Strong production, tested demand send milk prices crashing
Strong global milk production and rebalancing of demand among key buyers has delivered one of the biggest drops in whole milk powder prices in recent years.
These are the questions Taranaki lower order sharemilker Geoff Batchelor posed to Rural News on his farm last week. Batchelor has received only one milk cheque since May and it didn’t even cover the monthly wages of his full-time worker Steven Chisnell.
Yet Batchelor says he gets up every day to milk cows because that’s his passion. He says the low milk price is a blip and will bounce back.
Batchelor and his wife Deanne milk 570 cows for farmer Paul and Tracy O’rorke at Opunake, 45km south of New Plymouth; he employs Chisnell full-time and Chisnell’s wife as a part-time relief milker.
Batchelor says in common with other dairy farmers and sharemilkers they have found the last few months tough.
“Where else would you have a worker turning up for work at 5am in the rain despite not receiving a decent milk cheque since May?
“The cheque we received in August wasn’t enough to pay my staff’s wages, let alone our wages; I’ve been dipping into my overdraft to pay my staff, my wife and myself and cover farm expenses.”
Like other sharemilkers Batchelor is paid by Fonterra as per the sharemilking contract with the farm owner.
Fonterra farmers are paid an advance rate for milk within two months of collection and also get capacity adjustment payments; with the milk price dropping below the advance rate, many suppliers are going without milk income for months.
Batchelor, who made some investments in property, recently sold a house and this has also helped his financial position.
Despite the hardship, he says he loves dairy farming.
“I know there are other sharemilkers worse off than me; we are getting support from the farm owner and are willing to ride out the storm.”
Federated Farmers Sharemilkers section chairperson Neil Filer says many sharemilkers and farmers have gone without milk cheques in the past few months. Lower order sharemilkers and farmers with large herds are facing issues, especially paying staff.
Filer says some farmers are passing on the 50c interest-free loan from Fonterra to sharemilkers to help ease their financial plight.
“I’m getting calls daily from sharemilkers who are facing financial issues,” he says.
