Dairy farmers on the up
Recently the omens have been looking good for dairy farmers. In fact in the latest Federated Farmers confidence survey, more of them said they expected to make a profit this year rather than a loss.
Over the past two years, the percentage of dairy farmers making a loss has fallen from 60 per cent to less than 10 per cent.
Even the setbacks at Fonterra – the Beingmate $405 million write down, the Danone damages payout of $183m and management upheavals – have not dented that confidence about their personal finances.
Although the average farmer with a herd size of 414 will be
$8000 worse off after last week’s cut in the final 2017-18 payout, it is still the third highest for a decade.
That’s a far cry from the
2015-16 season when prices plummeted to $3.90 per kilogram of milksolids, from a high of
$8.40kg/MS the year.
Then there was talk of large scale bankruptcies, which never eventuated.
Sharemilkers and contract milkers were the worst hit, but farmer/owners took up more of the burden around the farm themselves.
Fonterra came to the rescue with an interest-free loan of
$383m, which 76 per cent of its farmer shareholders took up.
Other factors this year have played into the buoyant mood, which was evident at June’s National Fieldays, when the wallets were opened and Swanndris flew off the rack.
Forecast milk payouts and high commodity prices saw spending rise by an estimated 10 per cent on last year’s record figure of $538m.
The weather has improved after a horror year last season when farmers were beset by record rainfall, followed by
drought.
There are positive signs in the battle against the cattle disease Mycoplasma bovis, although springtime calving and milk testing will be the proof.
The Government is now resetting its immigration policy to ensure the dairy industry can continue to employ migrants, 20 per cent of which come from overseas.
In contrast to the optimism about their own financial outlook, farmers in the Federated Farmers survey were less sanguine about the wider economy.
Top of their concerns was compliance, and the impact of the Government’s freshwater policies. But overall the fundamentals are sound for an industry that was down in the doldrums just a few years ago.