Dairy farm­ers face the worst

Matamata Chronicle - - News - By RICHARD MEAD­OWS

WEST­PAC is warn­ing that the coun­try’s milk pro­duc­tion could drop for the first time in five years if drought con­di­tions in the North Is­land con­tinue.

The bank’s agri-econ­o­mist, Nathan Penny, said milk pro­duc­tion for the 2012-2013 sea­son might fall by as much as 2 per cent, de­spite grow­ing herd sizes and a bumper spring.

As re­cently as last month the bank was still ex­pect­ing to­tal pro­duc­tion to be up slightly from last year, but the drought had since pushed pro­duc­tion lev­els ‘‘off a cliff’’.

The en­tire North Is­land has been de­clared a drought zone, and parts of the South Is­land also re­main dry.

‘‘Our best case sce­nario is now for this sea­son’s pro­duc­tion to equal last year,’’ Penny said.

‘‘It all de­pends on when the rains come.’’

West­pac agribusi­ness head David Jones warned that the full fi­nan­cial ef­fects of the drought might still be sev­eral months away. He said many farm­ers were still in a fairly strong cash po­si­tion af­ter mov­ing quickly to shed stock.

‘‘How­ever, with the killing chains now at full ca­pac­ity, un­cer­tainty over feed sup­plies, and a likely short­age of re­place­ment stock, a lot of their is­sues

The Glob­alDairyTrade TWI Price In­dex surged a mas­sive 14.8 per cent com­pared with the last sale three weeks ago, mark­ing the sev­enth straight gain for the bas­ket of dairy prod­ucts. It is now at its high­est since De­cem­ber 2007.

The av­er­age win­ning price at the auc­tion rose to US$4683 ($5685) per met­ric tonne, up from US$4216.

Max­i­mum sup­ply, or the mea­sure of how much dairy prod­uct Fon­terra has for sale, was just 16,320 tonnes with a to­tal of 15,994 tonnes sold. That vol­ume has halved in the space of a month.

At last week’s auc­tion, seven of the nine prod­uct cat­e­gories rose, and two were not traded.

Whole milk pow­der, the largest prod­uct cat­e­gory by vol­ume, rose 21.2 per cent. The next big­gest gainer was an­hy­drous milk fat, up 16.3 per cent.

Lac­tose and milk protein con­cen­trate were not traded.

The auc­tion saw 185 par­tic­i­pants out of 785 qual­i­fied bid­ders take part, with 82 win­ning bids.

Wait­ing for rain: The en­tire North Is­land has been de­clared a drought zone, and parts of the South Is­land also re­main dry. West­pac agribusi­ness head David Jones warns that the full fi­nan­cial ef­fects of the drought may still be sev­eral months away .

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