MILK MONITOR
Making more with less By Gerald Piddock
Each month the milk monitor delves into the dairy industry and gives us the low-down on the good, the bad, the ugly and everything in between.
T
he annual New Zealand Dairy Statistics has highlighted the massive contribution the industry has made to the economy over the past year, as well as throwing up some interesting facts about the state of the industry. It rounded off a great end to 2020 and many farmers can look back at what they achieved with a great deal of satisfaction. There is the huge feel good factor with record-high milk production for the 2019-20 season, with dairy companies processing 21.1 billion litres of milk containing 1.90 billion kilograms of milksolids. That is a 0.6% increase in milksolids from the previous season. Average milk production per cow also increased from 381kg MS last season to 385kg MS this season, while the latest count showed that NZ has 4.921 million milking cows – a decrease of 0.5% from the previous season, or just under 25,000 fewer cows. This is again down significantly from peak cow numbers in 2014-15, which were at over five million. So, per cow production went up despite there being about 56 fewer herds across the country. From a regional perspective, most of the cow number reductions have come from the North Island, which is hardly surprising given the effect of last season’s drought. Waikato had the largest reduction with around 13,000 fewer cows, but there were also reductions in Northland, Auckland, Hawke’s Bay and Wairarapa. In other words, farmers made more with less – largely down to better genetics and probably better feeding too. The number of cows being herd tested was the highest on record this year, with a total of 3.689 million cows tested – equating to 75% of all cows. The stats also highlighted the role the dairy sector was playing in the economy, contributing nearly one in every four
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Dairy farmers were able to produce more milk with fewer cows in the 201920 season.
dollars earned from total goods exports and services in the year to September 2020. The analysis by Recent Sense Partners showed the sector delivered $20 billion in export value. At a regional level, in 2019 the sector accounted for more than 5% of GDP in seven regions – and more than 10% in four of those. The West Coast had the greatest GDP from dairy, at 16%. It contributed nearly $2 billion in Canterbury, $2.5 billion in Waikato and is a significant employer in many districts, accounting for one-third of jobs in Waimate and one in four jobs in South Taranaki and Otorohanga. It marks off what has been a very positive Christmas and holiday period for farmers. The rain in early January came just in the nick of time for many in the North Island as soils started to dry out. Global demand is also holding up well, reflected in the new year’s first GDT auction, where there was a 3.9% price
index lift and there was an average price of US$3420/ tonne. Whole milk powder had its fourth consecutive price gain, while butter continued its rise, up for the seventh time with prices reaching levels last seen in June 2019. The result has put upward pressure on forecasts by the banks and other outlets. NZX lifted its forecast nine cents to $7.36/ kg MS in early January, while Rabobank lifted its forecast to $7/kg MS prior to the auction just before Christmas to bring it in line with Westpac and ASB. ANZ revised its forecast for this season from $6.70-$7.20/kg MS, which is at the upper end of Fonterra’s milk price guidance. Its forecast update says that if prices do remain near current levels, then next season’s milk price is likely to be higher than the $6.40/kg MS currently being forecasted. However, it predicted a stronger NZ dollar would mean it is unlikely to match the current season’s milk price. n
DAIRY FARMER
February 2021
