DairyNZ chief executive Tim Mackle says the industry’s leaders including dairy company chairs and chief executives and Federated Farmers’ dairy section have met over the past month to discuss the serious situation and considered joint actions and options for support.
The DairyNZ board also meets this week and will discuss further options. “We’ll be talking through and reviewing our plan as an industry,” he says.
With the forecast Fonterra Farmgate Milk Price dropping 25 cents from $4.15/kg milksolids to $3.90/kg milksolids, farmers will receive even less milk income than expected this winter and spring. “That’s when this latest drop in income will hit hard.
“This reduction equates to farmers getting $460 million less dairy revenue than expected this year, around another $37,000 per farm.
“It is extremely tough right now for farmers – some more than others. Farmers’ ability to survive the downturn will depend on the size of their debt and the level of their costs. Sharemilkers are one of the very vulnerable groups and so we are already currently running joint workshops with Federated Farmers to help them look at their options.
“Ten percent of the highest indebted farms have 30 percent of the total dairy debt - that’s $11 to $12 billion or $10 million each. But that doesn’t mean all those farms are at risk,” says Dr Mackle.
“Twenty percent of the highest indebted farms have 45 to 50 percent of the total debt - $15 to $38 billion. But again these bald figures don’t necessarily spell doom and gloom for all. While many in this group will be facing extreme pressure, it is the combination of high debt and high farm costs that will require urgent action. As we feared, milk price has been low for too long. We’re keen to see interest rates come down after last week’s OCR cut. That will help all farmers. Many are also looking at other income they can bring in off-farm or through diversification.
“I’ve met with all the banks to talk through the issues at an industry level. We are working with other key groups like Federated Farmers, the Dairy Women’s Network and Rural Support Trusts to ensure a united approach to pooling all our resources,” he says.
Dr Mackle says that with support from communities, regions and the banks, the industry and most farmers will be able to find a way through the current downturn. “We have a history of doing that.
“We know farmers have already made significant adjustments to reduce costs. We are going back to what has helped us be competitive over many decades – a relentless focus on pasture and reducing reliance on supplements.
“To help farmers we’ve been running our Tactics campaign and other key events for some time now, designed to drive down farm system costs and provide access to tools and support to make changes in their business.
“Farmers are using the obvious levers at their disposal to manage volatility in milk price – culling cows instead of using supplementary feed to maintain cow condition.
“The next phase of the DairyNZ Tactics campaign starting this month has a renewed focus on pasture as the key driver of farming competitively through both high and low milk price situations,” he says.
DairyNZ is stepping up its personal contact with farmers with more farm visits and phone calls. We will be going up driveways to connect with farmers we don’t see so often.
From this week, a series of ‘What are my options?’ events are taking place nationwide helping sharemilkers, contract milkers and their farm owners plan a path forward over the next year. Tailored resources have also been created which are available here
The industry has renewed its focus on pasture – it is a key driver of farming competitively through both high and low milk price situations. A series of workshops starting at the end of March will see us working with farmers to focus on tight and skilled pasture management.
In March and April we have GoodYarn workshops running, designed to help farmers talk about mental health and recognise the signs of stress and mental health problems.
Farmer to farmer support
Top budget case studies have been updated – these are the nine farms with farm working expenses below $3.50/kilogram of milksolids who have opened up their budgets and made them available on our website.
For more information on Tactics for farmers click here.
For an opinion-editorial from Tim Mackle, click here.