Tuesday, 11 August 2015 05:09

Debt-laden producers exposed to thin trade

Written by 
John Luxton, DairyNZ. John Luxton, DairyNZ.

The latest drop in the Global Dairy Trade price index will impact many farmers carrying a lot of debt, says DairyNZ chairman John Luxton.

Now banks must give young farmers leeway as they work their way through the crisis.

“Hopefully in 12 months there will be a much stronger industry going forward,” he told Dairy News.

The price index fell 9.3% in the latest GDT – the 10th consecutive fall, bringing it to levels not seen since 2002.

Whole milk powder, a crucial product for New Zealand, fell by 10.3% on average to US$1590/tonne.

Skim milk powder prices slumped by 14.4% to US$1419/t on average.

Anhydrous milk fat prices fell by 11.7%, butter by 6.1% and butter milk powder by 5.1%.

 Luxton says NZ is very exposed to a thinly traded market.

“One outcome of the low GDT is likely to be a rapid lowering of our cost systems and probably some reduction in milk production out of NZ. 

“When you look at the world market there isn’t a big overhang of surpluses despite what people are saying. The supply and demand is reasonably well balanced.”

More like this

Featured

LIC ends year with $30.6m profit

Herd improvement company LIC has ended the 2024-25 financial year in a strong position - debt-free and almost quadrupling its net profit.

Farmers back Government pause on RMA plan changes

There's been widespread support from the primary sector for the Government's move to put the brakes on local authorities to do any more work on planning changes ahead of major changes to the Resource Management Act (RMA).

Flood-hit Tasman farms begin long recovery

People affected by the recent two severe flood events in the Tasman district are weary and exhausted trying to deal with the devastation on their farms and orchards, according to the head of the Rural Support Trust (RST) in the region.

National

Machinery & Products

Fliegl offers effluent solutions

Founded in Germany as recently as 1977, today, the Fliegl Group employs more than 1100 workers, offering an expansive range…

» Latest Print Issues Online

Milking It

It's all about economics

OPINION: According to media reports, the eye-watering price of butter has prompted Finance Minister Nicola Willis to ask for a…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter