Tackling rising input costs

By Dwayne Cowin

The original version of this article appeared in Country-Wide Magazine in May 2022

Despite enjoying strong product pricing for beef and lamb, farmers’ bottom lines aren’t budging. Though earnings have increased, so have the costs of key farming inputs.

The reasons these price rises are myriad and complicated, but a significant factor is the pressure on global and local supply chains. Due to port delays and Covid-19 closure relate, shipping prices are around 600% higher than they were two years ago. The prices of ocean freight out of Asia have also grown substantially, increasing by 15 times between March and August last year.

Inflation also plays are part. With the annual rate of inflation recently released at 7.3% for the June 2022 quarter, few costs have escaped recent price increases.

There are two approaches farmers can take. Simply write out cheques with a ‘just suck it up attitude’ or see this as an opportune time to review the financial performance of the farm businesses. Part of that review could include implementing changes to deal with the rising costs.

Lowering the cost of fertiliser

Since the fertiliser cost on most farms is between 15 to 30% of total working expenses, farmers are understandably feeling the pinch from recent price hikes. The cost of some high analysis fertilisers has more than doubled in the last 12 months.

As a result, farmers are being forced to make difficult decisions about what product to use and how much to put on.

While the current prices could be a temporary spike, they’re unlikely to return to the levels they were 12 months ago. Rather than withhold fertiliser applications to ride out the price rise, a better strategy is to lower fertiliser costs. Even a 10% reduction in fertiliser expenditure through targeted fertiliser applications can reduce total farm working expenditure by 2%.

Cost-reducing strategies could include:

  • Start back at the start – have we got soil transect lines in the right place to best represent different areas of the farm?
  • Develop a more tailored fertiliser application strategy. By obtaining accurate soil test results, tools such as variable rate spread technology can be used to target more productive areas of the farm, or areas which will yield the greatest response.
  • Is there an area of the farm with a nutrient status above the optimum range? Can a sub-maintenance rate be applied over this area without reducing pasture production?
  • Don’t have a short-term fertiliser strategy that mines soil fertility to a level where pasture production becomes adversely affected.

 Lowering the cost of feed

While some sheep and beef farms operate a simple all grass system, other farms which are reliant on either conserving, growing or importing supplementary feed should be understanding the cost of doing so, and carefully considering this against the relative benefits.

Feed costs have increased in three main areas – nitrogen fertiliser costs, fuel costs (which affect cropping and supplement conservation costs), and chemical costs (affecting cropping costs).

The spike may be temporary, but prudent farmers would do well to consider the following cost-lowering strategies:

  • Review the current on farm stock policy – are we using a lot of supplements in our system? Is this still economic at higher prices?
  • Have a strategy to fill the feed gap. This could either be reducing feed demand (by selling some trading stock) or increasing feed supply (by feeding out or importing supplements).
  • Know the costs of conserving feed on farm (through cropping, silage conservation etc.) compared to importing feed. Most methods of conserving feed on farm cost between 13 – 20 cents/kg DM, whereas importing feed costs start at 30 cents/kg DM (applying nitrogen) and go as high as 50 cents/kg DM (importing palm kernel or baleage on farm).
  • If supplementary feed is grown/imported as part of the farming system, explore options to contract in product schedule pricing. This way the trading margin can be locked in, given we know the feed cost.
  • Be disciplined in the selling decision if the cost of supplying feed is going to be more than the return from retaining the stock.

Lowering the cost of repairs and maintenance

Unlike fertiliser and feed prices, the material costs for fencing, water reticulation etc. are unlikely to come back down. But there are measures farmers can take to minimise the impact of repairs and maintenance.

  • Decide ahead of time what is necessary expenditure (i.e. the business will fall down if the cost is not incurred) versus discretionary expenditure (the nice-to-do job list).
  • Decide which jobs are time critical (cannot be delayed) vs flexible. Prioritise the job list based on the time constraints.
  • Develop ‘if statements’ for when discretionary repairs and maintenance expenditure can be incurred. Is it when we know our average lamb sale price? Is it when we hit our target pasture covers pre-winter and don’t need nitrogen to boost feed supply?
  • Consider the above points as part of a whole farm budget – e.g. Since we didn’t achieve budgeted lamb sale value, is it more important to get all the fertiliser on and leave roofing the back docking yard for another year?
  • Get quoted pricing for materials.

 It all adds up

Although gains at an individual cost level may seem small, ten small wins can add up to a reasonable saving over your total farm working expenses bill. The key is to isolate each of the three key areas (fertiliser, feed, repairs) and systematically work through them to find the gains.



