Dairy sector profit still on the table, but margin gap tightens
DairyNZ’s latest Econ Tracker update shows most farms will still finish the season in a positive position, although the gap has narrowed compared with early season expectations.
For example, she says while the forecast farmgate milk price is reasonably positive now, many farmers are worried about what might happen should this drop to $6/kgMS in June next year. She says that would be the time when interest rates would be reviewed and that, coupled with ongoing rises in the cost of fuel and other inputs, would really put the squeeze on some people.
Overall, Speight says the situation on farm is pretty good in terms of grass growth and crops. The exception to this she says is the East Coast and Hawke's Bay which were badly hit by Cyclone Gabrielle and where farmers are still repairing pasture and infrastructure on their farms.
"But in other parts of the country silage making is taking place and supplement levels are nearing normal. Remember that last year was hard in terms of making supplement," she says.
In recent weeks rain has made this a challenge, but Speight says they have been told by NIWA that the weather will be dry for the next four weeks so 'wait for the dry' is the message. But she warns farmers to leave sufficient grass behind so that pastures can recover if the dry conditions continue for too long.
One thing that Speight says she's noticed this season is that several farmers are using deferred grazing as a means of conserving pasture - something she says was common practice many years ago but is suddenly becoming fashionable again.
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Sarah Speight, DairyNZ. |
"In terms of milk production, most people are playing catch-up because the early season production was lower than usual, except for Southland and Canterbury. Overall the South Island has done well, and after a slow start the North Island is now approaching normal," she says.
Finally, Speight says with all the uncertainty that is still about, people are stressed and scratchy and mental health is something DairyNZ has on its radar to deal with.
Other issues such as education and the need for better infrastructure is high on the needs list for farmers and their families. For many it's a waiting and hoping game to see how much the new Government can do to sort things out in a reasonable time frame.
