Rural round-up

July 12, 2015

Merino school jersey success – Sally Rae:

 With a passion for New Zealand wool, it was only natural that Banks Peninsula farmers Carl and Tori Uren dressed their four young children in merino clothing.

But when their eldest daughter Annabel turned 5, they were disappointed to find the only jersey option for the school uniform was made from polar fleece.

Believing there had to be another option, the sheep and beef farmers made some inquiries and were disappointed to find merino jerseys were not available. . .

Safe workplace culture ‘comes from within’ – Sue O’Dowd:

Changes around health and safety need to come from the community and from industry, says a Taranaki Worksafe leader.

“It’s not going to be the regulator that makes the change,” WorkSafe assessment manager Jill Manaia told about 200 people at this week’s NZ Ground Spreader Fertiliser Association conference in New Plymouth. “It’s industry and the community who decide what’s important.” 

She said Worksafe was tasked with leading a step change in health and safety performance in New Zealand to reduce fatalities and serious harm by 25 per cent by 2020.

“Whatever we’ve been doing hasn’t worked. We’re killing too many people – each statistic is a family member, a business member, a guy who has to be replaced and who is no longer part of society. If someone is killed or injured at your business, it’s likely you knew them well.” . . .

Export conditions still tough – Neal Wallace:

If last year proved tough for exporters they are unlikely to get much of a reprieve in the coming season.

A combination of economic upheaval in key markets and high production from competing exporters threatens to overshadow the looming export season before it even starts.

Rabobank’s dairy research director Hayley Moynihan said this season would be tough but some of that impact could be softened by an easing NZ dollar. . .

All atwitter over beef Wellington – Rod Slater:

Before our very eyes, the way we advertise our products is changing rapidly.

No longer can we refer to a marketing plan which includes the traditional mix of television, print, radio, outdoor and a touch of online marketing, as strong.

Online marketing is without a doubt “taking over the world” and I’m certainly not one for closing my eyes to the inevitable. In fact, I’m predicting the social media and the online space will quickly begin to absorb the majority of our costs when it comes to allocating advertising spend. . .

 

Outram’s Johnstones win again – Sally Rae:

Outram Limousin breeders Rob and Jean Johnstone have done it again.

The couple have been awarded the Alan Dodd Trophy for the overall champion in the annual Otago Southland beef carcass competition, which attracted 38 entries. . .

Governance skills a priority for new apiculture body:

Federated Farmers is calling for people with bee industry experience and skills to apply for positions on the Interim Apiculture Industry Governance Board (IGB). The IGB emerged out of the merger between Federated Farmers Bees, Honey Packers and Exporters Association and National Beekeepers Association at the New Zealand Apiculture Conference last month.

The interim working group member and Federated Farmers Bee Industry Group Vice-Chairman, Peter Bell, says it is vital to have the best people to navigate a way to structure and fund the apiculture industry. . .


Rural round-up

June 5, 2015

Central Plains Water moves to Stage II planning:

Central Plains Water is proceeding with planning for an enlarged Stage 2 of the $375m project on the back of fresh funding from the Ministry of Primary Industries’ (MPI) Irrigation Accelerator Funding (IAF).

The $3.5 million investment from the IAF will allow CPW to proceed with the first phase of the Stage 2 design. This investment is one of two that the IAF has committed to CPW, which must match the commitment dollar-for-dollar. . .

Rabobank New Zealand announces appointment of new general manager Country Banking:

Rabobank New Zealand has announced the appointment of Hayley Moynihan to the new role of general manager Country Banking.

Subject to regulatory approval from the Reserve Bank of New Zealand, Ms Moynihan will commence in the role from July 2, 2015.

Reporting to Rabobank New Zealand chief executive officer Ben Russell, the general manager Country Banking will be responsible for leadership of Rabobank’s rural banking business throughout New Zealand.

 

Farmers urged to have their say on future plans for fighting bovine TB:

New Zealand cattle and deer farmers are being urged to get involved in how the fight against bovine TB is carried out, with a review of the Bovine Tuberculosis Pest Management Plan underway.

Since the start of 2000, New Zealand has spent more than $1.2 billion fighting bovine TB and controlling the pests (especially possums) that spread the disease.

Independent Chair of the Plan Governance Group (PGG) Chris Kelly said, “To protect the health of farmed cattle and deer and our good international trade reputation around animal products, it is critical we continue to build on this large investment and maintain the low TB rates we see today.” . .

