DairyNZ chief executive Tim Mackle discusses what the organisation is doing to support dairy farmers and how the industry in general, is performing.
Right now many dairy farmers are looking at their costs, line by line. Where can they make further savings? The latest forecast milk price from Fonterra now puts this season’s Farmgate Milk Price at $3.90 per kilogram of milk solids. DairyNZ’s break-even figure for the average New Zealand dairy farmer is $5.25.That’s a significant gap to bridge.
Around 85% of the 14,000 owner-operators and share milkers affected by the low milk price are not making any money this season. They are having to build up more debt and erode their equity to get through another season of looking after their cows. The situation will impact on the people they employ and the rural businesses they support, too.
To help farmers we’ve been running our Tactics campaign and other key events for some time now, designed to hone in on cost creep and provide access to tools and support to make changes in their business.
DairyNZ has always maintained that the ability to efficiently harvest pasture is the best determinant of profitability across all farm systems. Pasture still provides the least expensive feed for dairy cows and remains the foundation of our farm systems.
Pasture and the ability to turn off supplement use is also the foundation of how we can manage volatility and farmers are using this mechanism firmly at this time. Farmers are using the obvious levers at their disposal to manage volatility in milk price – culling cows, instead of using the supplementary feed to maintain cow condition.
We are also currently running tailored events to support share milkers, in partnership with Federated Farmers. These are amongst the most vulnerable groups of farmers in the current situation.
Top budget case studies featured on our website have been updated. These nine top operators have opened up their resources and made them available to others. The update will detail what changes they have made and how they become ready for next season.
We are also running GoodYarn workshops, designed to help farmers talk about mental health and recognise the signs of stress and mental health problems.
Regarding our long-term research and science objectives, we can’t just turn off the tap. Two of our most important research projects, for example, are seven-year investments – one focused on developing forages for reduced nitrate leaching to future-proof our industry.
The other is examining cow fertility and lifetime productivity. Together, current performance in these two farming areas – fertility and productivity – are estimated to cost the dairy industry $1 billion annually. The profitability of dairy farming could be increased by $500 million per year if we achieve industry targets for reproductive performance.
We will not achieve these objectives using current knowledge and technologies alone. A biological breakthrough is required. The aim of this project is to accelerate genetic gain in fertility, and manipulate the biology that underpins cow fertility.
The challenge we have is you can’t quickly switch research on and off if you want to keep it delivering for farmers. If we do, the government will also stop investing with us. However, we are looking at what research projects can be pared back for now and reducing our costs.
I am accountable to our farmer-led board on how $67 million worth of levy funds from dairy farmers delivers value for the investments the board prioritises and approves. Farmers are also keen to hear the value they get too for what is a substantial amount of money.
As production drops, so does our income, although not to the extent of farmers. The levy is not a fixed cost. It ties to farmer’s business regarding milk production, set at 3.6 cents per kg of milk solids.
The board has not relaxed any of our targets. It is expecting more from less as I know farmers are too.
