By PHILIPPA STEVENSON
The dairy industry is set to give the economy a $500 million boost with a record high in milk flow.
Yesterday, the Dairy Board raised the forecast milk production level at the season's end in May to 967 million kilograms of milksolids.
That is 17 million kilograms more than
expected at the beginning of the season and will blitz the record 1997-98 season of 892 million kilograms.
Dairy Board spokesman Neville Martin said sales of the extra milk were likely to boost returns to the country's 14,500 farmers by $385 million, providing the economy with an overall benefit of $500 million.
There was confidence in the prediction because favourable weather meant farms had plenty of pasture, as well as stored feed such as silage that would head off any sudden decline in milk supply, he said.
A lower New Zealand dollar was assisting good returns from markets where sales, particularly in milk powder, were also improving as Asian economies recovered quickly and low European stocks were snapped up on home markets.
The largest dairy company, New Zealand Dairy Group, yesterday reported daily milk flows nearly 20 per cent ahead of last year's poor season, with total production 9.6 per cent up for the season to date.
Just before Christmas, the Dairy Board raised its forecast end-of-year payment to farmers to between $3.20 and $3.25 a kilogram of milksolids. It will review the figure again next month.
Meanwhile, merger talks between industry giants Kiwi Dairies and Dairy Group have been on hold over the holiday period, but work has continued on a business plan that would tell farmers what benefits they could expect from a mega co-op of most companies and the Dairy Board.
Kiwi chairman John Young said yesterday that the business plan, which was waiting on figures from the board, was the key to advancing the proposal.
