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18 August 2006
The Ministry of Agriculture and Forestry's (MAF) 2006 Farm Monitoring
report into the status of the country's dairy sector shows farmers are
expecting only a minimal rise in gross farm revenue for the coming season
The report says while farmers are budgeting on an overall three percent rise
in milk solid production and an eight percent increase in cattle sale returns
for the year, they expect it to be off set by a lower payout. This
translates to a rise of just one percent in their gross farm revenue.
The dairy sector farm monitoring report is part of an annual process where
MAF's Policy group monitors the production and financial status of farms
in terms of their cash income and expenditure. Trends, issues, and sector
concerns are also monitored.
The reports are based on model farms designed to best typify average farming
operations within specific regions. Information for each model is drawn
from real farmers and a wide cross-section of agribusiness, and prices and
projections are based on their opinion, not MAF's.
Looking at the year that's been, the dairy report says 2005/06 saw a
jump in production, but the gains made did not translate into farmer
It says milk solid production was up four percent on the last season, but
did not lead to an increase in profitability due to a lower payout and rising
The report's co-ordinator, MAF Policy's Manager of North Island
Regions Phil Journeaux, says the lift in milk solids production resulted in a
10 percent increase in gross farm revenue, despite the lower payout. Farm
working expenses, however, lifted by 14 percent, with significant increases in
wages, feed, fertiliser, repairs and maintenance. Fuel costs rose by 18
percent and rates jumped 14.5 percent.
"The average property has recorded a disposable loss, offset by new
borrowing and off-farm income," Phil Journeaux says.
"Of the 100 farms monitored, 71 recorded a disposable loss, up from 59
the previous year.
The report concludes that most farms are once again budgeting for a
disposable deficit from their operations, offset by other cash sources.
"This is a direct reflection of the difficulty of farming with a $4.00
payout with current on-farm cost structures and ever-increasing prices of
inputs,' says Mr Journeaux.
"Overall though, farmers remain confident the industry is heading in
the right direction, despite the current payout level."
For further information, please contact:
Phil Journeaux, Manager North Island Regions, MAF
Ph.: 07 957 8314 or 029 957 8313
Lesley Patston, Senior Communications Adviser
Ph.: 04 894 0163 or 029 894 0163
To view the full report online, visit: