More FTAs needed

He says NZ is relying on the TPP to deliver but is unrealistic as Proudfoot believes there is very little likelihood that this will happen. But he adds, given the importance of Japan as market for our beef, the need for FTA with the Asian giant is critical.

Proudfoot reckons the dairy industry also faces some new challenges caused by the breakdown of the relationship been the United States and Mexico and further uncertainty caused by Donald Trump’s election.

“Mexico was the largest buyer of American skim milk and it seems they have significantly reduced their buying at the moment, which will mean that the US will have to find different markets for some of that product and SE Asia is one of the potential markets,” he told Rural News.

“This means they will compete with NZ products destined for that market; so that means we could see some changes here in NZ pretty quickly over the next couple of GDT auctions.”

Proudfoot also has concerns that the apparent fast recovery in dairy prices is leading to complacency, which he thinks is a problem. He’s found, in recent years, there is a strong correlation between better prices and complacency and says farmers need to continue to watch their cost of production otherwise they will get caught out financially.

Proudfoot says because of the fast recovery, some farmers who had been planning changes have suddenly put these on hold.

Meanwhile, he says overall American milk production is up and there are no signs of a reduction in Europe. Proudfoot is not so sure that milk production in NZ will be down as much as predicted a year ago.

He says while some farmers are suffering from both drought and wet, many had a better November and December and this may reduce the drop in local milk production.