Chinese demand returns, sending prices soaring
Chinese buyers are returning in force to replenish stocks and helping send global dairy prices higher.
That was the message from Primary Industries Minister Nathan Guy at a Morrinsville forum last week.
He announced $175,000 funding for dairy systems' change towards effective use of pasture. A brochure was also launched outlining measure available to help farmers.
Guy says farmers in general are doing what they talked about at the seminar.
"They realise they can't control the external factors like the weather, the exchange rate and what's happening in Russia and China, or the Europeans producing a bit more milk. They are things outside of our control," Guy told Dairy News. "What they can control is inside the farmgate."
About 90 farmers turned up at the Morrinsville event where DairyNZ chairman Michael Spaans and the Bankers Association were among the speakers.
"I launched the brochure 'Readying the Dairy Sector for Future Growth – Combining Efforts to Support Farmers'," Guy said.
"There is a huge support out there for dairy farmers and we have collectively worked with DairyNZ, the Bankers Association, Federated Farmers, Dairy Womens Network, etc, and pulled together all this information into a one-stop shop. Now farmers will understand all the support that is available."
While the medium-long term outlook for the sector remains strong, dairy farmers are doing it tough. The event and the brochure are to remind farmers they are not alone.
"We can come out the other side more productive and successful than ever," Guy says.
"We are doing everything we can to help farmers through this period of volatility, making sure farmers are focused on doing their line-by-line review in cashflow analysis, working with their accountant and banks and focusing inside the farmgate on growing and harvesting grass efficiently," he says.
A "wonderful" opportunity is being offered by Chartered Accountants Australia New Zealand -- a one-hour free consultation as a health check on their businesses.
"I am keen that farmers take up this opportunity to get an independent professional having a look at their books. They can then have a good discussion with their banks to make sure they are supporting them through this period of volatility which I think we will see for the best part of 2016."
The Government allocated $800,000 in last year's Budget towards the MPI Farming Systems Change programme. A key focus is looking at ways to boost the performance of farms by learning from the strongest performers.
As part of this about $175,000 has been allocated for an independent provider to do an in-depth study of innovative low cost, high performing farm systems, Guy says.
MPI will firm up in the next few weeks who will be the external party to do the study, he says. It will link with nine farms now shown on the DairyNZ website, with working expenses below $3.50/kgMS.
"So it will be an in-depth study taking 6-12 months looking at how these farms can be profitable long term, focussing back on growing grass, harvesting it efficiently and putting more milk in the vat," he says.
The new brochure talks about the Primary Growth Partnership with $170m spent on transforming the dairy value chain. For example, mozzarella cheese at Clandeboye that used to take six weeks to process now takes six hours.
It talks about initiatives under the Sustainable Farming Fund (SFF) including seven in the dairy industry; several look at onfarm profitability. One is entitled 'Reducing reliance on imported feed' – a SFF programme looking at sustainable dairy grazing.
"Last year we also announced $500,000 to support rural mental health. Supporting this is Dairy NZ's Tactics programme, Farmstrong and Rural Support Trusts in action around the country," Guy says.
"Sharemilkers are finding this season very challenging and are being supported by the $1.5 million SMASH (smaller milk and supply herds) initiative -- Smaller Herd Farmer Businesses which helps dairy farmers, particularly those with smaller operations, to make the best use of their resources. Forums and regional conferences have reached around 2400 attendees so far."
Commenting on a report from ASB last week that European milk production was slowing, he said he was about to travel to Europe for an OECD ministers' conference and will get a feel for what is happening there.
"They are coming into their spring peak so it will be interesting to see," he says.
