DairyNZ: Strong payouts offset high farm costs
The dairy sector is in a relatively stable position, with strong milk price payout forecasts continuing to offset ongoing high farm costs, according to DairyNZ.
They are deeply frustrated and struggling to maintain faith in their dairy company Westland Milk Products, he says.
The company is in a financial mess and chief executive Toni Brendish has the unenviable task of trying to return it to a reasonable financial footing. Already she has made clear there will be a lower payout for farmers and job losses at its factories.
This is hard on farmers, Bishop says. “If we had a bad season by itself or a poor payout season by itself we’d have been able to manage, but the two combined is more than the effect of two. It will be difficult for them to transition their way through this,” he says.
Bishop says until a month ago there has been incessant moisture on the Coast and when it wasn’t raining there were poor drying conditions.
“The ground has never really dried out enough to get fertiliser on in time, to get tractors on for topping or making supplement. And because we are looking after our pastures we were grazing higher than normal to avoid treading damage so we didn’t accumulate a lot of feed surpluses. It was difficult to get in winter crops so they are either delayed or if they were sown there was a very low strike.”
Coming into summer, farmers were down on supplements they’d normally have for the winter and they are also down on winter crops. Farmers are also facing pasture damage caused by treading.
Bishop says in the last month things have changed for the better with warm dry weather and they have been able to catch up on some work on their paddocks.
“But now it’s generally too late to get crops in, or they will have had to select crops that won’t yield quite as much. There’s been a bit of supplement made but nowhere near what people would be expecting to make. People are now going to have to make strategic decisions about their farms as we move into the autumn proper.”
He says farmers must decide soon whether to buy in extra feed to keep the cows milking or instead to quit dry cows to reduce feed demand. Milk production is on average down by 5-7% on the West Coast, but Bishop is unsure whether this is due entirely to the wet season or partly to farmers reconfiguring their businesses in the light of previous poor seasons.
The weather and the financial woes of WMP are also a blow to the region.
“The Coast has had the coal slump and the dairy slump and there just isn’t the same amount of money circulating in the local economy. It’s not stagnant but it’s not buoyant. I think the dairy farming business here is still profitable but work is still to be done on what those businesses need to look like,” Bishop says.
While the Coasters are renowned for getting through tough times, Bishop says someone needs to find a replacement word for ‘resilience’.
