New Zealand dairy organisation DairyNZ has warned that some farmers in the country will make a loss this season and has revised its breakeven milk price.
According to DairyNZ, the industry organisation that represents all New Zealand dairy farmers, the country’s national breakeven cost is $7.51 per kg/milk solids (ms) for this season.
This revised figure is above DairyNZ’s forecast revenue which is $7.34 kg/ms. It is also above Fonterra’s midpoint forecast of $7 kg/ms.
This means some farmers will make a loss this season, it said, so the focus will be on “maintaining business viability”.
DairyNZ head of economics, Mark Storey said that this will also have “significant flow-on effects” to New Zealand’s regional and national economy.
“We know dairy farmers have a difficult season ahead, in light of the reduced milk price and continuing high farm costs,” Storey said.
He added that this season’s reduced income will be causing “real concern” on many farms.
He said that farmers are looking at budgets “line-by-line” and analysing where spending can be reduced, including pausing non-essential capital expenditure and carefully evaluating feed, fertiliser and other spending.
The new forecast is expressed as a national average, which does not necessarily reflect individual farm situations.
DairyNZ general manager of farm performance, Sarah Speight said: “Every farm is different so we encourage farmers to look at their own situation and what changes can be made.
“Given the further drop in the Global Dairy Trade this week we are looking at 12-18 months of reduced income, so it is important to consider changes carefully.”
DairyNZ have encouraged farmers to talk with their farm teams, advisors and the organisation’s regional teams for support and advice.
“DairyNZ will continue working with farmers to support them to remain viable this season.
“This includes running events where farmers can hear from others on how they are managing costs and are focusing on farming as efficiently as possible,” Speight said.
