Farmers urged to use Dairynz resources when times get tough
Farmers are being encouraged to use Dairynz information and resources to help them farm through the more challenging times ahead, with lower incomes a reality.
Dairynz chief executive Dr Tim Mackle said Dairynz’s farm management information and research aimed at greater farm profitability were crucial when times were tougher.
The recommendation follows the country’s largest milk company Fonterra recently announcing its forecast milk price payout for its farmers at $6.05 per kilogram of milksolids (kg/ms) for 2011-2012, down 30 cents from the previous forecast.
At the same time, Fonterra announced a lower opening forecast payout for the coming 2012-2013 season commencing June 1, of $5.50 per kg/ms.
The chop in farmer returns is driven by global supply and demand dynamics, with high production levels, particularly in the United States, the effects of the high New Zealand dollar and economic uncertainty in Europe.
Mackle said the long-term outlook for dairy farming was still very bright, however the immediate focus was how to manage through the short-term reduced incomes.
‘‘We’ve always been consistent with our messages to farmers about the volatility of international milk prices, which ultimately affect their incomes, and for them to ensure they have a farming system that is as resilient as possible to fluctuating prices,’’ he said. ‘‘Because farmers can’t control the price of milk, or interest payments in the short term, the action has to be around managing the cost of production. All farmers need to ensure they have a good budget in place and they are looking closely at what they are spending, including, of course, any variable farm costs.’’
Dairynz has planning and budgeting tools available, and valuable information could be gained by attending farm discussion groups, Mackle said. Many discussion groups were organised through Dairynz farm consulting officers.
Dairynz’s Dairybase database information should be another standard ongoing tool for farmers to ensure a focus on profitability.
Federated Farmers is echoing the call to farmers to budget conservatively, following the second payout revision downwards by Fonterra in just over two months, which is estimated to see around $500 million less come into the economy.
The farmer group’s dairy chairman Willy Leferink said farmers should have two budgets prepared for their farm – one in the low $5 kg/ ms range and the other in the mid to upper $5 range.