Fog expected to lift on dairy industry
The dairy industry has a great future despite the fog currently surrounding it, DairyNZ strategy and investment leader Bruce Thorrold said.
Thorrold said 74 per cent of dairy farmers believed the returns were not worth the effort and they were feeling disillusioned with the industry.
‘‘A lot of dairy farmers don’t know where they are going or how they are going to get there.
‘‘They are thinking, why are we bothering do this?’’ Thorrold said.
The increase in plant-based foods and coronavirus were giving farmers plenty to worry about, he said.
However, Thorrold put the case for optimism at the DairyNZ Farmers’ Forum which was held at the Southern Dairy Hub in March.
He believed the fog surrounding the dairy industry would soon lift.
‘‘The milk price is solid.
‘‘We’re producing a great product that the world needs a lot more of and our competitors are feeling constrained,’’ Thorrold said.
While it wasn’t a high milk price year for New Zealand farmers, he believed farmers could produce it at a competitive rate. Thorrold said farmers should be aiming for a 7 per cent return on assets (ROA), based on a milk price of $6.50/kg. ‘‘It’s realistically achievable. ‘’This would make a farm an outperforming asset, it makes debt profitable and it creates options.’’
Thorrold said water quality would continue to be an ongoing concern for the industry.
Farmers would be encouraged to get winter cropping right and get cows off pasture at critical times.
‘‘Getting wintering right will be very important.’’
They would also be required to reduce their amount of purchased nitrogen and continue to fence off riparian areas and wetlands.
The Zero Carbon Bill, which required a 10 per cent lowering of methane emissions by 2030, would be achieved partly by feeding stock feed additives or growing specialist feeds such as rape and plantain.
Thorrold said in the long-term vaccines and genetics would also play a role, but he predicted this could be five years away.
DairyNZ chief executive Tim Mackle believed the future of the dairy industry would be underpinned by technology and innovation.
‘’They will go hand in hand together,’’ he said.
‘‘We’re producing a great product that the world needs a lot more of and our competitors are feeling constrained.’’
DairyNZ strategy and investment leader Bruce Thorrold.