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.
“It’s not broken,” he told a DairyNZ Farmers’ Forum in Timaru last week.
“[But] there are some things that need to be tweaked.”
He said that the DIRA review needed to protect the position of dairy farmers.
“You have an asset for 48 hours and beyond that it’s a liability. You need to have secure contracts to pick up your milk and process your milk and get you enough from the marketplace to cover costs. That’s my starting point.”
O’Connor said he was not an advocate for competition but there were some “healthy tensions” that a competitive environment in some spaces brought to the industry.
“I’m just trying to find the right balance and hopefully we’ll end up in the right spot.”
O’Connor said he would soon report back with some ideas around DIRA.
“We’re not trying to reinvent the wheel, but we are taking the opportunity to look at the legislation and make sure that – if there are ways that we can improve it to better suit the modern reality that we have, not one that was set down in the early 2000s, around the level of competition for Fonterra, the issues around environment, animal welfare – they will be taken into account.”
Milk price-setting arrangements were a core part of the discussion.
He said he would come back with a set of proposals that he hoped the industry would see as sensible, but there would be time for feedback from the dairy sector and from dairy farmers themselves.
Noting another small increase in the Global Dairy Trade (GDT) index, O’Connor said dairy should be looking to the future with confidence, although he was not denying the sector faced challenges.
O’Connor was speaking to the forum, the first of a series of five around the country, by video link from his office, but is expected to attend the next in person, in his home province of Westland.
On the proposed sale of Westland Milk Products to Chinese dairy giant Yili, O’Connor said he was not a shareholder but has family who are.
“As [it is] the second biggest co-op in this country, I am really saddened to see it go through the process of potential sale.
“Partnership might have been better,” he said.
“I’m not familiar with all the details and all I’ve said is that farmers, if they are shareholders, if they have an interest, they should ask all the questions they think of now, not worry after the deal that they should have asked.”
Now was the time for debate.
Migrant workers need certainty
Migrant workers who have been here for five years deserve the right to apply for residency, Damien O’Connor told the forum, in response to questions from the floor.
In opening the forum earlier, Dairy NZ director Colin Glass said that the dairy sector had 46,000 people working in it, but with 14% churn, needed 5,000 new entrants every year just to stand still.
“We have a massive people shortage in Canterbury and Southland with up to 24% of staff on farms operating on short-term work visas.
“So migrant employees are absolutely valued members of our teams but we need to create certainty for them.”
Glass also called for a focus on regional education, employment and welfare.
“So that regional approach is absolutely key and we’re really pleased that the Government’s taking up that focus and looking to apply that more regionally,”
