Record high on the cards

Bay of Plenty Rural Support Trust chairman Derek Spratt says optimism is high.

Dairy milk production rates are expected to hit a record high in the Bay of Plenty after farmers lost $79 million last season because of the drought.

Dairy NZ senior economist Matthew Newman says milk production is 8 per cent higher compared with the same time last year. "Not only is there full recovery from the drought but, at this stage, the Bay of Plenty is on target for a record milk production year."

In 2011-12, milk production was 117 million kilograms milk solids. That fell 7 per cent to 109 million kilograms milk solids in 2012-13 because of drought.

Bay of Plenty Rural Support Trust chairman Derek Spratt says optimism is high. Dairy milk production on his farm is ahead by 16 per cent on the same time last year and daily pick-up has increased by 27 per cent.

"At the end of February we will do the same production that we did for the whole of last year."

All the stars had aligned, Spratt says.

"This year is great. We have a good payout, good weather conditions and the cows are milking well."

Cows will be dried off at the end of May, he says.

Last year, Dairy NZ estimated that on average $30,000 a farm was spent on feed.

Favourable weather means surplus grass is being turned into supplements. "A lot of people are making supplements, which they couldn't do last season.

"There is a lot of maize out there for sale and some of it is being offered at cheap rates. Silage is equivalent to having money in the bank because it will store for a couple of years."

However, farmers need to be cautious as interest rates are tipped to rise and the payout is likely to drop next year, he says.

"If the commodity prices can hold that will be fine but you must expect a drop and quite a significant drop.

"The forecast for next season's payout could be $1 a kilo lower and if farmers aren't preparing for that they need to be."

Spending has also been put on the back-burner as farmers paid debt.

"At the moment, there is quite a bit of debt reduction going on which is great.

"Farmers are bearing in mind that interest rates are about to go up shortly so they are only at maintenance," Spratt says.

Welcome Bay dairy farmer Andrew McLeod did it tough last year, however this year is looking up, he says.

"Milk production to date for the season is about the same but we have got 40 fewer cows," he says. "We're going to get through summer quite nicely and have made a lot more supplements."

It was also great to have the opportunity to spend on maintenance and debt, he says.