8 Aug 2011

Grain and seed prices expected to improve

5:34 am on 8 August 2011

An arable farming representative hopes that a significant lift in cereal and seed incomes projected for the next year will slow the loss of cropping land to dairying.

The Ministry of Agriculture's latest farm monitoring report for the arable sector says growers in the main production area, Canterbury, are expecting a substantial increase in profit in the 2011-12 season.

The forecast for a typical cropping farm, is for pre-tax profit to almost double, to $362,700.

That's based on a return to better-than-average yields and continuation of current strong cereal prices.

Federated Farmers' grain and seed chair Ian MacKenzie says prices and prospects are improving after last season's poor harvest and low crop and produce prices.

Mr MacKenzie says a reasonable harvest next year is necessary because if the arable industry shrinks much further there is a danger it will become difficult to attract overseas contracts and handle the local market for grain.

He says anecdotal reports suggest the area in cereal and seed production shrunk by 20% last year and the yield was also 20% down.

Mr MacKenzie says arable land use now has to compete with a more buoyant sheep and beef sector, as well as dairying.