MAF dairy monitoring survey results

Key Points from MAF National Monitoring report  2008/09 was a relatively forgettable year for dairying in NZ, coming on the back of variable weather, a significant decline in the payout throughout the 2008/09 season, and a forecast $4.55 payout going into 2009/10. Nationally, production was up by 9.8 % compared with 2007/08, with most of this being a post-drought recovery from 2007/08. Despite the increased production, net cash income dropped 27 % compared with 2007/08 to $750 000, very much as a result of the drop in the payout, from an original forecast of $7.00 per kilogram of milksolids down to $5.20. Farm working expenses increased again in 2008/09 to an average of $3.86 per kilogram milksolids, driven by increased feed expenses due to the variable weather, and increased prices pushing up fertiliser expenses. The average dairy farm finishes the year with a cash loss of $58 500, a 141% drop on 2007/08. In the absence of off-farm income, new borrowing, and introduced funds, this loss would be $130 600. 2009/10 Farms in most areas of NZ went into the 2009 winter with less than desirable pasture covers and cow condition. While supplementary feed was readily available, the cash to buy it was not. Despite this, farmers are budgeting for a 3% increase in production over 2008/09 levels. This helps somewhat to offset the drop in payout, with the result that net cash income decreases 5% to $714 900 in 2009/10. A significant feature of the 2009/10 budgets was farmers' expectation of decreasing their farm working expenses, which are budgeted to drop by 11 percent, to $3.34 per kilogram milksolids. Major decreases are budgeted for feed, fertiliser, and repairs and maintenance expenses. The average farm, as depicted by the model, still makes a cash loss of $15 500 in 2009/10. In the absence of off-farm income, new borrowing, and introduced funds, this would grow to almost $40 000. As a result of the financial losses in 2008/09, the lower than expected payout of $4.55 per kilogram of milksolids in 2009/10, and some uncertainty around the final payout price, farmer morale is subdued.