The Dairy Industry Restructuring Act (DIRA) appears to be preventing Fonterra from effectively managing some aspects of its farmers’ environmental performance, says a discussion document from MPI.
This comes in the latest update of MPI’s Situation and Outlook Report for Primary Industries (SOPHI) which updates the outlook for the global market and what might happen down on the farm.
It bases its forecast on “weakening global price sentiment” which points to a likelihood of a lower price this season. It notes that milk price future contracts have recently fallen as have the GDT prices, the latter mainly due to weakening demand in China.
In the year ended June 30, 2018 dairy exports rose by 13.9% to $16.7 billion, but this season the rise will be modest at a mere 2.1% which would see dairy exports rise to $17b. Another modest increase is expected the following season.
Any increase it says will probably come as a result of a favourable exchange rate and a shift to more high value dairy exports.
Down on the farm MPI is predicting that production growth is likely to be relatively flat over the coming years and that any increase will be by increased production per cow rather than by an increase in cow numbers.
The report cites a few warning signs which will not be big news to dairy farmers – the ongoing issue and effects of Mycoplasma bovis and the 63% prospect of El Nino making an appearance. This would bring more rain in the west and potential droughts in the east.
A senior analyst with MPI, Matt Dilly, says meeting the requirements of consumers who will buy our ‘value add’ products is challenging. He says it’s a fast moving environment and MPI is working hard to better understand consumers.
“People often underestimated just how engaged consumers are in some countries with provenance, traceability and technology at centre stage. We are operating in an exciting world now where those sorts of enabling technologies are being developed,” he says.
Dilly says some of the most engaged consumers in technology terms are in Asia and in particular China where people frequently go online to check out or purchase items.