New Zealand Dairy Farmers Endure Toughest Economic Year in a Decade, DairyNZ Survey Shows
Source: The DairyNews
The latest economic survey conducted by DairyNZ for the 2022-2023 season has highlighted that New Zealand dairy farmers have faced their highest costs in ten years, grappling with significant inflationary pressures that have reshaped their expense structures and overall farm operations.
Mark Storey, DairyNZ’s head of economics, pointed out that the combination of plummeting milk prices and escalating on-farm costs have driven down the operating profit to NZ$2.57 per kilogram of milk solids (MS), a sharp decline from NZ$3.46/kg MS recorded in the previous season. This has marked the season as the costliest in a decade for milk producers across the country.
"Owner-operators saw their operating expenses surge by about 5% this season, reaching NZ$6.67/kg MS, the highest level recorded in the last ten years," Storey explained. He noted that feed remains the most substantial operating expense, constituting about 30% of total farm costs, followed closely by labor and maintenance expenses.
Despite the economic challenges, the season did witness an above-average milksolid payout of NZ$8.68/kg MS. Although this was lower than the previous year's figure, it remained comparatively high and provided some cushion against the rising costs.
Sharemilkers were not spared from these challenges. They faced increased operating expenses, which rose to NZ$3.76/kg MS, but managed to maintain profitability thanks to an increase in milk solids production per cow and a slight expansion in herd size.
"Despite the uptick in interest costs this season, it’s reassuring to see that debt-to-asset ratios slightly declined, indicating prudent financial management by not accruing additional debt," Storey added.
As the new farming season looms, Storey advised farms to remain vigilant about their expenditure and to continue refining their cost management strategies. He emphasized the availability of advisers and rural professionals who can assist farmers in planning and adapting their operations to cope with the fluctuating dairy market.
"Owner-operators saw their operating expenses surge by about 5% this season, reaching NZ$6.67/kg MS, the highest level recorded in the last ten years," Storey explained. He noted that feed remains the most substantial operating expense, constituting about 30% of total farm costs, followed closely by labor and maintenance expenses.
Despite the economic challenges, the season did witness an above-average milksolid payout of NZ$8.68/kg MS. Although this was lower than the previous year's figure, it remained comparatively high and provided some cushion against the rising costs.
Sharemilkers were not spared from these challenges. They faced increased operating expenses, which rose to NZ$3.76/kg MS, but managed to maintain profitability thanks to an increase in milk solids production per cow and a slight expansion in herd size.
"Despite the uptick in interest costs this season, it’s reassuring to see that debt-to-asset ratios slightly declined, indicating prudent financial management by not accruing additional debt," Storey added.
As the new farming season looms, Storey advised farms to remain vigilant about their expenditure and to continue refining their cost management strategies. He emphasized the availability of advisers and rural professionals who can assist farmers in planning and adapting their operations to cope with the fluctuating dairy market.
