Wednesday, 07 February 2024 09:55

Dairy has 'turned a corner'

Written by  Peter Burke
Pita Alexander Pita Alexander

A leading farm accountant and consultant believes the dairy industry has turned a corner as the rural sector navigates a downturn.

Christchurch-based Pita Alexander says the present downturn is the worst he’s seen in his 60 years in the business, but while the situation is still dire for the sheep sector, there are positive signs for dairy farmers.

He says the recent increases in the Global Dairy Trade (GDT) and the fact that predictions for the farmgate milk price are moving up are positive.

“However, the reality is that the dairy farmers need a farmgate milk price of $9/kgMS,” he says.

Alexander says the challenge for many dairy farmers – especially young ones – is that they have never experienced a downturn like this one, whereas it’s more likely sheep and beef farmers will have. But he says even though dairy farmers have four times more debt than their sheep and beef colleagues, they have been able to handle this better because it appears to have lasted only one year.

“Farmers are resilient and can handle one bad year, but two years in a row with low returns and higher input costs is another thing,” he says.

One of the problems for NZ, says Pita Alexander, is the flat state of the Chinese market, which is by far the biggest market for dairy – taking 35% of our exports. The next biggest markets, at just 5%, are Australia, the USA and Indonesia. But Alexander says we can’t blame China because it is grappling with its own internal economic problems. On top of that, domestic dairy production in China has risen.

He says even with the upturn in the dairy industry, farmers still need to be prudent with their spending and a downcycle is not a time for making principal payments on bank loans or helping family financially. He says there is no substitute for accessing a top-class farm advisor to ensure good decisions are made.

More like this

Mixed results on GDT

The first Global Dairy Trade (GDT) auction drew mixed results, with drop in powder prices and lift in butter and cheeses.

Featured

Fruit fly controls to remain in place

According to Biosecurity New Zealand, legal controls on the movement of fruit and vegetables in the South Auckland suburb of Papatoetoe will remain in place until mid-February.

NZ genetic engine version 6 launched

The rollout of the New Zealand Genetic Evaluation Version 6 is said to mark a step-change in the depth and breadth of genetic information available to both stud and commercial sheep breeders.

Harvest samples sought for crop nutrient project

Arable growers are being invited to supply samples of their harvested crops as part of a project which uses an alternative approach to determining how well they are managing their biggest input - fertiliser.

National

Farm Source turns 10!

Hundreds of Fonterra farmers visited their local Farm Source store on November 29 to help celebrate the rural service trader's…

Machinery & Products

A JAC for all trades

While the New Zealand ute market is dominated by three main players, “disruptors” are never too far away.

Pushing the boundaries

Can-Am is pushing the boundaries of performance with its Outlander line-up of all-terrain vehicles (ATVs) with the launch of the…

» Latest Print Issues Online

Milking It

Milking fish

OPINION: It could be cod on your cornflakes and sardines in your smoothie if food innovators in Indonesia have their…

Seaweed the hero?

OPINION: A new study, published recently in Proceedings of the National Academy of Sciences, adds to some existing evidence about…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter