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.
Dairy farmers struggling to breakeven can expect better prospects next season.
Three major banks are forecasting opening farmgate milk prices over $8/kgMS for the 2024-25 season, which kicks off June 1.
ANZ agricultural economist Susan Kilsby notes that dairy commodity prices are steadily trending higher, and this is expected to continue in coming months.
ANZ is forecasting a milk price of $8.50/kgMS next season.
"If achieved, this should deliver some profit back into the industry, as this price will end up near breakdown for the average farm," says Kilsby.
"Farms with high debt levels are finding it particularly challenging to keep up with the rapid rise in interest rates and other costs."
Westpac's chief economist Kelly Eckhold believes farmers will get $8.40/kgMS next season.
"Combined with an easing in prices for some on-farm inputs, this should leave farmers modestly above breakeven on average," Eckhold says.
He points out that near-term, world dairy prices are expected to remain relatively steady.
"Growth in the Chinese economy is expected to remain subdued, though we have seen this counter-balanced more recently by stronger demand from other regions."
Global milk supply is expected to grow modestly this year, with New Zealand production likely to be slightly up on last year. In contrast, environmental regulations have driven a substantial drop in European milk production recently, he notes.
BNZ is the most conservative of the three banks, lifting its next season's forecast milk price by 20c to $8.20/kgMS.
Senior eonomist Doug Steel says Global Dairy Trade (GDT) dairy prices have continued to improve in the New Year to now be 30% "above their ding-dong lows" of last August.
"Dairy prices have fully recovered from last year's dip. This is only to around average levels on an inflation-adjusted basis, but that is a lot better than being well below normal."
As for this season, BNZ and ANZ are forecasting a milk price of $7.90/kgMS, 10c above Fonterra's mid-point of $7.80/kgMS. ANZ is sticking to its forecast of $7.70/kgMS.
Red meat farmers are urging the Government to act on the growing number of whole sheep and beef farm sales for conversion to forestry, particularly carbon farming.
The days of rising on-farm inflation and subdued farmgate prices are coming to an end for farmers, helping lift confidence.
A blockbuster year and an exciting performance: that's how Ministry for Primary Industries (MPI) Director General, Ray Smith is describing the massive upsurge in the fortunes of the primary sector exports for the year ended June 2025.
Federated Farmers president Wayne Langford says the 2025 Fieldays has been one of more positive he has attended.
A fundraiser dinner held in conjunction with Fieldays raised over $300,000 for the Rural Support Trust.
Recent results from its 2024 financial year has seen global farm machinery player John Deere record a significant slump in the profits of its agricultural division over the last year, with a 64% drop in the last quarter of the year, compared to that of 2023.
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