Research findings a promising start for PhD student:

Preliminary findings from a research project at the University of Waikato could mean good things for farmers dealing with the effects of ongoing drought.

Increasing drought resilience
Doctoral student Jack Pronger’s research focuses on identifying approaches to increase pastoral drought resilience by using more diverse mixes of pasture species. He’s comparing the seasonal water use of mixed-sward pasture systems (a combination of different grass, legume and herb species) with more traditional ryegrass/clover systems under dairy grazing. . .

Healthy thinking workshops for rural people:

A 1980s era ambulance will be on the road soon, helping to bring practical advice to farmers and others in the rural community about looking after themselves.

It is part of a new programme, Farmstrong, that rural insurer, FMG and the Mental Health Foundation have launched.

It is taking a different approach to other rural mental health initiatives, by promoting well-being, with advice on subjects such as nutrition, managing fatigue, exercise, and coping with pressure. . .

Growing value – an uncertain future:

The uncertain future of the dairy sector is currently top-of-mind for many primary sector leaders, reports KPMG New Zealand.

That was a key theme arising from the KPMG Agribusiness Agenda 2015, titled “Growing Value”.

KPMG’s Global Head of Agribusiness, Ian Proudfoot, says conversations about the dairy industry’s future have “changed dramatically in the last year”.

“The extent of the downturn in milk returns for the 2014/2015 season was not expected. The belief that prices had moved to a new plain, driven by insatiable Chinese demand, has disappeared.”  . . .

Farmers score with new DairyNZ app launching at Fieldays:

A tool to allow farmers to perform one of their most important jobs on a smartphone will soon be available when DairyNZ launches its new free Body Condition Scoring (BCS) App at the National Agricultural Fieldays next week in the Waikato.

The app gives farmers the opportunity to body condition score cows on their smartphone using DairyNZ’s Body Condition Scoring Made Easy field guide.

DairyNZ animal husbandry specialist Andrea Henry says condition scoring cows is such an important job, DairyNZ wanted to make it as easy as possible. . .

Blocks help minimise metabolic disorder risks in herds:

It’s the calm before the calving season and a bit of planning now will help herds get through without the risk of metabolic disorders, such as milk fever, which can lead to downer cows or impact future milk production.

The disorders are prevalent just before or after calving, triggered by an inability to mobilise enough calcium. Subclinical cases of milk fever can be hard to pick up, with industry data indicating that for every downer cow it is likely that between 10 and 15 others in the herd will have early stage milk fever symptoms.

“It’s estimated that the cost of a clinical case of milk fever can reach up to $1,500 per cow* – including lost milk production, reduced fertility, and increased likelihood of culling due to other diseases such as mastitis. Not only is the risk a costly one, it’s also unnecessary,” says SealesWinslow Product Development Manager, Jackie Aveling. . .


Rural round-up

May 5, 2015

Dairy price rise case of ‘when not if’ – Sally Rae:

DairyNZ research and the latest economic outlook for dairy farming was outlined at a Farmers Forum, organised by DairyNZ, in Balclutha last weekend. Agribusiness reporter Sally Rae went along.

Medium-term prospects for dairy prices remain ”solid but not spectacular”, Rabobank’s director of dairy research New Zealand and Australia, Hayley Moynihan, says.

The 2014 15 season was further evidence of the market volatility expected to continue in global dairy markets, Ms Moynihan said.

A recovery in prices was all about ”when and not if” but the recovery was likely to be more prolonged than seen in 2009 10 and 2012 13. . .

 DairyNZ chief’s bloodline is farming – Sally Rae:

DairyNZ chief executive Tim Mackle always wanted to be a farmer.

Brought up on a Kaikoura dairy farm which has been in his family for generations, farming is in his blood.

His intention was to go to Lincoln University, complete his tertiary studies and then return and farm alongside his brother.

But he got ”sidetracked” by the science and business aspect and was encouraged to follow that path. . .

Dairy to benefit from Chinese-NZ research:

A new research project between China and New Zealand is to focus on how to improve the efficiency of water use in the dairy sector.

The collaborative project involves AgResearch and the Chinese Academy of Sciences and is aimed at helping a range of factors from watering feed crops to washing out cow sheds.

Principal scientist at AgResearch’s Ruakura base Stewart Ledgard said both countries had a lot to learn from each other. . .

 Les Roughan still going strong in dog trialing at 91 – Diane Bishop:

Les Roughan’s ticker isn’t the best.

