Tuesday, 25 July 2023 07:55

Farmers forced to take extra work off farm

Written by  Sudesh Kissun
Some farmers are taking on additional work off farm to keep up with rising interest costs, says Federated Farmers dairy chair Richard McIntyre. Some farmers are taking on additional work off farm to keep up with rising interest costs, says Federated Farmers dairy chair Richard McIntyre.

Some farmers are taking on additional work off farm to keep up with rising interest costs, says Federated Farmers dairy chair Richard McIntyre.

He points out that while the price of some farm inputs such as nitrogen fertiliser, fuel and palm kernel expeller (PKE) are starting to ease, there is still a lot of stress amongst farmers, particularly those with higher levels of debt.

"Many have come off fixed interest rates and the significantly higher interest payments are really starting to bite," he told Dairy News.

"We are hearing of farmers beginning to take on additional work off farm to keep up with their rising interest costs."

McIntyre warns that any drop in the milk price will exacerbate the problem.

His comments came as economists review their forecast milk price for the season following another drop in Global Dairy Trade (GDT) price index.

Westpac senior agri economist Nathan Penny says there are not clear downside risks to its ambitious 2023-24 milk price forecast of $8.90/kgMS.

"As a result, our forecast is under review," he says.

Penny says the downward price trend is clear and has been sustained much longer than expected, with overall prices falling at 10 of the 14 auctions held this year.

"And overall and whole milk powder (WMP) prices are down 22% and 17% in annual change terms. In contrast, we had expected that prices would have bottomed by now, if not begun to turn higher."

Penny  says the chief catalyst for the ongoing price decline is the sluggish Chinese economy.

ANZ agri economist Susan Kilsby believes that prices will not materially increase before a large proportion of the current season's supply is traded.

"What is clear is that consumer demand is being impacted by weaker economic conditions in many regions.

"Most economies are still growing, albeit at a considerably slower pace than normal, which is taking a toll on dairy demand," says Kilsby.

"The softer demand from China is having the largest impact, as China is by far the world's largest importer of dairy products."

Kilsby says the bank is now forwcasting a milk price of $7.75/kgMS for the season, a drop of 50c. Fonterra is forecasting a price range of $7.25 to $8.75 for the season.

McIntyre syas it is concerning to see that banks are reducing their forecast milk price.

However, it's the processors' forecasts and the resulting change to the advance rates that will have the biggest impact, he warns.

More like this

Feds vow to keep Govt honest

Buoyed by a survey showing farmer confidence rising to its highest level in over a decade, Federated Farmers says it's not taking its foot off the pedal.

Turning NZ into a pine plantation

Federated Farmers meat and wool chair, Toby Williams says what the Government has effectively signed up for is a decade more of planting pine trees on productive land because that’s the only way for our country to achieve such a steep reduction.

Featured

Farmer input needed to combat FE

Beef + Lamb New Zealand (B+LNZ) is calling on livestock farmers to take part in a survey measuring the financial impact of facial eczema (FE).

Editorial: Escaping Trump's wrath

OPINION: President Donald Trump's bizarre hard line approach to the world of what was once 'rules-based trade' has got New Zealand government officials, politicians and exporters on tenterhooks.

Wool pellets to boost gardens

With wool prices steadily declining and shearing costs on the rise, a Waikato couple began looking for a solution for wool from their 80ha farm.

National

Miraka CEO steps down

The chief executive of Taupo-based dairy company, Miraka – Karl Gradon - has stepped down from the role for personal…

Machinery & Products

Bigger but not numb

When you compare a RAM 1500 or Chevrolet Silverado to a Ford Ranger or a Toyota Hilux, you will understand…

Good just got great

Already well respected in the UTV sector for performance, reliability and a competitive price point, CFMOTO has upped the ante…

Nedap NZ launch

Livestock management tech company Nedap has launched Nedap New Zealand.

» Latest Print Issues Online

Milking It

O Canada

OPINION: Donald Trump's focus on Canada is causing concern for the country’s dairy farmers.

Plant-based fad

OPINION: The fact that plant-based dairy is struggling to gain a market foothold isn’t deterring new entrants.

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter