NZ farmers, the world's largest dairy exporters, increased milk production almost 10% in the year ended June as they re-stocked after a drought the previous season, according to a government survey reports Bloomberg News. The average dairy farm produced about 137,000 kilograms of milk solids in the period, 9.8 percent more than a year earlier, the nation's Ministry of Agriculture and Fisheries said in an annual survey today. Farmers are budgeting on a 3% production increase in the current year despite cold weather, weak prices and a lack of funds for supplementary feed, the report said. A collapse in dairy prices to five-year lows has prompted farmer protests in Europe in the past two months and caused U.S. cooperatives to plan their second cow cull in three months to help restore incomes. NZ farmer morale is "subdued" and spending is being cut to limit a second year of losses, today's report showed. Farm working expenditure is "budgeted to drop by 11% ," the ministry said. "Major decreases are budgeted for feed, fertilizer and repairs and maintenance expenses." NZ accounts for about 40% of the global trade in butter, cheese and milk powder. Those exports contribute about 20% of the nation's export earnings. Average farm sales dropped 27 % from a year earlier as a production increase wasn't enough to offset lower milk prices, the report said. Rising fertilizer and feed costs meant the average farm incurred a NZ$58,500 ($38,285) cash loss for the year. Reduced spending and lower interest costs will help reduce losses to NZ$15,500 this year, assuming Fonterra Cooperative Group Ltd. doesn't further reduce its payouts to farmers, the ministry said.
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