Lee Matheson

Tumuaki Whakahaere
Kaiwhakahaere Matua

B.Appl.Sc (Hons), FNZIPIM (Reg)

Nā tana whakapakeketanga i Pōneke i haere mai ai a Lee ki tana mahi nei. He Tāhū Paetahi Pūtaiao Otaota, ā, he mātanga hoki a Lee ki te tāhua mākete. Nā tana tūranga Pouwhakahaere e kore e kaha a Lee ki te puta ki ngā pāmu, heoi anō ki te puta atu ia ki waho, ka hākoakoa katoa ngā koko o tōna ngākau. He ahakoa kai te tari e mahi ana a Lee ināianei, kai konei tonu ia e kaha ana ki te tohutohu ki te arahi ki te tuku i ana matauranga rautaki a pāmu , ona whakaaro auaha, ana matauranga a Kāwanatanga, te mātai whakangao me te rangahau ohaoha ki ngā taringa pakiki.

A waho atu i a Perrin Ag, he tangata aroha ki te whakaako whutupōro, te mātakitaki i ana tokotoru e pakeke tupu ana me te ngaki māra tahi me tana hoa rangatira a Haidee.

"E aroha ana ahau ki te whakamana i ngā tāngata i o mātau wāhanga tuatahi me te ngahau o te kite i ngā kiritaki e tutuki ana i a rātau hiahiatanga. Mēnā ka taea e tātau te whakahauhau i nga kaiahuwhenua kia whakauru ki o rātau kiritaki, kia nui ake te whakauru hohe ki a rātau mekameka putanga me te tirotiro i a rātau umanga mā tētahi arotahi whānui ake, kātahi ka whakaaro ahau he nui ake te wā e heke mai ana a tātau mahi."

Abbey Dowd

Kaiwhakahaere

B.Ag.Sc (Hons), MNZIPIM

I uru a Abbey ki Perrin Ag i te wā o Hui 2023 hei wāhanga o te hōtaka tono mātauranga o te umanga, o Empower.

I tipu ake a Abbey e karapotitia ana e nga pāmu miraka kau i roto i tētahi iwi tata i Waikato ki te Tonga. I kite a ia i te tuatahi me pēhea te tautoko a nga kaiahuwhenua o te rohe i tōna iwi, koia ia i whakaawe ai i a ia ki te ako i te Whare Wānanga o Lincoln.

I nga wā katoa e mīharo ana te tipu ake i roto i tētahi iwi ā-taiwhenua o Abbey i nga wā katoa e hia nga kaiahuwhenua o te rohe e āwhina ana ki te iwi. I pīrangi a ia ki te āwhina ki te whakahoki ki te umanga me te tākaro i tētahi wāhanga ki te āwhina i to mātau wāhanga tuatahi kia whakaputa tonu i te kai kounga i runga i te āhua mārō.

I te tau 2022, i pau i a Abbey te raumati hai takawaenga i runga i tētahi o nga mahi miraka tauhokohoko tuatahi a Aotearoa. Ko tana kaupapa Honours e rangahau ana i te miraka deer i te taha o ētahi atu mahi miraka tūturu ake, me te arotake i ngā āheinga whakanao o te umanga miraka.

"I te tipu ake kaore ahau i noho i runga pāmu, engari i mōhio tonu ahau e hiahia ana ahau ki te mahi i te wāhanga pāmu. I pīrangi ahau ki tētahi tūranga i reira he toenga i waenganui i te mahi me te pāmu, ā, ka taea e au te tautoko i nga kaiahuwhenua kia whiwhi ai i te pai rawa atu i a rātau umanga."

Sam Gray

Kaiwhakahaere

I tipu ake a Sam i runga i te pāmu miraka kau i te Raki Tawhiti. I muri iho i tana whiwhinga mai i te Whare Wānanga o Otago i te tau 2005 me tētahi tohu Honours i roto i te hangarau hangarau rāpoi ngota, he maha nga tau e mahi ana a ia i roto i te rangahau rongoā i Aotearoa me Pākehā. I a ia e hoki ana ki Aotearoa i te tau 2012, e whā nga wā i pau ai i a ia te pāmu miraka kau i Te Whenua o Raki i mua i tana hokonga i tētahi paraka 56 ha i Taupо, i reira ia i kitea tuatahitia ai ki te pāmu i raro i te pū hauota. I uru a Sam ki Perrin Ag i te tau 2023, ā, ka mauria mai ōna pūkenga kaha e whakatūria ana e tētahi huarahi hāngai ki te whakaoti raruraru. I waho o te mahi pāmu me te tohutohu, tērā pea ka kitea e koe e rere ana a ia i te hī ika, te whaiwhai, te papa huka rānei.

"He tokomaha nga kaiahuwhenua e rongo ana i te uaua i mua i te huringa tere o te whenua mana. E tautohe ana ahau ki te āwhina i nga kaiahuwhenua kia mārama he aha te tikanga o ēnei ture taiao mo a rātau umanga, me te tuku rongoā māia e āhei ai rātau ki te mahi tonu i ā rātou mahi tino pai, i a rātau e noho tautuku tonu ana".

