'Under pressure' seed and grain seek green shoots in challenging market

The agricultural seed and grain sectors in New Zealand are facing significant challenges as market pressures mount. High operating costs, adverse weather conditions, and import competition are contributing to the pressures on the country's legacy arable sector. At an industry event in Christchurch, executives and officials discussed the various woes affecting the sector, including rising costs, climate disruption, regulatory burdens, and the loss of productive land to dairy conversion.

The success of the arable sector is considered vital to New Zealand's food security, agricultural productivity, export performance, and regional economies. Seed and grain exports generated around $325 million annually, primarily driven by pasture and vegetable seeds. However, domestic cropping farmers are finding it increasingly difficult to sell their vegetable and pasture seeds or grains locally, as major food companies have announced closures of vegetable processing factories and cuts to vegetable product lines.

The closures, which affect hundreds of farmers, could have far-reaching consequences for rural service providers, such as seed processors and merchants. The industry's challenges have caught the attention of new Associate Agriculture Minister Mike Butterick, who highlighted the sector's importance to primary industries. He noted that higher costs in fuel, fertiliser, agrichemicals, machinery, and labor, along with intense international competition and volatile weather, have made it difficult for the sector to maintain its margins.

In response to the challenges, the government is working on improving the planning and consenting regime, expanding market access for exporters, and securing new trade agreements. For instance, officials have recently secured new market access for carrot seed into Mexico and are exploring opportunities to enter markets in India, Peru, and Ecuador.

However, the sector faces additional risks, such as unreliable water access and energy costs, which have led to decisions by overseas-owned companies like Heinz Wattie's and McCain Foods to exit the New Zealand market.

The Foundation for Arable Research launched a landmark NZ Grown Grains certification to promote local grain uptake among farmers and reduce the carbon footprint of feed grains compared to imported alternatives. Despite these efforts, the arable industry forum planned for next week aims to address concerns and explore opportunities for recovery, as the sector's future remains uncertain amidst mounting pressures.