World dairy prices rose 7.7 per cent overnight following a huge rise in the previous GlobalDairyTrade auction.
The average price was US$2920 per metric tonne. Read more »
Whilst farmers are taking huge hits as dairy prices continue to track low – Fonterra still has the money to throw small party gatherings at Auckland CBD restaurants.
Last night a group of Fonterra executives partied at Vivace in High Street.
Whilst it was apparently for a couple of staff who were leaving – now is not the time to be seen in public spending up on the company credit card. Read more »
Michael Woodhouse has made a complete balls up of Health & Safety legislation and had to suffer actually very good questions from Andrew Little.
John Key may have laughed off some of the questions but the bottom line is this, there is no way that butterfly and worm farming are more risky than dairy farming. Labour can bash National endlessly with this and it is simple for any deadhead, except Michael Woodhouse, to understand.
This is National’s light bulb and shower head moment and there is plenty of time to play on this. Labour can ask day after day after day whether or not butterfly farming or some other innocuous occupation is safer or or not than dairy farming and people will laugh, because it is that ridiculous. Read more »
Farmers are keeping their wallets shut as they face at least a year or two of tough conditions.
They’re fighting to stay on their farms, but in the towns, the lack of money is going to kick start unemployment.
Retailers in Taranaki say the downturn in the dairy market is starting to hit turnover, with sales declining by between 10 and 20 percent.
Fonterra has slashed its forecast payout for the season to $3.85 a kilo of milk solids – far below the break-even point for many farmers, whose spending on non-essential items has all but evaporated.
Michael Eager, who owns the R J Eager furniture stores in New Plymouth and Stratford, said it was taking longer to shift stock.
“We are already seeing a slowdown in retail sales. Enquiries have dropped away so it is impacting at the present time quite strongly and particularly in the small towns.
“We have a business in Stratford, and we’re seeing that impact take place now.” Read more »
Bill English has just returned and discovered that the Chinese are sitting on a massive stockpile of milk products. From China:
The Finance Minister, fresh from a week long trip to China, New Zealand’s largest export market, said that there was a picture of an international glut of dairy products which would keep prices lower for some months to come.
In recent weeks the US Department of Agriculture had highlighted an increase in stocks of dairy prices being stored in China.
“It appears there’s been almost literally a mountain of milk powder in warehouses around China, more than people thought so it might take a bit longer to work through,” English said.
“The way it’s been described to me, there’s been a perfect storm of excess milk supply, influenced by events in Russia, Europe, in China, in New Zealand, Australia and that’s led to these prices which I think everyone regards, everyone believes are too low for the health of the dairy industry, whether it’s here, in China or in Europe, but it is going to take some time for the prices to pick up.”
English remained confident that there would be a recovery in dairy prices some time in 2015.
“I don’t think there’s much doubt that they’re going to pick up, it’s just a matter of when and how fast.”
Estimates ranged from picking up in a few months to remaining flat until Christmas, English said.
“I haven’t seen any estimate that it would take years to clear up.”
The economy looks to take another hit as dairy prices crash overnight
International dairy prices fell by 8.8 per cent at this morning’s GlobalDairyTrade auction – the first sale to be held since last week’s 1080 infant formula contamination scare. Read more »
ANZ economists have cut their milk price forecast to $4.35 per kilogram of milk solids, well below the break-even point for many struggling dairy farmers.
The bank’s downgrade represents an approximate $6.9 billion hit to overall dairy revenue compared to last year’s bumper season.
Dairy prices have finally started bouncing back from the five-year lows plumbed last year, with a 3.6 per increase in the first GlobalDairyTrade auction of the year.
However, ANZ said that was offset by the largest increase in supply from major exporters in eight years, with increased pressure from Europe and a growing domestic milk supply in China.
While oil-dependent nations had been a key source of demand in recent years, the ANZ economists said they were already seeing some pull-back due to collapsing oil prices.
