DairyNZ: Strong payouts offset high farm costs
The dairy sector is in a relatively stable position, with strong milk price payout forecasts continuing to offset ongoing high farm costs, according to DairyNZ.
Opening the DairyNZ Farmers Forum in Taranaki today, Spaans noted that milk production had slowed in Europe and Australia.
While the US was still producing more milk, most of it was being absorbed by the domestic market.
Spaans says milk production across the globe, particularly Europe, has been constrained by lower milk prices …”quite a good thing for us”.
“When we find it tough, we have the resilience to keep going…. places like Europe and other producers who rely a lot on grain, they actually find it a lot tougher.
“We see it is holding back growth of milk production in Europe and this is certainly going to help our milk price going forward.”
Spaans noted that Australian milk production was “bit of a mess”, dipping quite significantly.
“The US is looking quite solid and growing but a lot of production is being absorbed by the domestic market; some milk is now starting to come into the world market.”
While milk production has slowed, global demand remains strong.
But Spaans had a word of caution for farmers; things can change quickly.
“From the lessons learnt during the last few seasons, we know these things change and we know that opening forecast can be wrong.”
He says farmers also know prices could move around during the year.
“We should ensure we farm profitably, remain cautious and use extra cash, if it does come through, wisely.”
