Milk volatility looks set to stay

Dairy farmers aren’t lifting their hopes for marketplace volatility leaving them any time soon.

Swinging commodity prices are expected to continue with few in the dairy industry holding out hope for change in the near future.

Federated Farmers Dairy chairman Andrew Hoggard said volatility was likely to be a ‘‘constant companion’’ for dairy farmers in the foreseeable future, and that had to be factored into their farm budgets.

‘‘We need to assume risk is there and make sure our businesses are resilient for it,’’ he told federation members at its national board meeting in Wellington recently.

Raising some optimism was that global prices seemed to have improved after at least two lean payout years.

Hoggard said prices were at a stage where farmers could start to get confident of a ‘‘reasonable’’ milk price being delivered this season.

However, there was little to show that any great change in global demand would suggest steady prices in the long term, he said. ‘‘To be blunt, it feels like the world is even more of an unstable environment to be trading in now than it was this time last year. That instability could go either way. If the great wall of [US President Donald] Trump is built, will it mean increased dairy trade opportunities to the south of it for us, and decreased competition from north of it, because all the people that do the actual milking got deported?’’

In Europe, Dutch farmers may be forced to reduce their herd numbers to meet phosphate limits if politicians don’t cave in on that front. ‘‘Will the Trump/Putin bromance mean the Russian dairy market opens up again, or will it remain closed?,’’ asked Hoggard. He felt more confident about competition from plant-based or lab-grown alternatives to dairy. Hoggard said there would always be a demand for naturally produced foods if demand shifted to lab-produced foodstuffs.