If the forecast proves to be correct, it would be the lowest since 2007’s payout of $3.87, and almost half last year’s record $8.40.
Federated Farmers national dairy chairman Andrew Hoggard said the ANZ forecast was just one view, with Fonterra’s $4.70 guidance still the number to watch.
However, he said it was a sign that dairy farmers needed to be wary and cautious of more downside to come. Read more »
The boom in the New Zealand economy has been led by massive dairy intensification. It is also the driver behind silly socialist projects like the Ruataniwha Water Storage Scheme where townie councillors have bought into government and Federated Farmers spin about the future being dairy and they are promoting economic models based on boom years that are unsustainable in bust years. Even so the proposals can’t work without massive subsidies or government grants even in boom years.
Yet no one has really stopped to question what the real long-term price of milk solids is, and if it is a sustainable long-term path to prosperity for New Zealand.
After last years boom prices there was not much consideration to what was going on world-wide, especially with the Chinese Market.
In the Sydney Morning Herald, their business editor wrote a good article comparing dairy in New Zealand to iron ore in Australia. I slammed it at the time, but have had a bit more of a think about it, plus some additional research over the holiday break.
Uppity Kiwis feeling boastful about their dollar approaching parity with the mighty Aussie might do well to stick to rugby for their kicks. Their China-driven boom is coming to an end as quickly as Australia’s. And they have less to fall back on when it does.
Meanwhile, reports of Gina Rinehart going long on dairy farms could prove as reliable a warning as many another billionaire diversifying outside his or her area of expertise.
The New Zealand economy’s resurgence has owed much to China’s demand for milk products and getting in early for a comprehensive free trade agreement with the Middle Kingdom.
Trouble is, China has been busily investing and encouraging others to invest in increased and globally diversified milking. Just as iron ore miners have ramped up production both from existing provinces and new projects from Africa to Mongolia, New Zealand’s farmers are facing increased competition from South America to Russia and all points in between, including Australia.
[…] Read more »
Eric Watson suggests we have reached the maximum production capacity. We can not really make more. So what next?
New Zealand has led the world developing technologies to maximise output from our limited land resources. Unfortunately, I believe we are close to reaching the geoclimatic and biological limits of our “pasture-based” model.
The reality is, the gap between the maximum potential yield of New Zealand’s pastures and utilisation of this pasture has diminished to the point where little incremental growth in production is possible without alternative feed sources.
It is no surprise that continued increases in dairy production have gone hand in hand with significant increases in the use of imported supplementary feed stuffs, such as palm kernel which, with increased rates of applied nitrogen, contribute to nutrient loading on dairy farms.
New Zealand is caught between the necessity for economic growth and our obvious geoclimatic limitations.
As an isolated exporter of commodity dairy products, our opportunities to add to our export value without increasing volume is limited, but to maintain our market share we need to increase volume.
New Zealand’s dairy exporters have continued to explore opportunities for value-added products to increase our export values, but these initiatives are dwarfed by the impact of volume in the major commodity dairy products we export, and ultimately this is what motivates our farmers and the dairy industry.
The key here is the ability, or rather the efficiency, of ecosystems to convert nutrient inputs into product.
Forget Killer Cows, you are going to see Homicidal, mad as all hell psychopathic cows when they get wind of plans for them to wear nappies in Bavaria.
The other farm animals will likely die from laughter.
Bavarian farmers are angry that their famous Alpine dairy cows will apparently have to wear nappies under European Union environmental laws.
Johann Huber, whose family has farmed on the mountain slopes of Gmund am Tegernsee for over 400 years, has begun putting home made nappies on his 18 diary cows to avoid falling foul of an EU fertiliser ban.
Mr Huber said that his cow Doris had behaved well when he fitted her with a home made bovine nappy to prevent her dropping cow pats on the Alpine slopes.
“We have no standard nappies, they have not been developed commercially yet,” he said.