But, the 91-year-old, who lives at Mandeville, is determined to finish the dog trialing season before undergoing heart surgery.

Roughan is the oldest competitor at the Tux South Island Sheep Dog Trial Championships which are being held on Leithen Valley Farm at Greenvale this week. . .

New research into West Coast agricultural pest:

Fresh research by AgResearch scientists will help unlock mysteries of one of the West Coast’s worst agricultural pests and allow farmers to make better management decisions and potentially save money.

Porina caterpillars are grazers that have the potential to reduce the long term quality and production of pasture but AgResearch Senior Scientist Sarah Mansfield says very little is known about the pest’s specific impact on the West Coast.

However, research conducted during a three year $300,000 Sustainable Farming Fund project will allow farmers to better understand how to monitor for the pest and then utilise control methods more efficiently and cost effectively.

“One of the big problems is that farmers often use control methods too late and after the damage is already done,” Dr Mansfield says.

“Clearly this costs a great deal of time and money for very little return so we hope to be able to provide them with more effective tools to alleviate this.” . . .

NZX adds iFarm to its AgriHQ business –  Suze Metherell:

(BusinessDesk) – NZX has bought iFarm, the livestock market information business, for an undisclosed sum from owners Jon Sherlock and Peter Fraser and will add the firm to its AgriHQ data business.

The Napier-based agriculture service publishes reports covering export data and prices as well as a wrap up of stock sales across the country, the Wellington-based exchange operator said in a statement. The acquisition price was confidential and wasn’t material. . .


Rural round-up

March 4, 2015

Water refusal ‘will have wide imapct':

Federated Farmers says the Canterbury Regional Council’s refusal to allow some farmers to exceed their groundwater limits this year will have a widespread impact on farming there, as the drought bites deeper.

Some farmers with seasonal restrictions on their ground water allocation have asked the council if they can increase the amount of water they can take, because they say they’ll need more to get them through the irrigation season.

Environment Canterbury turned them down because it said limits were set for each zone for environmental reasons.

It said groundwater levels were now very low, particularly in the southern half of the region, where some wells have dropped to record levels. . .

Improvements to food traceability on agenda:

Food Safety Minister Jo Goodhew has welcomed the release of the Dairy Traceability Working Group’s reports, which make recommendations on food supply chain traceability.

“The group was formed following a recommendation from the Government Inquiry into the Whey Protein Concentrate Contamination Incident, with a mandate to investigate dairy traceability,” Mrs Goodhew says.

“However traceability is critical for all foods exported from New Zealand, and the government is now considering applying the report’s recommendations across all food sectors. . .

Magnetic milk – the lure of dairy investment down under:

In 2014 there was a flurry of inbound investment activity by Asian dairy companies, mostly from China, into the New Zealand and Australian dairy sectors. However Rabobank warns that ongoing growth in import requirements by Chinese and wider Asian dairy companies shouldn’t be taken for granted.

In a recently-released report ‘Magnetic milk – the lure of dairy investment down under’, global agribusiness banking specialist Rabobank says a specific focus for overseas investors in New Zealand dairy has been on securing access to liquid milk and ingredients for infant formula.

Report co-author, Rabobank director of Dairy Research, New Zealand and Asia Hayley Moynihan says a quest to secure access to a high-quality, safe milk pool is driving international investment in dairy down under.

“Between 2014 and 2020 we expect China and South East Asia combined to account for almost one third of the increase in global dairy imports,” Ms Moynihan says. . .

 

 – Keith Woodford:

[This post was first published in the Fairfax NZ Sunday Star Times on 22 February 2015. It is the fourth of a series of five on Fonterra.  The earlier posts were ‘The evolution of Fonterra’, ‘Fonterra’s jouney’, and ‘Fonterra’s global reach’.]

One of the big challenges for Fonterra has been to determine its overall market position. Is it a marketer of commodities? Or is it a marketer of fast moving consumer goods (fmcgs)? Or is it a marketer of specialist ingredients? Can it be all three?

The challenge of trying to be all three is that the appropriate business culture is different for each market positioning. Commodity marketing is all about logistics, efficiency, and financial discipline. Fmcgs are all about entrepreneurship, creation of brands, being fast on one’s feet, and willingness to take risks. Specialised ingredients require a focus on science and technology. . .

 

Scholar is one to watch:

Henry Buckingham says his Beef + Lamb New Zealand scholarship is worth far more than the $5,000 per annum financial support.

“It’s the people I’ve got to meet and the information I’ve picked up from those people.”

