Thursday, 28 September 2023 16:04

Breakeven milk price forecast up 21c

Written by  Sudesh Kissun
DairyNZ is encouraging farmers to plan for the months ahead, amid increasing costs and an expected El Niño weather pattern. DairyNZ is encouraging farmers to plan for the months ahead, amid increasing costs and an expected El Niño weather pattern.

DairyNZ has updated the national breakeven forecast to $7.78/kgMS, a 27c increase from its previous forecast.

The breakeven milk price is the milk sale price per kgMS to cover the farm’s costs in a season, excluding capital expenditure and principal repaid on loans.

DairyNZ head of economics, Mark Storey, explains that the breakeven figure has been updated based on new pricing information, tax changes and in response to milk price and dividend payment announcements.

 “Outside the breakeven milk price, we have seen farm expense forecasts increase, impacting overall costs, while revenue expectations have shifted with high dividend payouts, accompanied by decreasing milk price expectations for the 2023/24 season,” says Storey. 

 “It’s also important to understand your overall business. The breakeven milk price is one indicator, however operating profit margin, debt-to-asset ratio and return on assets are all part of a farm’s overall business picture. 

 “Some of these indicators are available on the Econ Tracker, to allow farmers to see how their numbers compare and consider where they may require additional support to get through the season ahead.”

DairyNZ is also encouraging farmers to plan for the months ahead, amid increasing costs and an expected El Niño weather pattern potentially bringing a variety of challenges on farm. 

 DairyNZ’s general manager of farm performance, Sarah Speight, explains that right now farmers need to focus on growing and utilising as much pasture as possible, as it remains the cheapest source of feed. 

 “Farmers are faced with high costs, so attention to detail and a focus on financial outcomes ahead of production will drive better business outcomes,” says Sarah. 

 “This is especially important at this time of year where pasture cover and getting cows back in calf will determine financial and production outcomes, not just for this season, but into next season too.”

The new forecasts are published on the DairyNZ Econ Tracker and expressed as a national average, which does not necessarily reflect individual farm situations.  

 Farmers can contact their DairyNZ regional team, call 0800 4 DairyNZ, or go online to dairynz.co.nz/budgeting for more information and advice on how to navigate the season ahead.  

More like this

Musical chairs

OPINION: DairyNZ's director elections has seen scientist Jacqueline Rowarth re-elected for another three-year term.

DairyNZ levy to increase?

Retiring chair Jim van der Poel has used his final AGM to announce the intention to increase the DairyNZ farmer levy for the first time in the industry-good body's 17-year history.

Tributes to retiring 'Jim the farmer'

Doing what is right, not what is easy, has been the hallmark of Jim van der Poel's leadership of, and advocacy for, the dairy industry, attendees at the DairyNZ annual general meeting heard last week.

Featured

New ag degrees at Massey

Changing skill demands and new job opportunities in the primary sector have prompted Massey University to create a new degree course and add a significant major into another in 2025.

The show is on!

It was bringing in a new Canterbury A&P Association (CAPA) show board, more in tune with the CAPA general committee, that has ensured that Christchurch will have a show this year, says CAPA general committee president Bryce Murray.

National

'Quite a journey'

Former Synlait chief executive Grant Watson says the past two years have been quite the journey.

DairyNZ levy to increase?

Retiring chair Jim van der Poel has used his final AGM to announce the intention to increase the DairyNZ farmer…

Former Fonterra CEO dies

Former Fonterra chief executive Theo Spierings passed away in the Netherlands over the weekend.

Machinery & Products

Milk Sustainability Centre launched

The recently announced Milk Sustainability Centre – a collaboration between global giant John Deere and milking and feed specialists De…

Data connection made easier

New Holland and Case IH are introducing new advancements in their precision technology stack to make farming easier and more…

» Latest Print Issues Online

Milking It

Feed from farmers

OPINION: The country's dairy farmers will now also have a hand in providing free lunch for schools.

Brighter future

OPINION: The abrupt departure of Synlait chief executive Grant Watson could be a sign that Chinese company Bright Dairy, the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter