Opinion-editorial from DairyNZ senior economist, Matthew Newman
Focus on competitive edge to control your own destiny
With milk prices down, the dairy industry needs to focus on the fundamentals of successful dairy production which have
given the country its competitive advantage.
In the commodity business, cost competitiveness is the most critical element in being able to achieve rewarding margins.
This is where New Zealand has excelled and holds an advantage over the US and EU producers, but the US's most profitable
farms are closing in when capital requirements and operating costs are considered. There are risks of New Zealand
farmers acquiring land at too high a cost as well as locking into high farm working expenses to achieve production
growth.
DairyNZ senior economist Matthew Newman says greater efficiency will keep us competitive.
Despite fluctuating milk prices, the New Zealand dairy industry is in control of its own destiny. It has the ability to
sustainably convert low cost, high yielding pasture into nutritious, high protein dairy products. Beyond the farm gate
it is also equipped to make the most of its product mix with its global reach and scale, along with supply chain
efficiencies and full traceability.
For many farmers, remaining competitive and profitable in the medium to long term, may mean seeking options involving
less intensification. Upholding productive capacity, while concentrating on cost effectiveness and meeting environmental
requirements and other on-farm compliance will be the challenge.
Other farmers will need to manage their intensive farm systems in a manner that will remain profitable in the volatile
world of commodity markets combined with currency markets. Regardless of the production system, it is time to reassess
for the long term.
Click here<http://www.dairynz.co.nz/news/latest-news/back-to-basics-to-sustain-dairys-competitiveness/> to read the full article.
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