The 19 year old is one to watch. He was the 2011 winner of the New Zealand Teen Ag award, which runs along similar lines to the national young farmer of the year competition. Henry also has a goal of competing in the Coast to Coast and is currently building up for the event. . .


Rural round-up

February 17, 2015

Agricultural cooperatives increasingly thirsty for capital – industry report:

Growing global market opportunities and the need to strengthen supply chains are creating a thirst for capital among agricultural cooperatives as they seek to invest in their future, according to a recently-released research report.

In the report Agricultural cooperatives – quenching the thirst for capital, agribusiness banking specialist Rabobank says sourcing capital is on the agenda for almost every large agricultural cooperative, and is rapidly moving up the list of priorities for many.

Report author, Rabobank research director Hayley Moynihan says the traditional source of investment capital for cooperatives – their member base and modest debt facilities – may now no longer be enough to allow coops to fully participate in an increasingly dynamic global and local food and agribusiness market.

 

Health & Safety requires a shift in attitude – Chris Lewis:

This week, Worksafe is launching a new program, funded 50/50 by WorkSafe and ACC.

As you would have read in the media health and safety is a big issue affecting the rural community, and we are taking it seriously.  Last year, Federated Farmers Waikato ran six health and safety seminars with industry organisations, with significant attendance by farmers.

In the last two years, there has been up to 40 deaths and many injuries on-farm. Most farmers would agree this has been too many. While there is no pattern, there are too many accidents occurring and we must do more to reduce these on-farm. This starts with you the farmer, the person in charge of the work place, the owner of the business, the management taking ownership and responsibility. If you don’t think this will affect you, you are wrong – the health and safety culture is here to stay. This is sinking in as throughout the country the demand from farmers for health and safety workshops has been increasing as well as sales of Federated Farmers Health & Safety Policies. . .

Milk price guarantee winner this year:

Dairy farmers who signed up for Fonterra’s guaranteed milk price scheme this season will find themselves on the right side of the ledger.

The scheme, in its second season, allows farmers supplying the co-operative to offer up to 75 percent of their milk for a guaranteed price.

About 180 farms signed up for the first offer at the start of the season in June, accepting a price of $7 a kilo of milk solids, which was the opening forecast. . .

Germans love our grass-fed beef  – Tony Benny:

German diners are warming to the taste of New Zealand grass-fed hereford beef and a high-value niche for it is growing in a market dominated by pork and poultry, says importer Christian Klughardt.

Just back in Hamburg after his annual visit here to meet supplier Silver Fern Farms, Klughardt said demand for hereford was growing thanks to its quality and consistency, which makes it stand out from beef imported from South America.

At blind tastings staged as part of marketing and promotional events, New Zealand hereford always came up tops, he said.

“We blindfold them and let them taste hereford to the other and they would always pick the hereford on a continuous basis,” Klughardt said. . .

Rugby rep revels in rural life – Anne Hughes:

Former Taranaki rugby player Carl Carmichael is loving his return to country life.

After 53 appearances for Taranaki’s ITM Cup rugby team, Carmichael and his family moved back to Matiere, the farming community west of Taumarunui where he grew up.

While the former prop misses his favourite coffee shop since leaving New Plymouth, he says the country is where he and his family want to be.

He has worked as a builder since he and wife Emma moved 12 months ago. He played rugby last season and represented King Country in the New Zealand Heartland tour.

The couple are rearing calves and running cattle on land they lease at Matiere in the hope of building their stock numbers so they can buy their own farm one day. . .

Chairman returned & new director welcomed to Silver Fern Farms’ Board:

Rob Hewett and Fiona Hancox have been elected to the Silver Fern Farms’ Board of Directors.

The results of the election which closed at 3.00pm on Friday, 13 February 2015 were:

· Rob Hewett: 41,437,912

· Fiona Hancox: 25,241,163

· Herstall Ulrich: 20,695,485 . .

 


Rural round-up

June 30, 2014

Rustling needs to be a specific offence:

Federated Farmers is asking political parties to develop policies to tackle the scourge of stock theft better known as rustling.

“We know stock theft or rustling has been estimated to cost the farming community some $120 million each year,” says Katie Milne, Federated Farmers rural security spokesperson.

“In recent weeks we’ve seen a lifestyler raided for breeding ewes in Waikato and over 200 sheep despicably shot in Otago.

“We’ve got to ask if the penalties imposed are serious enough to be a deterrent for either rustling or poaching. Based on our experience to date they are not. . .

