Friday, 23 September 2016 09:24

Farmers must ‘lock in the gains’ as milk price lifts

Written by 
DairyNZ chief executive Tim Mackle. DairyNZ chief executive Tim Mackle.

DairyNZ is encouraging farmers to lock in the gains achieved in the past two seasons, as a pasture-first farm system will continue to provide payback as the milk price rises.

Chief executive Tim Mackle says the increase to $5.25/kgMS for the forecast 2016/17 Fonterra farmgate milk price is terrific news for dairy farmers.

“This brings many farm businesses to around the 2016/17 break-even milk price of $5.05/kgMS, once retrospective payments and dividends are taken into account. This means fewer farmers will need to borrow extra funds this season,” says Mackle.

“Retrospective payments for next year have also been boosted by 20-25 cents in this announcement, to over $1/kgMS.

“Farmers will therefore look at the advance rates and test the effect on their cashflow budget – and winter 2017 will look more promising as the retrospective payments come through.”

DairyNZ’s Tactics campaign continues to work with farmers to improve business returns under the reduced milk price.

“Many farms have developed a disciplined approach to their farm system, having reduced costs and maximised the amount of pasture eaten. Now is the time to continue that focus and regain some lost income,” says Mackle.

“Making maximum use of pasture is key to any farm’s profitability. With this price increase, it’s important to take the opportunity to lock in the gains made over the recent couple of seasons.

“Most farmers who have debt have added to that debt following the successive cash losses. It’s crucial they keep a focus on generating cash to pay that back.”

Farmers are encouraged to re-run cashflow budgets, talk with their bank and reforecast overdrafts and cashflow for the season.

The Tactics campaign has helped farmers control costs, make timely decisions, utilise pasture and focus on cost-effective systems during the low milk price.

Budget case studies are available online, detailing the financial spending of top-performing dairy farms and helping farmers identify ways to minimise the impact of lower milk prices.

Tactics for Spring events also continue, taking place south of Waikato/Bay of Plenty until early October. These events are aimed at helping farmers manage their pasture during the most productive time of the year.

For more information, visit www.dairynz.co.nz/tactics

More like this

Musical chairs

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

DairyNZ levy to increase?

Retiring chair Jim van der Poel has used his final AGM to announce the intention to increase the DairyNZ farmer levy for the first time in the industry-good body's 17-year history.

Tributes to retiring 'Jim the farmer'

Doing what is right, not what is easy, has been the hallmark of Jim van der Poel's leadership of, and advocacy for, the dairy industry, attendees at the DairyNZ annual general meeting heard last week.

Featured

New ag degrees at Massey

Changing skill demands and new job opportunities in the primary sector have prompted Massey University to create a new degree course and add a significant major into another in 2025.

The show is on!

It was bringing in a new Canterbury A&P Association (CAPA) show board, more in tune with the CAPA general committee, that has ensured that Christchurch will have a show this year, says CAPA general committee president Bryce Murray.

National

'Quite a journey'

Former Synlait chief executive Grant Watson says the past two years have been quite the journey.

DairyNZ levy to increase?

Retiring chair Jim van der Poel has used his final AGM to announce the intention to increase the DairyNZ farmer…

Former Fonterra CEO dies

Former Fonterra chief executive Theo Spierings passed away in the Netherlands over the weekend.

Machinery & Products

Milk Sustainability Centre launched

The recently announced Milk Sustainability Centre – a collaboration between global giant John Deere and milking and feed specialists De…

Data connection made easier

New Holland and Case IH are introducing new advancements in their precision technology stack to make farming easier and more…

» Latest Print Issues Online

Milking It

Feed from farmers

OPINION: The country's dairy farmers will now also have a hand in providing free lunch for schools.

Brighter future

OPINION: The abrupt departure of Synlait chief executive Grant Watson could be a sign that Chinese company Bright Dairy, the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter