30 July 1985 Roger Lough discusses future planning for maize production

Future maize production should be centred away from dairying in the central North Island regions of Manawatu and Poverty Bay where production could be part of a balanced cropping-livestock policy, according to Mr Roger Lough, a senior research economist with the Agricultural Economics Research Unit at Lincoln College.

He gives his view in a discussion paper, just released by the A.E.R.U., on a survey of the New Zealand maize industry.

His report follows up field work done by Mr Alistair Rayne on the 1983-84 maize production year.

Mr Lough says that future production oriented research into maize should centre on Manawatu and Poverty Bay.

Special emphasis should be given to variety trials by regions, weedicide and insecticide programs reflecting increased returns a hectare, and better use of plant and machinery.

Payment for quality should be introduced so research into crib-maize drying techniques, and on-farm drying and grain handling will be important.

Most maize has a domestic use in compound stock food, starch, distilling, and breakfast foods ; a little is exported.

Slightly less than 4000 ha is planted in maize as a fodder crop.

Most maize is grown in the North Island as high-yielding varieties do not do well in the South Island because of cooler summer temperatures.

Versatility for grain, greed feed and silage gives maize a significant advantage over other crops.

Export markets are small with most New Zealand maize going to Fiji and Singapore ; only 22,471 tonnes, worth $3.33 million, was sent overseas in 1980-81.

Imports are also small, and strictly controlled to keep out diseases such as southern leaf blight and boil smut.

These imports are mostly used as a basic source for seed.

One company, New Zealand Starch, uses imported maize as the maize is sterilized during processing.

Nearly 100 per cent of maize production is in the North Island, with two thirds of the North Island crop produced in the South Auckland-Bay of Plenty region.

This region accounted for 61 per cent of the increase in maize production between 1981 and 1982.

Production per hectare rose from 3.9 tonnes in 1961 to 9.1 tonnes in 1982, but partly off setting this has been a decline in area from a peak 28,600 hectares in 1977.

Much of the increased yield has been brought about by improved cultivars being used.

Before the late 1960s hybrid seed production was controlled by the Department of Agriculture, but as more areas were sown to maize seed firms became involved.

Seed merchants now develop, produce and market imported seed hybrids, in association with United States franchise holders.

In 1969 southern leaf blight devastated U.S. maize crops, and as a result the first post-quarantine growing area for maize cultivars was established in New Zealand.

Cultivar development was able to continue without the risk of importing disease.

DSIR Crop Research Division initiated a breeding program in 1968 to produce superior hybrids for New Zealand conditions.

Specific gene sources were isolated and incorporated into U.S.-bred seed lines

DSIR Plant Physiology Division established a breeding program in 1976, evaluating hybrids, and assessing fertiliser requirements, weed and pest control, plant population and sowing times.

New Zealand maize varies in price both seasonally and according to the growing region.

Because of being closer to the markets, maize from Manawatu and Waikato fetches higher prices than that from Poverty Bay and Bay of Plenty.

However, because Gisborne is used as a maize export port this favours growers in Poverty Bay.

Cribbed maize fetches higher prices than picker-shelled maize by way of a storage increment.

Cribbed maize is usually of a higher quality, but, as yet, there is no quality-based pricing system.

Most maize is grown under contract to merchants, who provide chemicals, seeds and fertilizer as well as seasonal finance.

Price stabilization was introduced in 1975 and the stabilization fund was controlled by a committee of four growers, five merchants and a government representative.

Maize was levied at $3-$5 a tonne, depending on the season.

The fund reimbursed merchants on any deficit between the internal price and the export price.

However, in the 1981-82 season the fund failed to meet obligations to all the grain merchants.

In the 1983-84 season some Gisborne growers co-operated to market their crop in the Waikato region.

They pooled their resources, and were successful in reducing freight and drying costs.

Devaluation last year effectively put export prices well above New Zealand prices for maize.

This further reduced the need for a stabilization fund to help Gisborne and Bay of Plenty growers.