Behaviour is the root cause of meat industry’s problems – Allan Barber:

I am not completely sure why we spend so much time and effort complaining about the meat industry or which problems we are trying to solve. However in the interests of encouraging progress and stimulating debate, I will try to define the problem: this appears to be that the meat processing and export sector is not profitable enough, whether in absolute terms or in comparison to dairy. Both may be true.

It is worth stating the unique challenges of the red meat sector up front. First, there is a market at both ends of the chain, procurement and sale of the products; second, New Zealand exports a higher percentage of its production than any other country which must travel further to reach its markets, not all of them equally buoyant; third, sheep and beef must be disassembled into multiple cuts of meat as well as many co-products, all of which are sold into a wide range of markets for variable returns; fourth the climate dictates when the grass will grow and livestock will be ready for slaughter; and last, but not least, the producer can choose when and where to send the livestock for slaughter except in a drought. . .

The recipe for future success:

Blue Sky Meats and its suppliers will be relieved the company is back in black after two challenging years.

The return to profitability – a $1.946 million after-tax profit for the year to March – came on the back of the only two losses in the Southland-based company’s 28-year history.

It has been a much better year for meat companies. Along with Blue Sky – and Lean Meats – the two big co-operatives, Alliance Group and Silver Fern Farms, who both report late in the year, have signalled profitable years. . .

Dairy recovery anticipated – by Christmas – Sally Rae:

Dairy commodity prices are predicted to stay in a trough period for another three to six months.

Speaking at the recent South Island Dairy Event in Invercargill, Rabobank’s director of dairy research for New Zealand and Asia, Hayley Moynihan, said it could be Christmas before there was a more sustained recovery in commodity prices.

It would be a ”reasonably prolonged” trough, as inventories were worked through and an additional seven billion litres of milk available on the world market in the first half of 2014 took time to ”find a home”. . .

Focus on consumers behind Pasture to Plate success – Sally Rae:

King Country farmer William Oliver’s belief in the consumer stemmed from his time studying at the University of Otago.

Mr Oliver and his wife Karen were the overall winners of the Silver Fern Farms’ Pasture to Plate Award.

Silver Fern Farms chairman Rob Hewett said the couple impressed the judges with their focus on the consumer. . . .

Simpler pesticide rules on the way:

The Environmental Protection Authority is aiming to simplify the rules covering pesticides and other hazardous substances.

The authority is marking its third anniversary as the country’s environmental regulator after being created from three agencies – the Environmental Risk Management Authority, the Ministry for the Environment and the Economic Development Ministry.

EPA chief executive Rob Forlong said one of its big achievements has been a wide ranging review of organophosphate chemicals, which resulted in controls on some pesticides being tightened and others phased out. . .

Final countdown for Ultimate Rural Challenge:

The showcase event of the rural calendar is only three days away!

The 2014 ANZ Young Farmer Contest Grand Final begins this Thursday 3 July, 4.30pm with the Official Opening at Lincoln University Library. Here, the top seven contestants will be introduced to the public and compete in their first head-to-head challenge.

The competition over the following two days is a testament to the sophistication of modern farming and level of skill and knowledge required to be successful in the field. The top seven young farmers have made it through to the Grand Final by competing in their local district competition and taking first place in their Regional Finals.  . .

Successful annual conference for Rural Contractors NZ:

More than 100 agricultural contractors from all over the country met in New Plymouth, last week, for Rural Contractors New Zealand’s (RCNZ) annual conference.

Rural Contractors New Zealand is the only national association for rural contractors in New Zealand.

Last week’s conference saw Wellsford-based Steve Levet re-elected as president of RCNZ, with Southland’s David Kean re-elected vice-president. . .

 


Farmers subsidisng NZ consumers

November 29, 2013

The question of why milk isn’t less expensive here when we produce so much is often asked.

What most people don’t know is  the retail price is well below the real cost.

. . . Chief executive Theo Spierings said the downside of strong demand for dairy commodities was increasing pressure on Fonterra’s NZ Milk Products division where profit margin remained under pressure.

To illustrate his point, Spierings said if the division were to pass on to consumers of a two litre bottle of milk in New Zealand the full price paid to farmers for their milk, the retail price would need to increase from $4 to $6 and the co-operative would be facing a media storm.

“And that would not be the worst of it…we would see the volume of dairy consumption in NZ going down very fast.”. . .

Fonterra and ultimately the farmers which supply it are subsidising consumers.

