With the continued decline in milk price, DairyNZ Chief Executive Tim Mackle has called on dairy farmers to cut unprofitable production from their systems.
“These are extraordinary times. Open Country Dairy’s milk price forecast is under $4/kg of milksolids (kg MS) and all indicators show Fonterra will be forced to lower their forecast on August 7. This price dip is lower and longer than anything we’ve seen in the last decade,” says Tim.
“Assuming a milk price of $4.00 for the average Open Country Dairy supplier, that means a potential deficit of around $250,000 for the year ahead.”
He said it is now a necessity for many dairy farmers to do more than just shave costs.
"Removing unprofitable production from our systems is good for individual farm businesses, and will send the market a signal that New Zealand farmers will not produce marginal milk at a loss.”
He also said that a 'zero spend' policy is not the solution either and warned dairy farmers that animals need to be kept fed and healthy, while pastures need to be kept growing.
"Cows will need minerals and in some cases, some supplement to achieve this. Using nitrogen fertiliser and keeping average pasture cover above 1800kg of dry matter per hectare will maintain growth rates.”
He also warned Kiwi dairy farmers that it’s hard to see how any supplementary feeding is profitable through spring.
"Lower milk production should be easily covered by lower feed costs. The drop in milk production will be minimal for many farmers as better pasture quality is maintained and less silage is made.”
DairyNZ has an online Supplement Price Calculator which works out profitable supplement use based on milk price, post grazing residuals and supplement type.