NEW ZEALAND - Dairy organisation DairyNZ is encouraging farmers to lock in the gains achieved in the past two seasons, as a pasture-first farm system will continue to provide payback as the milk price rises.
Chief executive Tim Mackle says the increase to $5.25 per kg MS for the forecast 2016/17 Fonterra Farmgate milk price is terrific news for dairy farmers.
“This brings many farm businesses to around the 2016/17 break-even milk price of $5.05 per kg MS, once retrospective payments and dividends are taken into account. This means fewer farmers will need to borrow extra funds this season,” said Mr Mackle.
“Retrospective payments for next year have also been boosted by 20-25 cents in this announcement, to over $1 per kg MS.
“Farmers will therefore look at the advance rates and test the effect on their cashflow budget – and winter 2017 will look more promising as the retrospective payments come through.”
DairyNZ’s Tactics campaign continues to work with farmers to improve business returns through the tough times.
“Many farms have developed a disciplined approach to their farm system, having reduced costs and maximised the amount of pasture eaten. Now is the time to continue that focus and regain some lost income,” said Mr Mackle.
“Making maximum use of pasture is key to any farm’s profitability. With this price increase, it’s important to take the opportunity to lock in the gains made over the recent couple of seasons.
“Most farmers who have debt have added to that debt following the successive cash losses. It’s crucial they keep a focus on generating cash to pay that back.”
TheCattleSite News Desk