Dairy profits down but still high per hectare
Higher operating expenses per hectare in an otherwise-spectacular 2011-2012 dairy season resulted in farmer owneroperator profit sliding by $186 a hectare, a new DairyNZ report says.
But the 2011-2012 DairyNZ Economic Survey said operating profit which declined by 6.6 per cent to $2624 per hectare was ‘‘still a high level’’.
DairyNZ said the season was characterised by an excellent summer and autumn resulting in record milk production for all regions.
But offsetting the 9.2 per cent increase in milksolids per hectare was a matching decline in milk prices, leaving gross farm revenue per hectare almost unchanged.
The report said milksolids production per cow rose 30 kilograms of milksolids or 8.8 per cent to 364kg per cow. Likewise, milksolids per hectare increased by 11.4 per cent or 105kg, to 1028kg per hectare.
In both cases the previous record was set in the 2010-2011 season.
However, DairyNZ warned of a large dilution effect on per-kilogram key performance indicators because of the large increase in milksolids production.
While owner-operator operating profit fell slightly on the previous season, it remained the third-highest on record.
Cash operating surplus fell by 6.4 per cent or $31,931 to $464,654 per farm.
Slightly lower interest payments were offset by increased tax payments,
Overall the $39,081 cash deficit in 2011-2012 followed a similar sized surplus in the previous season.
On a per kilograms of milksolids basis, the operating profit of $2.49 was down 43c on the previous year’s very high profit, the report said.
The average cost of producing milk (operating expenses per kg/milksolids) decreased to $4.73/kg, down 22c/kg on the previous season.
Farm working expenses also declined by 11c/kg to $3.95/kg. For 50:50 sharemilkers dairy operating profit per hectare of $1222 was the same as the previous season, the report said. Lower milk prices of $3.34/kg and a small increase in expenditure were offset by record milk production.
Operating costs decreased 17c/kg milksolids to $2.81. Average cash operating surplus increased by 5.2 per cent.