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.
At least one bank is forecasting an $8 opening forecast farmgate milk price for the next season.
Dairy prices are holding most of their gains from earlier in the year and remain remarkably high, a good omen for the coming season.
Westpac senior agri economist Nathan Penny is forecasting an $8/kgMS opening forecast and ASB has boosted its forecase by 20c to $7.50/kgMS.
Penny now expects dairy prices to start the 2021-22 season firmly on the front foot.
Penny points out that in milk price terms, the last GDT auction and NZ dollar rate equated to a milk price of over $9/kgMS. Since March, Westpac has lowered its NZD/USD forecasts by around two cents over the season, adding further upward impetus to milk price forecasts in NZ dollar terms.
"From the stronger starting point, we have built in a moderation of global dairy prices over the New Zealand dairy season.
"Specificallly, we forecast for whole milk powder prices (WMP) to fall by 18% over the season. In other words, we have built in a supply response to the higher milk price."
Another factor that could keep milk prices high is a very modest supply response to the high milk price by historical standards.
"As such we expect that dairy prices will remain stronger for longer," says Penny.
He notes that in New Zraland, dairy supply is constrained for a range of reasons, including environmental constraints, limits on cow numbers, limits on fertiliser usage and higher compliance costs.
"As a result, we expect modest production growth next season of 2%."
On the demand side, Penny expects robust demand to continue.
Boutique Waikato cheese producer Meyer Cheese is investing in a new $3.5 million facility, designed to boost capacity and enhance the company's sustainability credentials.
OPINION: The Government's decision to rule out changes to Fringe Benefit Tax (FBT) that would cost every farmer thousands of dollars annually, is sensible.
Compensation assistance for farmers impacted by Mycoplama bovis is being wound up.
Selecting the reverse gear quicker than a lovestruck boyfriend who has met the in-laws for the first time, the Coalition Government has confirmed that the proposal to amend Fringe Benefit Tax (FBT) charged against farm utes has been canned.
Holstein Friesian excellence was front and centre at the 2025 Holstein Friesian NZ (HFNZ) Awards, held recently in Invercargill.
The work Fonterra has done with Ballance Agri-Nutrients Ltd, LIC and Ravensdown to save farmers time through better data connections has been recognised with a national award.
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