Very productive and profitable year for NZ dairy farmers

18 July 2001

Despite climate problems and the Global Dairy Company merger issue, 2000/2001 was a very profitable year for most New Zealand dairy farmers, with overall production up in all areas, according to the Ministry of Agriculture and Forestry Dairy Farm Monitoring Report released today.

Dairy farmer expectations for next year are high. Most farms are budgeting on similar or greater production than the 2000/2001 season. Payout expectations are for only a slight drop compared with 2000/2001. The result is for a similar gross farm revenue figure to this season, and similar expenditure on-farm.

Farm monitoring is a process whereby MAF monitors the production, finance, trends, issues and sectors concerns in New Zealand farms. The expectations of farmers and those servicing the sector are analysed and presented as a model farm. The report highlights the 2000/2001 seasons and forecasts the 2001/2002 season. The views reflect those of the sector, and not necessarily those of MAF.

There are nine farm monitoring reports this year. Five of these are sector specific (deer, sheep and beef, dairying, arable, and horticulture). Four are regional (South, Central South, North and North Central).

Overall dairy production was up in all areas, combined with an expected $500/ks milk solid payout, which saw a significant lift in the dairy farm profitability. Gross revenue on farms was up 40-50 percent, compared with the previous season. Spending on-farm has correspondingly lifted, particularly in the areas of feed (especially in the lower North Island and South Island), fertiliser, repairs and maintenance, spending on machinery replacements was also up.

The current feed situation on most farms throughout the country is variable, but many are quite tight, especially so in the lower North Island and in the South Island. Cow condition is also less than desirable. Cold frosty weather through June saw soil temperatures and pasture growth plummet. Therefore many farmers will be hoping for benign weather conditions through the rest of winter and spring.

Internationally prices for cheese reached its lowest for eight years during the 1999/2000 season. Since then demand and prices for cheese has recovered relatively strongly, aided in part by the BSE and foot and mouth disease (FMD) crises in Europe, which had reportedly lead European consumers to turn to cheese as an alternative source of protein. World demand for cheese is likely to remain strong and prices are expected to recover over the medium term.

Demand for New Zealand milk powders has also increased recently as a result of the FMD crises in Europe, as countries that normally would purchase from Europe have sought product from elsewhere. However, as most of New Zealand's production is already committed, the potential for selling to these buyers was very limited.

MAF Farm Monitoring Reports can be found on the MAF website at www.maf.govt.nz

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