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.
In his 2015-16 annual report, Spaans says lower milk prices have meant reduced milk volumes and, therefore, reduced levy income into DairyNZ.
“But in spite of lower income, the DairyNZ board and management have been committed to ensuring we still achieve our long-term strategic plans, while continuing to deliver immediate support for our farmers.
“We have also maintained a deficit over the last two years in a deliberate tactic to be more efficient with farmer money. Rest assured, we will continue driving for outcomes according to our industry strategy.”
According to DairyNZ’s annual report, it collected at least $67 million in levies from farmers last season: Fonterra farmers paid $56.3m, Open Country Dairy $4m, Westland $2.4m, Synlait $2m, Miraka $760,000, Tatua $561,000 and other dairy companies $900,000. In 2015, DairyNZ collected $68m from farmers.
DairyNZ’s spending included R&D to create practical onfarm tools, onfarm adoption of good-practice farming, promoting careers in dairying and advocating for farmers with central and regional government. Biosecurity, farm profit and R&D took up 64c of every dollar spent and again this year will account for most of the spending; environmental work and people will also absorb about $20m.
Spaans says this year DairyNZ will refresh the Strategy for Sustainable Dairy Farming. During the process, farmers will give their feedback on the future direction of the industry.
Several key initiatives, including the Southern Dairy Hub in Southland and the Lincoln Hub in Canterbury, are also in the pipeline.
They will contribute to innovation, industry-led research and education.
“Even though farming has become more complex, the need to be competitive and farm responsibly remains the firm focus of DairyNZ. The goal to support profitable farm systems has not changed.
“Being more efficient and utilising pasture is the key to locking in gains in operating costs, as milk price moves to a more sustainable level.
“We need to ensure consumer expectations are met and exceeded, including farming responsibly by maintaining high animal welfare standards and farming within environmental limits.
“We must also attract talented people to our industry and provide positive work environments.”
Spaans says the long period of low milk prices has not been seen in recent times, but DairyNZ has remained purposeful, determined and unwavering.
“Farming has always been cyclical, but in today’s world farmers need to ensure their farm businesses are set up to cope with greater price volatility.
“Even with lifts in the milk price, volatility will no doubt continue to be a risk. We have been encouraged to see, yet again, that farmers can and do adapt, and as an industry we remain competitive internationally.
“We are long-time players in the global industry, with a well-established dairy infrastructure. We must stay internationally competitive and be more productive and profitable, so when we get out the other side we will be in better shape,” Spaans says.