Agreement on maize marketing was reached in November last year, and participation contracts are to be introduced.

Under these contracts a company markets to the best advantage growers' maize supplied to a specific pool.

Growers are also to be given the option of a fixed-price contract, or the right to sell on the free market.

Fixed price contracts for the 1984- 85 season are $235 a tonne in Bay of Plenty and Waikato, $230 in Manawatu and $218 in Poverty Bay.

Growers believe stability is essential to the maize industry, but because maize can be grown over such a wide area supply will continue to fluctuate.

The 1983-84 season was considered by grain merchants to be slightly better than average, although Manawatu crops sustained some hail damage and there was flooding on the East Coast.

Production on surveyed farms was one tonne per hectare better than the national average for 1982, and 1.3 tonnes better than 1981.

Yield variations for the 1983-84 season were not great, but Poverty Bay, with a saleable output of 11.4 tonnes a hectare, outyielded the other regions.

Average area of maize grown on a farm is nearly 40 hectares, but more than half the growers grow less than 30 hectares.

This emphasis the influence of a small number of very large producers.

Nearly two-thirds of the maize sown is of two varieties : PX74 and Pioneer 3901.

PX74 is used extensively in Bay of Plenty .and Poverty Bay, and to a lesser extent in Waikato, while Pioneer 3901 is sown extensively in Manawatu.

Planting requires a precision drill which is expensive to both buy and maintain.

Contractors are used for planting, and growers with precision drills often plant large areas under contract.

Nearly all growers apply a balanced N.P.K. fertiliser at planting, but there are wide regional differences between basal applications and side dressings.

All the surveyed growers used seed coated with a fungicide and used some form of weedicide, but only 60 per cent used an insecticide.

Picker-shell maize is artificially dried, but cribbed maize is dried in mesh towers under a roof and exposed to drying winds.

Artificial drying reduces moisture content to about 14 per cent, from between 20-34 per cent but usually about 26 per cent.

Dryers, fired by gas or oil and occasionally wood, require skill, time and money to use.

Over all the regions there was gross revenue of $2018 in the 1983-84 season from each hectare.

This revenue required variable cost inputs of $827 and machinery overheads of $220 for each hectare.

This resulted in a gross margin , less machinery overheads of $971 per hectare or $96 a tonne sold.

Poverty Bay achieved the highest regional revenue per hectare with high perhectare production off setting the low value per tonne.

This revenue advantage was not offset by higher variable costs or machinery overheads, with the result that Poverty Bay showed the highest gross margin and gross margin less machinery overhead returns.

Nearly 62 per cent of the total costs of growing maize are in machinery and drying.

Overhead machinery costs in growing and harvesting are the single biggest cost.

Drying is also a major cost, in spite of seasonal variations, and costs twice as much as contract harvesting.

Comparing returns from maize with those from wheat, ignoring the time the crops are in the ground, gross margin for maize  in Manawatu is $508 per hectare higher than for wheat.

Gross margin less machinery overheads for maize is $377 higher than for wheat.

This shows that because of high gross revenue the high machinery overheads in maize production are absorbed within the total maize cost structure.

This makes maize considerably more profitable than wheat, and maize is also more profitable than barley or sheep production.

Gross per-hectare margins of maize compare with those from bull beef and process pea production.

However, maize is less profitable than dairying or intensive crop production.

Maize occupies the land for 12 months of the year, while alternatives are more flexible in land use and allow a combination of enterprises on the same land over a year.

However, further analysis, related to land values, suggests alternative land use as being more profitable than maize in Bay of Plenty and Waikato.

But in Manawatu and Poverty Bay maize is more competitive, so maize production can be expected to expand in these regions.

Mr Lough concludes that increased returns for wheat could see wheat replace maize only to the extent the shorter growing season can be used efficiently by arable farmers.

Further information from Mr Roger Lough, Agricultural Economics Research Unit, Lincoln College 8150