increase font size
Going up! Urea prices have jumped by nearly 25% recently to $1,190/tonne.
Federated Farmers vice president Chris Lewis claims farmers won't be making much money this year, despite a record forecast milk price.
He says fertiliser prices have jumped 100%, wage bills are up 20% and hiring tradesmen has become more expensive.
Lewis says "market forces" mean farmers must pay more to retain staff in a labour-squeezed market.
While the record forecast payout must be celebrated and provides a buffer against rising costs, he doesn't expect too many farmers to end up with a large surplus this season.
He points out that recent surveys found farmer confidence still low.
"With the strong payout we should see higher farmer confidence but that's not the case," he told Rural News.
"Farmers are not thinking about dollars. While the high milk price is a cause for celebration, high inflationary costs are a major cause for worry for some farmers."
Last month, DairyNZ solutions and development lead adviser Paul Bird urged farmers to use strong milk price to pay off debt and be better prepared to withstand shocks.
Speaking at the online DairyNZ Farmers Forum, Bird noted that while industry debt had dropped to $38 billion, reducing it further would be "a good thing".
"The average dairy farm is still made up of half debt and half equity. That's still quite a big chunk of debt," noted Bird.
Farms with returns of around 5% would come under pressure if interest rates rose to 5% and beyond.
Bird says paying debt puts farmers in a good position to withstand shocks.
It also puts farmers in a solid place if they are "looking for the next opportunity to grow in dairying".
Lewis says farmers have been hearing this message for the past five years from the banks.
OPINION: Recent media commentary from Southland Federated Farmers has raised concerns among our rural communities, particularly around Environment Southland’s approach to winter grazing inspections and nitrogen reporting. But let’s be clear, much of what’s been said simply doesn’t reflect reality.
OPINION: Environment Canterbury's (ECan) decision recently to declare a so-called “nitrate emergency” is laughable.
A shameless political stunt is how Federated Farmers is describing the Canterbury Regional Council decision to declare “a nitrate emergency” on the back of its latest annual groundwater quality survey.
Federated Farmers say Environment Canterbury's decision to declare a 'nitrate emergency' is a shameless political stunt that won't help anyone.
Farmers want the Government to scrap controversial freshwater rules that "put river spirits and ideology ahead of practical water use", says Federated Farmers board member Mark Hooper.
A drop in methane targets announced by the Government this month has pleased farmers but there are concerns that without cross-party support, the targets would change once a Labour-led Government is voted into office.
Farmer shareholders of meat processor Alliance have voted in favour of a proposed $270 million joint venture investment by Irish company, Dawn Meats.
The former chair of the Bay of Plenty Regional Council and farmer, Doug Leeder, says rural communities' biggest fear right now is the lack of long-term certainty over environmental regulations.
New Zealand First leader and Foreign Minister Winston Peters is ratcheting up pressure on Fonterra farmers as they vote on divesting the co-operative’s consumer and related businesses.
Alliance Group's Pure South Handpicked 55 Day Aged Beef has been recognised on the world stage, securing top honours at the World Steak Challenge in the Netherlands.
Meat co-operative, Alliance has met with a group of farmer shareholders, who oppose the sale of a controlling stake in the co-op to Irish company Dawn Meats.
