Dairy price rise not the breaking dawn
Federated Farmers is warning against overstating the 14.8 percent rise in the latest GlobalDairyTrade online auction,
saying the increase is driven solely by supply and demand.
“New Zealand’s drought needs to be taken with the one that the United States suffered and unexceptional production out of Europe,” says Willy Leferink, Federated Farmers Dairy Chairperson.
“When you look at the global picture it is no wonder prices have spiked upwards. Westpac is forecasting New Zealand’s
production may actually decline for the first time in years. The truth is that the supply of milk and global demand is
finely balanced.
“This makes markets skitty and while any increase in international price is welcome, it is moot when you are yet to be
fully paid-out for what you have produced. In the North Island many herds have either stopped production or are in the
process of drying off early.
“So forget images of flash new cars because it is going to be a lean winter on-farm and I believe many farmers will be
looking at a cash loss for the 2012/13 season.
“There is one thing Government and councils can really help us out with and that is tightening their belts to keep
future rates and fee increases to the absolute minimum. That message is one that I feel will be welcomed by businesses
outside the farm-gate as well.
“With winter coming North Island farmers are going into it with spartan pasture covers and low feed reserves. Much
winter feed has been used early meaning the cost of supplements will rise along. There is also the need to renew or
undersow damaged farm pasture.
“The markets know recovery from drought can take several seasons for these reasons.
“While it has been damn tough, we are incredibly proud of the way New Zealand’s dairy farmers have prioritised animal
health and welfare. I must also thank all of the banks and the rural supply merchants who have shown understanding
through extending their lines of credit.
“For consumers there will likely be price rises but they need to know their milk and dairy products are not as simple as
mixing sugar and flavouring with carbonated water. What the drought hopefully shows them is how much care and effort
goes into producing dairy products.
“It underscores to me that faming is as much a craft as it is a science,” Mr Leferink concluded.