Tuesday, 30 October 2018 12:14

Crunching the numbers — Editorial

Written by 
How will DairyNZ and Beef + Lamb NZ split their $278m bill? How will DairyNZ and Beef + Lamb NZ split their $278m bill?

It's crunch time for dairy and beef farmers as they decide how much the two sectors will pay, respectively, toward cleaning up the cattle disease Mycoplasma bovis, likely to cost $870 million over 10 years. 

Taxpayers are, through the Government, putting up $592m and DairyNZ and Beef + Lamb NZ will pay $278m.

The Government has already paid out $25.6m in compensation to farmers and all infected properties remain linked by a single strain.

Of NZ’s 24,000 farms, 74 have been infected to date with 36 subsequently destocked and cleared of M. bovis.

On dairy and beef sector contributions things still aren’t clear. An independent committee has reported to industry leaders on how the bill should be split. The leaders remain tightlipped about the report and negotiations.

There is the risk the costs of eradication would grow if more livestock were culled.

There were about 20,000 dairy and beef farms in total. Much of the estimated cost was for the response and compensation. High-risk animal movements have been traced to 3000 farms and 858 are under surveillance.

ASB economists had done some early calculations on how dairy revenue might be affected, assuming all the losses were confined to that sector.

The impacts on dairy revenue were not straightforward. The cull was equivalent to 2 - 3% of the national dairy herd, after conservatively assuming 10% of those culled would have been culled anyway.

An assumed 3% loss of dairy production at a milk price of $6.05/kgMS implied $356m of foregone revenue. The value of slaughtered cows would be about $250m.

The beef industry would also bear impacts. The impact of additional livestock slaughter on meat prices needed to be seen in the context of 4.2 million cattle being slaughtered every year.

Federated Farmers, which has a foot in both sectors, is hoping for a fair split.

Dairy industry sources say an 80/20 split between dairy farmers and beef farmers would be fair. However, beef farmers are pushing for a 90/10 split, pointing out that dairy farms are at the centre of the outbreak.

The leaders have a decision to make, one which must satisfy everyone on this crucial and challenging journey to eradicate M. bovis.

More like this

From Sky Tower to cowshed

Every morning dairy farmer Sam Waugh sees the Auckland Sky Tower through his window. It's a great reminder of one of his key life goals - giving young people from towns and cities insights into farm life.

Celebrating dairy farmers this International Women's Day

Siobhan O’Malley is a dairy farmer, innovator, businesswoman and community volunteer, an example of the thousands of Kiwi dairy farming women throughout New Zealand who multi-task every day to contribute positively to their communities.

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.

» Latest Print Issues Online

Milking It

Papal visit

OPINION: European farmers are going to extreme lengths to have their message heard.

Thai egg tarts

OPINION: The hustle and bustle of one of Bangkok's most popular fast food outlets may feel a world away from…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter