
The News sought comment from PGG Wrightson Grain and Viterra.
It’s been a roller coaster year for growers. Prices were good a year ago, with Niwa predicting a drought. But prices dropped when the drought did not eventuate.
“By the time harvest had finished if you had a crop sale you may have thought you were lucky – although some of those sale prices were at levels that growers are probably losing $1000 to $1500 per hectare.”
Crop yields were up about 8 to 10 per cent, maize silage sales had pricing as low as 15 to 17 cents per kg dry matter standing and maize grain pricing down to $300 per dry ton delivered to the silo.
“A number of growers did decide that these prices were too low so they either stacked maize silage or harvested the grain and are storing it at their own expense,” Stobie said.
“For all growers this overhang is a problem as it has kept a lid on demand and pricing for the new season.
“From a feed sale view the summer, autumn and winter has been far too kind with too much grass growing and there is very little demand for this extra feed that is around at the moment”.
Fonterra and its customers focusing on emission intensity per unit of production, maize grain could become a more attractive option compared to palm kernel, which has a higher emission rating. A shift of just 10 per cent from palm kernel to maize grain could boost demand by approximately 20,000 tons.
Waipā District based agricultural contractor John Austin, who grows about 6000 tonnes of grain on 500ha every year, said the industry had been discussing the gas shortage for months.
“It does not make sense to me,” he said. “As a contractor it really concerns me because we really need the work.”