Danni Armstrong

Kaiwhakahaere pūtea

Pakeketia a Danni i te pāmu kau i Atiamuri ka noho hoki mō te rima tau hai pou hāpai kūtētē kau. He ahakoa tana mahi pāmu ehara i te mea ka noho motuhake ki tēnei mahi, ka aro atu hoki ki te rīhi motukā, ki te hauora me te mahi moana. He kaha tana aronga ki ngā take whakahaere me te tiaki moni, mātua ko te manaaki me te atawhai i ngā tini manuhiri ka whakatata mai, ka rua ko te tiaki i te taha ki te ao hangarau pēnā me ngā whārangi pāpāoho ki te ao hou ko te whakahaere tuku motukā, ā, tae rawa ki ngā kaupapa ako, te whakarite rōhi -a-mahi, H&S me te whakatika hapa. I whakapiri mai a Danni ki a Ag i te marama o Mei 2021, he ahakoa he tauhou he mātanga ki tōna ao pākihi koi i tāhuri mai ia ki tēnei whānau.

He wahine pānui pukapuka me ōna ngeru, he wahine takahi whenua haere ngāhere.

“I runga i ngā tini kaupapa whakawetewete, ara ake ai ahau ia rā ia rā – kāre i tua atu i te whakamutunga o aku mahi tatau kia ea ai– e whai tūranga mana ai taku tu ngātahi me tēnei tīma”.

Duncan Walker

Tumuaki
Kaiwhakahaere Matua

B.Appl.Sc, MNZIPIM (Reg)

I te haerenga mai i tētahi papamuri pāmu maroke me te miraka kau, i nga wā katoa e hiahia ana a Duncan ki te tipu i nga umanga o te wāhanga tuatahi. Ahakoa he pāmu tawhito, he ngahere, he pūtea penapena rānei i waho o te kēti pāmu, ko te mahinga pakihi tūturu ko te hiahia o Duncan. I muri i te mākatanga mai i te Whare Wānanga o Massey me tētahi Bachelor of Applied Science i Agribusiness, ko te wā tuatahi o Duncan ki te arotau i tētahi umanga pāmu mā te mahi i tētahi tahuringa miraka kau. Na te kaupapa Duncan i whakahaere te tahuringa, a, ka haere tonu te whakahaere i te pāmu miraka kau mo te toru tau anō.

Mai i te hononga atu ki Perrin Ag i te tau 2011 ka mahi a Duncan me te whānui o ngā kiritaki tae atu ki ērā 'i waho o te kēti pāmu'. Mā tōna papamuri kaha i roto i te tātari pūtea penapena, te rautaki pakihi me te whakahaere kaupapa, kei te nui haere te mahi a Duncan me ngā kiritaki ki te tātari me te whakauru i ngā pūtea whenua me ngā pūtea rākau ki roto i ā rātou umanga pāmu.

“Ko te hāpai o ōku hoa me te arataki i a rātou me ngā kōpikopikonga huhua o te ao hou taku oranga ngakau. Kia tū rangatira ai rātou, he aha i tua atu!”

Lee Matheson

Tumuaki Whakahaere
Kaiwhakahaere Matua

B.Appl.Sc (Hons), FNZIPIM (Reg)

Nā tana whakapakeketanga i Pōneke i haere mai ai a Lee ki tana mahi nei. He Tāhū Paetahi Pūtaiao Otaota, ā, he mātanga hoki a Lee ki te tāhua mākete. Nā tana tūranga Pouwhakahaere e kore e kaha a Lee ki te puta ki ngā pāmu, heoi anō ki te puta atu ia ki waho, ka hākoakoa katoa ngā koko o tōna ngākau. He ahakoa kai te tari e mahi ana a Lee ināianei, kai konei tonu ia e kaha ana ki te tohutohu ki te arahi ki te tuku i ana matauranga rautaki a pāmu , ona whakaaro auaha, ana matauranga a Kāwanatanga, te mātai whakangao me te rangahau ohaoha ki ngā taringa pakiki.

A waho atu i a Perrin Ag, he tangata aroha ki te whakaako whutupōro, te mātakitaki i ana tokotoru e pakeke tupu ana me te ngaki māra tahi me tana hoa rangatira a Haidee.

“Kai reira kē te ihi o taku mahi, ko te whakarangatira i ngā tangata mahi tahi pēnei i a tatou me te whakaputanga o ngā apataki ki te ao marama i runga i ngā whakatutukitanga a wō rātou tumanako-ā-ngākau. Mēnā tatou e tāea ki te whakaakiaki i ngā tangata pāmū ki te hono ki wō rātou kiritaki, me te ū a ringa raupā nei ki te ara whakaputa, me te titiro whānui ki tā rātou pākihi , ka harikoa katoa ahau i te mōhiotanga he ao ki tua mō tēnei tūmomo mahi”.