Dairy cow prices down 50% in the south
18th Mar 09, 4:18pm
Fonterra's reduced milksolid payout has resulted in the value of dairy cows almost halving during the past five months, according to stock agents reports The Southland Times. Rural Livestock Ltd. Dairy representative John Williams said the price for good-quality in-calf heifers had fallen from $2300-$2400 in November to $1300-$1400. The fall had been triggered by back-to-back reductions to Fonterra's forecast payout for milksolids in November and January, Mr Williams said. That news had made banks less inclined to lend money for dairy and kept farmers out of the market, he said."Prices will vary depending on records but all dairy stock has gone down, even bulls." He confirmed 12 small-frame, non-recorded heifers sold for as little as $420-$480 at the Balclutha saleyards on February 25. However, Mr Williams stressed they were an "exception to the rule" because most of the Balclutha stock fetched $650-$850. PGG Wrightson dairy representative Murray Bain said those most upset by the price drop would be dairy farmers who bought into the market when prices were high in November. "We think, in the South Island, we're also going to have a bigger cull this year as farmers look to cut costs," Mr Bain said. That meant farmers would cull their older stock while the price of replacing them with new cows was low, instead of paying a high price for them to graze. That would leave farmers expecting to make money from grazing herds on their land out in the cold with a high level of excess feed, he said. However, milksolids prices looked to have settled and Mr Bain expected farmers to be more enthusiastic about purchasing stock in the coming months, halting any further slide. "We're normally trading in January-February but the banks aren't lending until Fonterra settles down." However, PGG Wrightson South Island livestock manager Craig Dempster said an increased cull could have further ramifications in a couple of months.Flooding the market with a surplus of manufactured beef, at a time when people weren't eating at restaurants and the market was precarious, was a concern, he said.