Dairy commodity markets continue positive trend
Rabobank released its Agribusiness Monthly for March. Here's what the bank had to say about the dairy sector, farm input prices and the weather.
The Reserve Bank says the outlook for global milk prices is highly uncertain and the financial stress on the dairy industry could rise markedly if prices remain at current low levels in the 2015-16 season.
In its latest Financial Stability Report, bank governor Graeme Wheeler lists dairy as one of three systemic risks facing the New Zealand economy. The others are the Auckland housing crisis and the current global financial conditions.
Wheeler says the dairy sector is experiencing a sharp fall in incomes due to lower international prices. Many highly leveraged farms are facing negative cashflows and the risks will become more pronounced if low milk prices persist beyond the current season.
The bank says while the situation in the China market may improve, the recent removal of milk quotas in Europe and the increase in US dairy exports are likely to weigh on prices.
Wheeler says that if the lower dairy payout were to be sustained, “there is a risk that farm values could fall sharply and further exacerbate the increase in financial stress associated with lower farm incomes”.
Farmer-led charity, Meat the Need is calling for donations to enable it to supply more meals to families in need.
Weaker pricing and demand from China continue to impact New Zealand red meat export earnings.
Fonterra has cemented its position as the country’s number one cheesemaker by picking up nine NZ Champion of Cheese trophies this year.
New Zealand dairy processors are welcoming the Government’s commitment to continuing to push for Canada to honour its trade commitments.
An educational programme, set up by Beef + Land New Zealand, to connect farmers virtually with primary and intermediate school students has reported the successful completion of its second year.
Horticulture NZ chief executive Nadine Tunley will step down in August.
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