Dr. Tim Mackle, CEO of DairyNZ, reflects on the end of season in the dairy industry as ‘weird’

DairyNZ chief executive Dr Tim Mackle has one word to sum up the latest dairy season - “weird”.

Unpredictable weather had wreaked havoc on farmers around New Zealand, he told The Country’s Rowena Duncum.

While Southland, which had suffered “a couple of tough springs” had experienced a “great one” this year, this wasn’t the case for other regions, he said.

“And of course, the rains keep coming, we’ve had floods. A lot of dairy farmers [it has] very significantly affected, whether it be Northland or Hawke’s Bay...

“We had 500 farmers who were moderately affected by flooding across the country.”

However, in other areas the rain meant farmers were experiencing lush pastures, Mackle said.

“It’s green out there, you look out at the Waikato and places that are normally dry at this time and farmers are scratching their heads.

“So it’s just been weird hasn’t it really?”

Another unusual force having an impact on dairy farmers, unfortunately, is rising on-farm expenses, which are creeping up around the $8.42 - $8.47 mark.

This exceeded Fonterra’s forecast mid-point of $8.30, despite it being “a jolly good milk price” historically, Mackle said.

The average milk price of the last 20 seasons came to around $7.00, he calculated.

DairyNZ’s data for the 2021-22 season showed a rise of 15 per cent in on-farm inflation costs compared to the Consumer Price Index (CPI) of 7 per cent, Mackle said.

This year wasn’t looking much better either, with the 2022-23 forecast predicted to rise another 11 per cent, he said.

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Compared to last season there has been an increase in interest (40 per cent), fertiliser (30 per cent), and feed (20 per cent) costs.

“The story’s all about cost - it’s not actually about milk price,” Mackle said.

However, there are ways for farmers to mitigate these circumstances.

“I know it sounds cliché but it is so crucial for farmers to know their numbers,” Mackle said.

“For the year to date that we’re in now - compare that budget with actual costs incurred so far - and then really work out a starting figure for next season.”

Budgeting for the future could be a bit of a balancing act, and farmers may need to ask a few tricky questions, Mackle said.

“What are the must-haves for next season and what are the nice-to-haves?

“[Farmers have to be] careful at the same time not to cut costs that will have a long-term effect on profit, but also importantly, the wellbeing of [themselves] and their staff, or their animals.

“So that’s the kind of struggle that farmers will face.”

DairyNZ suggested preparing two farm budgets, one for a higher milk price and an alternate, using a ten-year milk price, Mackle said.