Agri sector to lead economic recovery
OPINION: Over the past month, people up and down the country have been asking me what I think is in store for the Agri sector.
At least one bank is forecasting an $8 opening forecast farmgate milk price for the next season.
Dairy prices are holding most of their gains from earlier in the year and remain remarkably high, a good omen for the coming season.
Westpac senior agri economist Nathan Penny is forecasting an $8/kgMS opening forecast and ASB has boosted its forecase by 20c to $7.50/kgMS.
Penny now expects dairy prices to start the 2021-22 season firmly on the front foot.
Penny points out that in milk price terms, the last GDT auction and NZ dollar rate equated to a milk price of over $9/kgMS. Since March, Westpac has lowered its NZD/USD forecasts by around two cents over the season, adding further upward impetus to milk price forecasts in NZ dollar terms.
"From the stronger starting point, we have built in a moderation of global dairy prices over the New Zealand dairy season.
"Specificallly, we forecast for whole milk powder prices (WMP) to fall by 18% over the season. In other words, we have built in a supply response to the higher milk price."
Another factor that could keep milk prices high is a very modest supply response to the high milk price by historical standards.
"As such we expect that dairy prices will remain stronger for longer," says Penny.
He notes that in New Zraland, dairy supply is constrained for a range of reasons, including environmental constraints, limits on cow numbers, limits on fertiliser usage and higher compliance costs.
"As a result, we expect modest production growth next season of 2%."
On the demand side, Penny expects robust demand to continue.
Newly elected Federated Farmers meat and wool group chair Richard Dawkins says he will continue the great work done his predecessor Toby Williams.
Hosted by ginger dynamo Te Radar, the Fieldays Innovation Award Winners Event put the spotlight on the agricultural industry's most promising ideas.
According to DairyNZ's latest Econ Tracker update, there has been a rise in the forecast breakeven milk price for the 2025/26 season.
Despite the rain and a liberal coating of mud, engines roared, and the 50th Fieldays Tractor Pull Competition drew crowds of spectators across the four days of the annual event.
Nationwide rural wellbeing programme, Farmstrong recently celebrated its tenth birthday at Fieldays with an event attended by ambassador Sam Whitelock, Farmers Mutual Group (FMG), Farmstrong partners, and government Ministers.
Six industry organisations, including DairyNZ and the Dairy Companies Association (DCANZ) have signed an agreement with the Ministry for Primary Industries (MPI) to prepare the country for a potential foot and mouth outbreak.
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