$150B farm succession challenge looms for NZ agriculture
Within the next 10 years, New Zealand agriculture will need to manage its largest-ever intergenerational transfer of wealth, conservatively valued at $150 billion in farming assets.
Dairy prices softened slightly again at last week’s Global Dairy Trade Event but results were again mixed, says Rabobank dairy analyst Emma Higgins.
Before the auction the prices had been expected to fall.
The average sale-price index was down by 1.2% (to an average sale price of US$3481/tonne) and follows a fall at the previous event.
The whole milk powder (WMP) index was down 1%, average price US$3189/t, while the butter index was up 0.8%, average price US$5611/t.
“Fonterra had lifted its offer volumes of skim milk powder (SMP) ahead of this event with an extra 200t on offer, and volumes increased over the next 12 months by 6000t.
“Both SMP and WMP prices eased slightly. Butter prices held steady but Oceania prices continue to trade at a discount to European wholesale prices, meanwhile cheddar prices saw the largest declines -- falling 3.6%.
“This is a quiet period with New Zealand milk production largely on hold until August, so another muted auction event is not unusual for this time of year.”
NZ milk production numbers for May 2018 were released last week.
The data confirmed a strong finish to the season with 6.2% growth year-on-year in volume (up 5.7% in May on a milk solids basis) versus the prior year.
“This brings the 2017-18 season into line with the prior year: production is up 0.1% [in tonnes, but on a milk solids basis full-season production is down 0.6%],” says Higgins.
ASB’s senior rural economist Nathan Penny says they suspect the price weakness was driven by a late season rally in production and a stronger US dollar. The US dollar index lifted about 1% since the last auction, making dairy more expensive in most buyers’ local currency terms.
ASB is maintaining its 2018-19 milk price forecast at $6.50/kgMS.
Profitability issues facing arable farmers are the same across the world, says New Zealand's special agricultural trade envoy Hamish Marr.
Over 85% of Fonterra farmer suppliers will be eligible for customer funding up to $1,500 for solutions designed to drive on-farm efficiency gains and reduce emissions intensity.
Tighter beef and lamb production globally have worked to the advantage of NZ, according to the Meat Industry Association (MIA).
Groundswell is ramping up its 'Quit Paris' campaign with signs going up all over the country.
Some farmers in the Nelson region are facing up to five years of hard work to repair their damaged properties caused by the recent devastating floods.
Federated Farmers is joining major industry-good bodies in not advocating for the Government to withdraw from the Paris Agreement.
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