Friday, 10 July 2015 06:00

Crisis will take longer to clear – Mackle

Written by 
Tim Mackle. Tim Mackle.

DairyNZ chief executive Tim Mackle says the current downturn in the dairy industry is different from others in the past. 

During the last downturn New Zealand’s two biggest export competitors – the EU and US in particular – were hampered by credit and investment issues and a lack of confidence caused by the global financial crisis, Mackle says. Dairy feed prices were then high, effectively preventing them from entering the international market.

“This time they have lower oil prices, lower feed costs and they don’t have the issues they were dealing with post GFC so they are in a stronger position and they have aspirations to export. Things are different this time so it will, potentially, take longer for this to clear.”

Mackle says given the present economic climate the dairy industry needs to focus more on building resilient systems, the hallmark of NZ’s  success over many years. The industry has always been subject to volatility but the peaks now are higher and the troughs deeper. 

NZ farmers, who get no subsidies – unlike those in other countries – are very competitive. “But we have to use the opportunities ahead of us right now to reset that competitiveness and resilience in our system. 

“Key areas are, first, stewardship of the environment, which includes animal welfare, and making sure conditions for staff are in line with best practice. Health and safety is part of this. 

“Then there is the farming system itself: farmers need to make sure theirs is resilient. There is a risk that variable costs can end up being fixed costs.”

Mackle is urging farmers to focus their business acumen on ensuring they are financially sound. The present crisis provides an opportunity for farmers to examine their farm systems and themselves.

Getting the right people into agriculture at all levels is a big challenge, he says, but the industry seems to have a comprehensive plan. For example DairyNZ is spending $800,000 a year into its scholarship programme. Other programmes exist to get people into the industry; things have come a long way in the last five years, Mackle says. 

Financially some dairy farmers have got carried away in recent years with the high milk prices and over-extended themselves. 

“The old adage is that production is vanity, profit is sanity. That is a trap we have to watch and avoid, but no doubt some people have done well out of putting marginal feed into the system when prices are high. 

“The key thing they have done is, first, grown and harvested as much grass as they could, then they’ve put feed into the system strategically at the right price and time to get the maximum response,” Mackle says.

More like this

Strong uptake of good wintering practices

DairyNZ has seen a significant increase in the number of farmers improving their wintering practices, which results in a higher standard of animal care and environmental protection.

Better animal genetic gain system

A governance group has been formed, following extensive sector consultation, to implement the recommendations from the Industry Working Group's (IWG) final report and is said to be forming a 'road map' for improving New Zealand's animal genetic gain system.

OSPRI's costly software upgrade

Animal disease management agency OSPRI has announced sweeping governance changes as it seeks to recover from the expensive failure of a major software project.

Musical chairs

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

Featured

Massey Research Field Day attracts huge interest

More than 200 people turned out on Thursday, November 21 to see what progress has been made on one of NZ's biggest and most comprehensive agriculture research programmes on regenerative agriculture.

Expo set to wow again

Stellar speakers, top-notch trade sites, innovation, technology and connections are all on offer at the 2025 East Coast Farming Expo being once again hosted in Wairoa in February.

A year of global challenges

As a guest of the Italian Trade Association, Rural News Group Machinery Editor Mark Daniel took the opportunity to make an early November dash to Bologna to the 46th EIMA exhibition.

National

OSPRI's costly software upgrade

Animal disease management agency OSPRI has announced sweeping governance changes as it seeks to recover from the expensive failure of…

Machinery & Products

BA Pumps expand

Cambridge based BA Pumps & Sprayers, specialists in New Zealand-made spraying equipment, has acquired Tokoroa Engineering’s product range, including the…

Entries open for innovation award

Fieldays and its renowned Innovation Awards are celebrating their 57th year, marking a longstanding tradition in the agricultural calendar, with…

» Latest Print Issues Online

Milking It

Chinese strategy

OPINION: Fonterra may have sold its dairy farms in China but the appetite for collaboration with the country remains strong.

Not fair

OPINION: The Listener's latest piece on winter grazing among Southland dairy farmers leaves much to be desired.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter