Milk-price rise boost for farmers

Content cows on Mike and Jane Joho's Top Grass Rd farm, with their distrinctive mating paint last Friday. Photo / Christine McKay

News of Fonterra's lift in its 2016/17 milk price forecast by 75 cents to $6 a kilogram of milksolids is welcome for more than 300 Tararua dairy farmers, but they're being urged to remain cautious with their spending.

"The announcement is very welcome and it'll certainly help farmers' cash flows and budgets in the long term. But overall Fonterra's production is down 7 per cent in the first quarter of the season compared to last year," said Dannevirke dairy farmer Andrew Hardie, Fonterra Shareholder's Council representative for Hawke's Bay.

"We've had a hard downturn and we're not out of it yet. I'm predicting dairy farmers will be more cautious with their spending this time around," Mr Hardie said.

In October alone adverse weather conditions heavily affected Fonterra's milk collection, which was down 8 per cent. However, Fonterra's ingredient sales remain strong despite the big decline in milk supply and chairman John Wilson said news of the increased forecast on November 11 reflects improvements in pricing since September, following the gradual rebalancing of global supply and demand.

"We've seen falling production in the major exporting regions, particularly Europe and Australia and an unprecedented decline in New Zealand milk supply due to wetter than normal spring conditions across most regions," he said.

For farmers in Tararua the wet start to the season has made things very tough, Mr Hardie said.

"It's been very wet so far and there are still a few farmers who are down in cow numbers."

Mr Hardie said while the very wet season and lower herd numbers is reflected in the 7 per cent downturn recorded by Fonterra, the lower production also reflects how hard it has been to convert grass into milk in the vat.

"It's been very tricky and a slow growth season, but in the past couple of weeks things have begun to pick up. We just need a few days of sunshine."

While dairy farmers have been able to grow grass, the continuing wet weather has made it difficult to harvest, Mr Hardie said.

"You've also got to feel for businesses servicing the dairy industry, too. But going forward I have complete faith in the dairy industry, it's a great industry to be in. However, I think the peaks [in payout] will be faster and the troughs faster, too."

But Mr Hardie said he's confident the growing demand for protein throughout the world will benefit the New Zealand dairy industry. Mr Hardie and his wife, Helen, have been in the dairy industry for 30 years and on their farm on the outskirts of Dannevirke for 17 years.

"We're milking 700 cows and this property supports four families," he said.

"But it's new times now and up to farmers to take a cautious approach, despite the rise in payout."

Tararua District mayor and dairy farmer Tracey Collis said the news was positive for our area.

"I've certainly noticed a lift in dairy farmers spirits with the GlobalDairyTrade auction and now this payout increase will give them the confidence to be able to consider spending which has been deferred. With the advance being received next month the effect will be noticed immediately in local agricultural businesses and will be a timely lift for our retailers with Christmas approaching.

"This is great news for the Tararua District."