The latest GlobalDairyTrade (GDT) result has disappointed Federated Farmers and now means farmers will be preparing for an austere 2014/15 season.
“There’s no way to dress this up as anything but a kick in the guts,” says Andrew Hoggard, Federated Farmers Dairy chairperson.
“This is the auction result that brings the chickens roosting in the Eastern Ukraine home to us on-farm. Dislocated European Milk has definitely put a sinking lid on global dairy prices.
“Unlike most of our competitors who are subsidised there’s not one Kiwi farmer looking for a handout. We may not like what prices are doing but we know this is market forces at work and while it often runs in our favour, this season it isn’t.
“We don’t have subsidies, we have bankers and unlike subsidies you have to pay them back with interest.
“Any type of farming is a long run thing and you have to take the rough with the smooth.
“While Federated Farmers genuinely welcomes the NZX/Massey University Milk Production Predictor and Farmgate Milk Price Calculator, there’s just no way would these have factored in the Eastern Ukraine.
“If you look at the latest GDT result, there’s good volume sold at over 55,000 metric ton and 167 winning bidders, which is a goodly number. Despite this prices are flat to heading south and to us that’s the impact of dislocated European milk.
“With a small domestic market we are trade exposed whereas our competitors can fall back upon large domestic markets.
“This should help price recovery next season and the one afterwards because at current international prices, even with cheap feed grains, international dairy prices are not very attractive. This means herd numbers in Europe and North America will likely be sized to fit.
“Here, our guys will be going through budgets and making the decisions they need to make based on their farming system.
“If we had the power of foresight, we could have kept more calves for beef from the 2012/13 season instead of selling to calf rearers, yet that would have eaten into milk production, especially last season, our best one ever.
“You see with a biological system like farming it is easy to dial back production. If you wish to dial up production without buying animals in then you are talking time lags of at least two seasons.
Farmers’ advice to farmers is to watch costs but to keep
your bank, farm consultant, accountant and family fully in
the loop. Take a no surprises approach to get through
this,” Mr Hoggard concluded.