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.
Overall, feed costs are projected to fall around 5% for the current season, driven by falling product prices.
Total farm working expenses have also seen an overall decrease, driven by feed and fertilizer prices this year, however, other costs continue to experience inflationary pressures.
DairyNZ’s recently updated forecast data on the Econ Tracker, shows the national breakeven forecast currently sits at $7.79/kgMS, which is revised from the previous forecast of $7.78/kgMS.
The breakeven milk price is the milk sale price per kilogram of milksolids to cover a farm’s costs in a season, excluding capital expenditure and principal repaid on loans.
This is below DairyNZ’s forecast average payout received of $8.06/kgMS, based on the estimated milk receipts for the 2023/24 season and dairy company dividends.
This positive difference between the forecast breakeven and average payout will likely bring relief to some, particularly owner-operated farms.
The new forecasts are published on the DairyNZ Econ Tracker and expressed as a national average, which does not necessarily reflect individual farm situations.
A quarterly update, focused on the key drivers of feed costs, is also available online.
Farmers and the sector can use this tool to support informed decision making when it comes to financial planning, forecasting, and budgeting.
