Milk prices hold steady, despite drought

A predicted 20 per cent increase in the price of milk caused by the drought has not come to pass.

Economists last week forecast milk prices could rise to $5.75 for a two-litre bottle.

But when the supermarket chain Foodstuffs was questioned about milk price changes it referred media queries to dairy co-operative Fonterra.

A Fonterra spokeswoman declined to comment on any retail milk price fluctuations, but said the farm gate payout would remain at $5.50 a kilogram of milksolids this year.

The spokeswoman also said a 33 per cent reduction in milk production this season was similar to the fall in milk production during the same period last year.

Meanwhile, with farmers culling cattle from herds hit by drought, Dargaville's largest employer, the Silver Fern Farms meat works, has handled an additional 3000 animals between October and February.

Silver Fern Farms' chief executive Keith Cooper said markets were absorbing the increased supply well.

"This is normally a peak production period and we are coping with current livestock flows across our plants," he said.

Industry body DairyNZ ran two drought management meetings in Whangarei on Monday to provide farmers with advice.

DairyNZ Northland consulting officer James Muwunganirwa said with little rain since December, pasture covers were low and, with a shortage of supplementary feed, some farmers had moved to milking once a day and were either drying off or had dried off.

Despite recent rain, there is no drought relief in sight for farmers, with no significant rain forecast for the rest of this month.