Cold frosty conditions arrive in the south along with a backdrop of snow, but dry soils are allowing good utilization of pastures and early fed brassicas with growth still being recorded.
Winter grazing arrangements have been made and careful planning will be needed to ensure every kilogram of valuable feed is utilized efficiently.
Grain prices are falling as the margin between PKE and wholegrain offers managers cheaper options for quality feed.
Many areas of the North Island and West Coast and Southern regions have all had plentiful moisture, and after last months mild conditions pasture supplies have improved markedly.
With the downturn every cost of the dairy operation should be scrutinized, but one commentator urged farmers to look at achieving a low cost of milk, by getting the balance right with input costs and production.
And this has just become even harder this week as Fonterra readjusted downwards this years payout to $4.40 and predicted next years rate at $5.25/kg ms.
DairyNZ calculated this will remove $150,000 from this years average dairy farmers income, and the new seasons rate will with retrospective payments, mean the average income will be just $4.75/kg ms at the farm gate and result in Canterbury farmers being $300,000 short.
Another auction, and for the sixth successive event another decline, is the markets sorry plight at the moment, as global dairy commodity prices struggle under excess supply.
Butter and anhydrous milk fat lead the products down, but whole wilk powder's drop by 3.1% to $2309US/tonne will be a worry for future payout predictions.
Dairy futures had a record month of trading as uncertainty of prices lead customers to lock in risk, and Fonterra opened their Guaranteed Milk price offers for those farmers needing to secure certainty of price.
Reports suggest there is strong disappointment with Fonterra’s performance and some are changing to the smaller processors and releasing share capital to fund the shortfall.
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10 Comments
Considering Ballance fertilisers, which is owned by Fonterra now, can afford to offer pricing drops based on the drop in NZD (even through the advertisement says "Nitrogen is good for winter feed" (it's not, it's lousy in winter, as the grass doesn't grow much so giving extra nitrogen is just going to result in it dissolving and migrating to waterways. While chilling the soil even further as Urea dissolving is highly _endothermic_ and the process sucks a lot of heat out of it's environment, and it is readily soluble). But hey, what do they know they're only the manufacturer and fertiliser experts.
yet Fonterra is unable to provide even breakeven payments to farmers for the base product (but can spend _billions_ of factories, and give aforementioned discounts).
Perhaps the way forward for fonterra is just to dump all that milk stuff and go straight into politics and playing "global relevance" PR games.... oh yeah.... they're already doing that.
Wouldn't trust a word they said. (see fertiliser reference above). Wouldn't trust them as far as I could p... them.
Not much point really. The answers are plain as the nose on the face. Basic product needs to be paid for at minimum market price or better. that means real yield, proper valuations, gone are the days family can work for nothing, and farmer Joe can work 90 hours a week for capital gain, and use cheap "number8" jury rigged shortcuts. Those days are now illegal. So Fonterra is just going to have to face the music and pay above the minimum...or watch it's customer base ...and about 30% of New Zealand ... financially collapse. or do you think I don't have the experience and breadth of knowledge to make that call...
Rinse and repeat across sectors of industry and we can see that in petro/energy as well. Yet Fonterra has debt, and to raise its prices it has to do what? pass that on to the customer, but can it? looks like not. Yet in effect it has a monopoly in NZ? and exercises that by forcing NZers to pay "international" prices for milk products. However how much has the demand for cheese etc fallen since such rentier pricing got underway? oopsie.
What did I just get this week? yet another letter from Meridian increasing my electricity costs due to "inflation" twice this year. Can I do anything about it? no...its a rigged rentier market.
petrol? we pay or dont use it, and that is just it, we are not using it all over the developed world.
Meat industry? I dont buy much meat these days but I watch prices and they seem pretty flat to me. (Why because its not good for you, its not very "green" plus its a significant cost to my basket) Silverfern is a top dollar charger, I watch that and it gets ignored by shoppers and eventually significantly discounted then I might buy some as a treat.
Now I dont disagree that its not "sustainable" to continue on such low prices in any sector, the trouble is the lack of ability for ppl to pay it which seems to be going un-recognised by many. Where is wage rises? not much sign of that for a significant % of ppl for 5+years. hence why CPI is so subdued. This of course screams what is going to give out. You said you paid 3% rent, Ok that says to me when the true costs are considered that the farm is significantly over-valued or the % is wrong.
What do I see now in the future? why in effect corporations moving to force us the consumer via things like TPPA to pay somehow. Lets say that like the electricity industry they get their way, that means sectors without that power are going to suffer, in effect robbing Peter to pay Paul.
Higher prices is what caused all the problems in the first place. I think the solution is to restrict farming to local operators, you won't need as much environmental regulation because farm prices will be realistic, mortgages lower, the need for high propduction less , go back to individual ownership and away from corporate model. i.e the guy doing the work should be making the money not the shareholders and bureaucrats. High prices equals more big egos and mega factories and corruption. There were places in our area where you could get your own meat processed have been driven out of business by government regulation. The problem is the government wanting farming to be "big business".
My admittedly simplistic take on this Tim has always been that GDP is to blame. So much emphasis is placed on this and like measures and all seem to run against the small owner operator and even against simple profit as what is required is money movement to make these figures. The best illustration of this is the Governments backing for irrigation, it makes no sense to the individual farm but it does create more money movement figures.
Tim I don't disagree with your general sentiment but you need to define 'local operators'. Some of the higher prices have been paid by local buyers who own multiple farms and can leverage of their asset base. They consider themselves as family farmers not corporates, and many cases they still milk/relief milk occasionally on their 'home' farm. Many farms around us are owned under this type of ownership. It is not uncommon to see families own three or more farms - without any outside investors. Do they meet 'local operators' under your definition?
I think so CO, people who are have direct involvement in running the farm , support local businesses and the community. For example, I don't have a problem with a Chinese person immigrating here buying a farm, living here and working it supporting local business, it's differnt than a chinese corporation buying a farm (pushing up farm prices), supplying their own factory with profits going offshore and pushing production (contributing to driving down milk prices and the need for more environmental regulation) with little benefit to NZ
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