Rabobank flags rising global dairy prices, warns of downside risks ahead
While global dairy commodity prices continue to climb in most key exporting countries, the second half of the year is expected to bring increased downside risks.
A new report says productivity growth is the key to maintaining New Zealand agribusiness’ global competitive edge in the coming decades.
In its flagship 2015 research report ‘Unlocking productivity growth in the Australian and NZ food & agribusiness sector’, agri banking specialist Rabobank says productivity growth must be reignited to drive farmer profitability.
It says the rising cost of production in recent years has pressured the competitive position of NZ agriculture in the world market and turned a spotlight on Kiwis’ slowing productivity growth.
Reviving this growth is a “particularly pressing issue”, the report warns – given the challenges faced – to reduce NZ agriculture’s environmental footprint while staying internationally competitive.
Individual farmers will have to make productivity gains to drive profitability and sustainability, and other businesses likewise throughout the food and agriculture supply chain.
A particular challenge for NZ, says report co-author Rabobank analyst Georgia Twomey, will be in reigniting sustainable productivity growth in agriculture against the backdrop of strengthening environmental regulation.
“The open market economic reforms in the mid-1980s forced global competiveness to the forefront across the NZ agricultural sector, driving efficiency gains across all parts of the value chain,” she said.
“Additional productivity growth has been derived from changing land use, particularly the switch from extensive sheep and beef farming into dairy production.
“And the significant expansion of irrigated land area – which has doubled every 12 years since 1970 – has also contributed to land use change and increased productivity,” says Twomey.
Questions are being raised about just how good the state of the dairy industry is - especially given that the average farmgate payout for the coming season is set to exceed $10/kgMS.
A leading financial and banking advisor says he doubts if most dairy farmers fully understand the dynamics of banking.
Dairy farmers are shoring up their balance sheets, with almost $1.7 billion of debt repaid in the six months to March 2025.
Virtual fencing company Halter is going global but for founder Craig Piggott, New Zealand farmers will always remain their main partners.
A former Fonterra executive is the new chair of the Dairy Companies Association of New Zealand (DCANZ).
New Federated Farmers national dairy chair Karl Dean is looking forward to tackling the issues facing the sector.
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