By Philippa Stevenson
A confident Dairy Board has raised the estimate of its end-of-year payout in a move likely to hearten farmers when they are most hard-up.
Yesterday, the board said first quarter results that were ahead of budget had enabled it to increase the forecast payout to between $3.15 to $3.20
per kilogram of milksolids, up from the $3.10 indicated in June.
Board chairman Graham Fraser said both the consumer products exporter, NZ Milk, and ingredients company, NZ Milk Products, had put in better-than-expected returns.
Economic conditions had improved in South-east Asia, Latin America and Russia and along with it commodity prices for milkpowder and protein products, he said.
However, he said the outlook for third and fourth quarter sales was less certain, with the seasonal increase in supply from Europe likely to impact on price levels early in the New Year. Meanwhile, production for the season was currently estimated to reach 960 million kilograms of milksolids - 10 million kilograms ahead of last season - which would be a record.
Livestock Improvement spokesman Dave Miller said the raised payout, which Waikato-based Dairy Group was likely to immediately pass to its 7000 farmers, would arrive when farm overdrafts were at their highest.
Borrowings usually peaked in October following the large animal health bills associated with calving and mating, but debt was even higher this year because many farmers started in the red after last year's poor season.
Mr Miller said milk supply was booming but weather after Christmas, which was forecast to be dry, would determine whether the season was profitable. Farmers cover their costs in the first half of the season, and make money if they can milk long and well in the second half.