One reason for the higher cost is that we’re no longer low-cost producers.

The traditionally low-cost pasture-based dairying regions, such as New Zealand, have lost their cost advantage as input prices have risen, and now compete on the global market with a similar cost of production to producers with more intensive farming systems, according to a recently-released industry report.

In the report, No longer low-cost milk ‘down under’, agricultural banking specialist Rabobank says global milk production costs have converged between dairy-exporting countries, as the traditionally low-cost milk producers have seen their production costs rise, off the back of volatile global feed prices and the increasing use of feed in traditional pasture-based regions.

Report author, Rabobank director of dairy research, New Zealand and Asia Hayley Moynihan says New Zealand milk producers will need to structure their businesses and production systems to withstand ongoing high price volatility – for both dairy commodity prices and inputs.

Higher costs can be absorbed when the payout is higher but costs rarely drop quickly when the payout falls.

Ms Moynihan says lower-cost regions, like New Zealand, have already “largely capitalised their efficiency gains in a high milk-price environment into the price of land and other assets”.

Therefore there is a need to adapt to this loss of absolute competitive advantage in milk production as efficiency gains become more difficult to obtain.

“It is likely that optimal supply chain efficiency could at least partially mitigate this loss,” she says.

“Efficiencies achieved downstream in milk processing and marketing via a strong route to market and established supply chain relationships will likely play a greater role in differentiating competitive export companies and industries into the future.”

Ms Moynihan says to ensure that competitiveness is based on more than just the cost of producing milk, the New Zealand dairy industry will need to work hard to ensure that it stays ahead of the pack in supply chain efficiency, market access, marketing and sensible regulation. . .

We also have to safeguard our reputation for high quality, safe food.

The New Zealand dairy industry, most well-known for its low-cost production, has moved, perhaps irrevocably, to a higher cost farming system, the Rabobank report says.

Ms Moynihan says the structural increase in milk prices globally and locally has driven the quest for increased production, almost at any cost.

“The first signs were there in 2002 when , on the back of milk prices increasing 42 per cent over two seasons, farm working expenses surged 33 per cent per kilogramme of milk solids produced,” she says.

“The reality check of a 32 per cent lower milk price in 2003, which remained at a similar level over subsequent years soon saw expenses fall back into line.”

However, Ms Moynihan says the 72 per cent lift in milk prices in 2007/08, and higher prices on average in the years following, brought a steep increase in production costs Media Release November 27, 2013

that show little sign of abating without a significant change in farming systems or an economic crisis.

Farm working expenses increased 72 per cent in 2007/08 on the prior season and interest cost rose 29 per cent with both expenditure categories oscillating around these higher levels ever since, she says.

Additionally, higher interest costs per kgMS have been driven by New Zealand dairy farmers’ increased debt, not higher interest rates, Ms Moynihan says.

“The significant increase in dairy land values over the past decade combined with an increased focus on land acquisition resulted in aggregate farm debt across the dairy industry more than doubling since 2002 to almost NZD 20 per kgMS produced,” she says.

New Zealand producers are likely to experience upward pressure on milk production costs over the coming years as they are confronted by a rising interest rate market and the likely impact of future environmental regulations on farming systems and milk production levels.

“Tackling environmental issues is likely to result in a variety of measures that may include increased infrastructure on-farm, altering pasture management or decreased intensity of farming systems which all impact production cost dynamics”.

Ms Moynihan says milk producers in New Zealand should consider where the competitive advantage lies for their own operations.

“Increased exposure to the global dairy market for some milk producers and greater intensification on-farm for others has added complexity to many dairy farm businesses,” she says.

“A flexible production system at a higher average cost may still be competitive if it provides resilience during a downturn.”

With high volatility expected to continue for both milk prices and production costs, the ability to lower inputs and/or costs during periods of abundant global supply would be a distinct advantage, Ms Moynihan says.

“Southern Hemisphere producers previously survived global market downturns for prolonged periods due to the size of their absolute comparative cost advantage,” she says.

“With this cost advantage now minimal to non-existent, other strategies to survive the inevitable downturns – albeit likely short-term – will be required.”

Any dairy farmer not doing well with this season’s forecast record payout shouldn’t be in the business.

But next season’s payout will almost certainly be lower and even the best farmers have to keep a rein on costs to ensure they can cope with less money.

Businesses which service and supply farms also have to be aware that while they might be making hay under this year’s sun, next season could be cloudier.


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