The Whanganui District’s dairy payout is expected to be $3 million lower than last season. Photo/ Mark Mitchell.
The Whanganui District’s dairy payout is expected to be $3 million lower than last season. Photo/ Mark Mitchell.
A perfect storm is eroding dairy farmers’ profits.
The low price of milk forecast by Fonterra for the current season – from $8/kg to a midpoint of $7/kg of milksolids– was anticipated to take $1b off dairy farmers’ earnings across the country.
Whanganui dairy farmer Andrew Pearce said only afew dairy farms would manage to get above break even, and any farmer with debt would be sitting well below break even.
“There’s going to be a big slow down in spending coming off of farmers.”
He said they had been hit by a perfect storm of high costs, high interest rates, and a retreating milk price.
“Locally Whanganui doesn’t have a massive dairy industry but it is there.
“I hope from what I’ve seen that it’s relatively short term, and that’s what my gut still tells me and that things can change, but we’re just in a little bit of a perfect storm at the moment.”
Data provided by Whanganui and Partners shows that the Whanganui District’s dairy payout for the 2023/2024 season is expected to be $3 million lower than last season.
The 2023/2024 season’s total dairy payout is expected to be approximately $18 million, assuming that production levels from last season are maintained, compared to $21 million from the 2022/2023 season.
Federated Farmers Whanganui president Robert Ervine said most sectors of agribusiness were finding it difficult at the moment.
“Milk in particular is quite linked to the Chinese story and the economy in China hasn’t rebounded after Covid.
“Liquid milk is normally your highest earner and the Chinese market is depressed, and so in the home market they’ve had surplus liquid milk, and they’ve focused on converting that into milk powder so they’re not needing to buy as much from overseas.
Federated Farmers Whanganui president Robert Ervine. Photo / Bevan Conley
“We haven’t got a surge of production around the world, it’s more that we’ve got a depression of consumption.”
Ervine said overall the New Zealand economy and the region locally would feel the pain of agriculture going through a difficult time.
“Agriculture in general the prospects at the moment are difficult, you’ve got lamb, beef, logs and milk all in a low.
“If farmers don’t have the income they won’t spend money, and so they cut their cloth accordingly and hunker down.
“For your business to survive you’ve got to get your pencil out, sharpen the budget, and certain things come out; the reality is the nice-to-haves are the first things to go.
Eva de Jong is a reporter for the Whanganui Chronicle covering health stories and general news. She began as a reporter in 2023.
