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Grain-reliant North Island industries from brewing to pig farming face soaring costs this season as South Island dairy farmers keen to cash in on bumper milk payouts push up the price of barley.
Hew Dalrymple, North Island spokesman for Federated Farmers' grains council, predicted the grain - a common ingredient in beer and an important supplementary feed for livestock - would leap in price from $270 a tonne last year to around $400 a tonne in the new season.
He said this was because dairy farmers in the South Island were buying as much of it as possible to boost production in a year when Fonterra has forecast a record payout of $5.53 a kg of milk solids.
Although barley is also grown in the north, industries there had to import from the South Island to meet their needs, Dalrymple said.
"We are predicting that barley grown in the South Island will stay in the South Island ... [where] dairy farmers will be wanting to buy greater volumes ... to increase production due to high milk solid prices," he said.
"That means less supply of barley in the North Island, so buyers such as brewers and millers as well as buyers of feed for pigs, poultry, horse, deer and dairying will be squeezed," he said.
"There is no surplus grain in New Zealand right now - and that's most unusual. After a bumper crop in the South Island this year it's all gone."
The rise in demand would benefit North Island barley growers who could expect bumper prices after two years of low prices and poor yields, he said.
Dalrymple said high prices for Australian barley - which had jumped from $180 a tonne last year to $255 - meant those wishing to import from Australia faced prices of around $400 a tonne with shipping costs. He said that was how much New Zealand grain would be worth in the new season.
"If you want to import it into New Zealand you're going to have to pay that anyway."
The brewing industry, and poultry and pig farmers, are the biggest users of barley in this country.
Dalrymple said increased planting of maize for the biofuel industries in the United States and South America had reduced the amount of barley grown there, which had lifted world prices.
The biofuel industry had also boosted input costs for arable growers in New Zealand, he said.
"International demand for fertiliser has risen so rapidly because of ethanol requirements in the US and South America and as a result of that we're paying a lot more for fertiliser."
Price pressure
* South Island dairy farmers keen to capitalise on record dairy payouts are buying up barley stocks to boost production.
* North Island industries dependent on barley - such as brewing, milling and pig, poultry and deer farming - which normally import from the South Island face price rises as a result.
* Costs of importing from Australia have also risen, with drought slashing production and the US and South American biofuels industries inflating world grain prices.
