Tuesday, 26 March 2024 13:53

Returns lift, costs down - DairyNZ

Written by  Sudesh Kissun
DairyNZ head of economics, Mark Storey. DairyNZ head of economics, Mark Storey.

The outlook for dairy farmers this season has improved, especially when compared to forecasts only six months ago, according to DairyNZ.

Revenue projections have improved largely due to better results at the Global Dairy Trade (GDT) auctions, along with Fonterra’s adjusted projected payout for the season, which stands at a mid-point of $7.80/kgMS.

At the same time, there have been significant price decreases for feed and fertiliser, bringing these more in line with historical averages, reducing on-farm costs. However, things could tighten in the coming season, DairyNZ cautions.

It’s latest forecast data on the Econ Tracker shows the national breakeven forecast currently sits at $7.75 kg/MS.

DairyNZ head of economics, Mark Storey says while this is positive, they are seeing interest costs becoming one of the most significant costs for farmers this season.

“The Reserve Bank signalled slowed reductions to the official cash rate, meaning interest rates are now likely to reduce more slowly and later than previously expected, which is a concern.”

When considering these changes, the national breakeven forecast currently sits at $7.75 kg/MS. This is below DairyNZ’s forecast average payout received of $8.12 kg/MS, which is based on the estimated milk receipts for the 2023/24 season and dairy company dividends.

“A positive difference between these numbers is good news and will likely bring further relief to many farms, especially when compared to forecasts mid to late last year which showed a negative situation for dairy farmers,” says Storey.

“Looking ahead to next season, we see a marginal tightening of dairy farmer’s financial position, with less revenue forecast. We are not expecting feed and fertiliser costs to drop much further than they have already done and while debt servicing may ease, it will likely remain at very high levels,” he explains.

“We are encouraging farmers to continue managing their budgets and costs, as they will likely experience limited operating profits, and many will likely still find it tight across many parts of the country.

“However, we know that dairy operates in a fluctuating economic environment, and therefore, the farm revenue and costs captured in the 2024-25 season forecast are subject to considerable uncertainty and can change quickly.”

More like this

Editorial: On the mend

OPINION: DairyNZ's latest forecast data on the Econ Tracker, that the outlook for the current season has improved, will be welcome news for farmers.

Featured

Farmers fined for cattle abuse

A Waikato cattle farming family have been fined $23,000 for failing to provide sufficient food and care for their animals, resulting in more than half a dozen animal deaths.

App trial yields promising results

An initial trial of an app, funded by Beef + Lamb New Zealand, has demonstrated significant results in reducing drench inputs during a small-scale study.

National

Back to the tractor!

Alliance Group chair Murray Taggart is looking forward to spending more time on farm as he steps down after a…

Machinery & Products

PM opens new Power Farming facility

Morrinsville based Power Farming Group has launched a flagship New Zealand facility in partnership with global construction manufacturer JCB Construction.

AGTEK and ARGO part ways

After 12 years of representing the Landini and McCormick brands in New Zealand, Bay of Plenty-based AGTEK and the brands’…

100 years of Farmall Tractors

Returning after an enforced break, the Wheat and Wheels Rally will take place on the Lauriston -Barhill Road, North-East of…

» Latest Print Issues Online

The Hound

Crazy

OPINION: Your canine crusader was truly impressed by the almost unanimous support given by politicians of all stripes in Parliament…

More!

OPINION: As this old mutt suggested in the last issue, MPI looks a very good candidate for some serious public…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter