Agsafe Weekly Rural Report

Finance: The NZ dollar remained steady over the week but is still trading lower than recent years. Trump’s tariff war is creating international chaos & the US $ weakened. Brent Crude is steady around $70 to $75 per barrel, but is currently $71.83/barrel.

Wool: Wool prices There is increasing interest in wool & some promising signs being reported – still want to see the change!!.

Beef, Sheep & Venison schedules: Meat schedules are steady to slightly firmer across the board. There is strong demand for red meats especially the manufacturing beef in the USA. Venison prices are good, lamb & beef schedules are OK. The 10% tariff is at Trumps lower tariff level so might not impact too much on our beef supply & schedules.

Dairy Prices. The g/DT lifted 1.1% with WMP down 1.1% & SMP up 5.9%. The supply from our major competitors is down underpinning the strong world prices & increasing demand for protein.

Jim’s Weekly Rant:

The trade wars have started with 10% tariff to be charged on all NZ goods going into the USA and while we try and get our heads around the impact on world trade the NZ consumers are trying hard to make sense of the local Supermarket trade and the government’s inquiry into the Supermarkets. The supermarkets are full of stuff that come from the farms and while farmers often struggle to make a dollar we keep getting told the produce in the supermarkets is too expensive. The government has offered the public an insight into the supermarket industry advising us all that they make a $22 billion profit annually and that is apparently obscene. Of course, they need to make a profit and we all know that many of the workers in the supermarkets are some of the lower paid employees in the country and perhaps that is where we should all start with the review. I would be keen to see how a 10% increase in wages for the supermarket employees would impact on the $22b profit. I have tried to find out where the industry is ripping the consumer off, and it is not easy. If we look at the meat sold, a farmer is currently paid around $7 per kilogram of carcass weight for the beasts. That translates into around $14 per kilogram for the cuts obtained and that is before the animal is slaughtered and processed and readied for sale and meat prices will rise dramatically over the next 2 years as demand increases and other factors limit supply internationally. Milk is another staple item. The farmers get paid approximately $1.00 per litre and that is for the milk in the container but not delivered to the point of sale. Milk is perishable whereas meat can be kept for much longer in chilled conditions. The average price of a cut of meat in the supermarket is between $25 and $35 per kilogram and mince is +/- $17 per kilogram which would indicate the supermarkets are not attracting excessive margins in the meat sales. Basic milk sells around $2 per litre so again I ask, “where is the problem?” The international price for butter is $13.50 per kilogram and 500 gram of butter in the supermarket will cost upwards from $7.20 so again the margins are low!! Most of the miller’s wheat is imported from Australia and we can buy basic loaves of bread of $1.40 per loaf so I struggle to see any price gouging there. The vegetable growers are mostly large-scale producers as the smaller growers struggle to make a living and supply the local vege shops while we require Baille Bros, Chapman, Talleys & Leader Brands to produce at a scale where affordable prices can be sustained for the general buying population. My question to the government would be: “who are they expecting to take the hit on the supply price to the supermarkets?” The growers of the vegetables, the meat & the producers of the milk all take the production risk and are “price-takers” in what is traditionally considered a cut-throat industry. Vegetable yields are weather dependent. Meat production require farm land that is being sold off for trees and solar panels and the dairy industry is continually at war the ill-informed environmentalists and animal welfare lobbyist’s. And we have the staff at the supermarkets being paid only basic wages. Pushing the price paid to the farmer/growers even lower will be detrimental to the rural economy and no one wants subsidies but it seems to be what the government is wanting. The food producers need to become more vocal about the costs of production and the prices they receive against the risks taken.