Uncertainty means cautious outlook for farmers
Because of uncertainty, Taranaki dairy farmers are facing the future with a cautious outlook, suggests Donald McIntyre president of Taranaki Federated Farmers.
McIntyre’s evaluation of the overall farming scene currently being faced by Taranaki farmers is like the curate’s egg – there are good parts and bad parts.
While most of the region has enjoyed good rain fall up until Christmas resulting in good volumes of quality winter reserves being harvested, the extra production is offset by Fonterra’s forecast payout of $6.15 which is already below last season’s $6.70, he says.
Sheep and beef farmers are currently enjoying a good season, with good grass growth and high returns on lamb. Wool prices, however, are down.
Along with an uncertain final payout, there is also the strong possibility of the UK leaving the European Union without an agreement by the exit date of March 29, and this could easily impact adversely on New Zealand farmers, especially those in the sheep and beef sector.
There is no guarantee for farmers until Fonterra’s final payout announcement. It could go up from the current $6.15 or it could go down,’’ he says.
‘‘Of the 12 payout predictions made by Fonterra at the beginning of the season, seven finished down on the original prediction and five were up.
‘‘Farmers need to be aware of the bigger picture, not just the one which Fonterra is telling them about. There are lots of things happening in the background at Fonterra in terms of exchange rates, different market realisations, product mixes and all of that.’’
Milk production in Taranaki was up 18% percent on last year prior to Christmas, but there has been little rain since, says McIntyre.
‘‘Most farmers were very happy with the rain up until Christmas. Since then, however, rain has been very patchy and to make this worse, southerly winds have come through and dried it out straight away. The rain we have had has been great but with the recent heat, there has been little benefit.
‘‘The heat has also caused problems within some dairy herds, and I have even heard of cows being milked once a day or every 16 hours, particularly around the coast.
‘‘Because of the lack of green grass available, cows are being fully fed on supplementary feed, but milk production has still decreased.
‘‘No matter where you are, there is not a lot of green grass coming through.’’
While the possibility of Britain leaving the European Union without an agreement will likely have little impact on New Zealand dairy farmers, it is of real concern to New Zealand’s sheep and beef farmers, says McIntyre.
‘‘There are two sides to this,’’ he says.
‘‘It is unlikely to drastically impact on New Zealand dairy farmers because we sell product both to the UK and to the EU. I would like to think that the existing protocols work post Brexit.
‘‘The European Union has got rid of most of its stockpile of skim milkpowder, which is a positive, and they have moderated their production back down again.
‘‘On the meat side, our farmers are very concerned because we used to swap quota from Britain to the EU, depending upon what was happening. As the UK won’t be able to ship meat to Europe, in the manner they have done traditionally, the British stockpile of beef and lamb will build up.
‘‘Until Briton makes its exit from the EU, we won’t know for sure what will happen, but this uncertainty is causing concern for our sheep and beef farmers.
‘‘When Britain joined the then EEC in 1973, New Zealand found itself on the outer and suddenly had to find new markets. We managed to do so, however, and this has probably stood us in good stead looking forward.
‘‘Having said this, Europe and Britain in particular are still very important markets for New Zealand, especially for butter and sheep-meat.’’
The cost of compliance across a raft of areas is becoming a major challenge for farmers says McIntyre.
‘‘The list of requirements which farmers have to comply with going forward is mindblowing, really.
‘‘Environmental compliance is probably the biggest issue along with regulations around milk production such as increased chilling requirements for milk. Drug residues in milk is an ongoing issue along with tightened restrictions on the use of drugs in maintaining herd health.
‘‘The banks are being very tolerant, but farmers have had tough times over the last four to five years, and have quite often had to borrow money to maintain their farming systems. Their ability to borrow more money is probably coming to an end.
‘‘There is also a concern relating to the lack of knowledge among the general public on how their food is produced and how environmentally friendly New Zealand farmers are in doing this. We are some of the most efficient producers of protein per unit of greenhouse gas in the world.
‘‘For activist groups to demand that we drop our cow numbers it doesn’t make sense. The world still needs food and if we drop our cow numbers, it means that someone else in some other country will have to increase theirs! Those farmers will produce their product at a higher greenhouse gas footprint than what New Zealand farmers are doing.’’