Dairy prices likely to stay the same
What we saw in 2015 was that exports still grew even though dairy was down. Nathan Penny
Next year’s dairy payout should stay around $6 per kilogram of milksolids, ASB’S chief economist told farmers at the Central Districts Field Days.
Nathan Penny, addressing 30 people at a seminar, said food prices generally were increasing and international demand for all food including dairy products was already occurring. He said the milk payout was part of that.
‘‘But yes the economy is more resilient. Dairy struggled for several years. But what surprised us was the rest of farming, horticulture, beef and forestry filled the gap. What we saw in 2015 was that exports still grew even though dairy was down.’’
Penny said the milk price internationally had lifted structurally. But he said production would be dependent on the weather.
‘‘The New Zealand economy in general is pretty good. The Kiwi dollar won’t fall against the American dollar much at all.’’
But he said New Zealand could cop fallout if US President Donald Trump started a trade war with China.
‘‘Trump on his first day in office dumped the TPP. He is unpredictable.’’
Penny said a trade war against China was a bigger risk to New Zealand than tariffs on trade to the US.
He said agriculture was not talked about and he didn’t expect further trade barriers this year.
‘‘ But China is a major market for New Zealand and we don’t want to see a trade war between the two.’’