Dairy Farming Into The Future 2020 by Wairarapa Times-Age

www.age.co.nz Thursday, June 25, 2020

DAIRY FARMING INTO THE FUTURE 2020

Dairy enjoys good times despite COVID Recently released economic data shows dairy farmers continue to make a positive contribution to the economy throughout the COVID crisis, says DairyNZ chief executive Dr Tim Mackle. Dairy farmers have an important role to play and will be a key component in New Zealand’s post-COVID economic recovery, he says. The Ministry of Primary Industries (MPI) Economic Update for the Primary Industries released last week shows dairy exports up 12 percent since the start of March, compared to the same time last year. “The provisional trade data published by Stats NZ show dairy exports were particularly strong from 25 March to 3 June, up $519 million compared to the same time last year due to strong prices supported by the falling NZD,” says the Update. “Although activity from Chinese buyers (particularly for WMP and SMP) did weaken temporarily in early March, followed by a dip in Middle Eastern

activity in late April, demand from both regions had since returned.” “This is good news, and dairy farmers and workers throughout the dairy value chain can be proud of the valuable contribution they have made as essential workers throughout lockdown,” says Dr Mackle. The Update says that “Despite recent commodity price falls, dairy companies had contracted a high percentage of the 2019/20 season’s milk supply and will be able to maintain current season milk prices at historically high levels, which will support on-farm profitability in the short term.”

Weakness in the global consumer market will flow on to farmgate returns.

has been compounded by the limited processing capacity at meat works.” Looking ahead to the 2020/21 season, the Update says the impact of declining dairy export commodity prices and weakness in dairy foodservice and consumer markets globally, will ultimately weaken processor profitability and therefore flow on to farmgate returns.

However, the Update does come with a warning for the future.

“Weighted average prices on the Global Dairy Trade platform have fallen 15 percent (in USD terms) since the end of January, and are now 13 percent lower than at the same time last year.

“The deteriorating supply and demand outlook has pushed the upcoming season’s price outlook significantly lower since January, with flow on effects to farm level profitability,” it says.

“Over the same period, NZX farmgate milk price futures for the 2020/21 season have fallen 14 percent from NZ$7.30 per kg milk solid to $6.30 (Figure 17).

“Drought conditions have also affected some key dairying regions and contributed to feed shortages. This

“This is consistent with various bank forecasts for the 2020/21 season, which currently fall in a range between

$5.60 and $6.50 per kg of milk solids. “This will be close to, and in many cases below, farms’ break-even levels for profitability, and has the potential to undermine the financial viability of some marginal and highly indebted farm businesses. “Recovery for dairy may also be affected by the impact of increased subsidies in the US and EU. While the purpose of these subsidies is to provide economic stability, support rural communities and protect food supplies, there is risk that in the longer-term they may compound the negative economic impact of COVID-19 and increase volatility in markets by encouraging increased global production.”

TOGETHER WE WILL ENDURE Farming is the backbone of a proud nation carved out by our early pioneers’ strength, determination and hard work. Resilience and an inherent belief in a better way forward still drive’s our farmers desire and need for perpetual innovation. These same qualities are the foundation of Zimmatic. We are proud to lead the way in irrigation technology and to be part of the enduring legacy our farmers leave for future generations. Image courtesy of Christchurch City Libraries

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Thursday, June 25, 2020 Wairarapa Times-Age

Improved global dairy outlook forecast DAIRY FARMING INTO THE FUTURE 2020

Government intervention buying and the reopening of the foodservice sector have helped jump start dairy demand across key international markets, and the global dairy outlook is now not nearly as dire as it was at the height of the Covid-19 crisis, according to a new report by agribusiness banking specialist Rabobank. While remaining cautious about the underlying market fundamentals in the months ahead, Rabobank says the improved global outlook has seen it increase its farmgate milk price forecast by 35 cents to NZD 5.95/kgMS for the 2020/21 season. In its latest quarterly global dairy report – Dairy Quarterly Q2 2020: Waiting for the dust to settle - the bank says dairy markets have performed better than expected over recent months and prices should now avoid dropping to the levels anticipated earlier in the year. “The northern hemisphere experienced a rebound in milk and dairy product prices toward the end of quarter two as a result of government intervention, while we’ve also seen a rebound in cheese prices – particularly in the US – with this largely attributable to the reopening of the food service sector,” report co-author RaboResearch Senior Analyst Michael Harvey said. “And these factors have helped boost dairy demand and prices have moved back toward, or in some cases above,

pre-Covid levels.” Mr Harvey said while price rebounds were a sign the global dairy sector was on a path to recovery, the true strength of the current market was difficult to assess and the sector was not yet “out of the woods”. “Many dairy markets are still dealing with imbalances from demand destruction due to Covid-19-related government lockdowns. “The heightened retail sales and lower foodservice sales will begin to converge, returning to a more normal balance, but it will take time, and there will be limitations that will prevent a complete return to previous norms, especially in foodservice sales. Government aid and market support are also soon expected to slow and, once this occurs, market fundamentals will again take hold.” Mr Harvey said expanding global supply and economic recession across much of the globe would further hinder the speed of the recovery in dairy markets. “Milk production is forecast to increase by one per cent across the big-7 dairy regions (US, EU, Brazil, Argentina, Uruguay, New Zealand & Australia) in the second half of 2020 despite

The demand for milk in China is expected to contract sharply.

weatherrelated issues, lower milk prices and efforts to bring supply back in balance with demand in many areas. “We also anticipate much of the world will emerge from the Covid-19 lockdowns into economic recession with slower growth weighing on domestic demand as well as curbing import demand in many regions.” In China – New Zealand’s largest dairy export market – import demand was anticipated to contract sharply, Mr Harvey said. “The world’s largest dairy import market will be more absent in the world market in coming month due to above average inventory levels, sluggish demand and growing domestic production. China’s dairy imports between January and April were higher than anticipated, however, we still expect to see overall import demand fall be 15 per cent in 2020 year-on-year.” Mr Harvey said global currency movements were a further factor which could significantly influence dairy returns in different regions – particularly for export-focused producers like New Zealand.

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Thursday, June 25, 2020 Wairarapa Times-Age

Stepping into a post-covid world DAIRY FARMING INTO THE FUTURE 2020

Helping farmers increase profit and reduce their footprint is the aim of DairyNZ’s Step Change project, writes strategy and investment leader Jenny Jago.

Funded by the levy, Step Change will help farmers understand the key farm system interactions to consider in driving their business towards overall financial and environmental sustainability.

The world has changed quickly – and our dairy sector is in a fortunate position to be working and providing food and export revenue for New Zealand.

Many farmers are facing challenges resulting from droughts, floods and Covid-19.

Through this, we remain committed to our Dairy Tomorrow strategy goal of striving for financially competitive businesses that take care of the environment, our animals and our people. This will hold us in good stead as we navigate through an uncertain time, ensuring we’re stronger and more resilient for the future, and enhancing our reputation for producing highly sustainable and nutritious food. One of DairyNZ’s priority projects is ‘Step Change’, which we designed to help farmers achieve financial gains while making progress towards environmental goals, and be more able to adapt to pending regulations. The overarching aim of Step Change, which commenced early last year, is to tackle three key areas: profitability, water quality and greenhouse gas emissions. Progress on these fronts will help ensure dairy farm businesses are fit for whatever else comes at us in the future, from people/customers, the climate and world events.

Feed cost and supply decisions, in relation to milk price and cow numbers, will be top of mind for many farmers. Step Change sheds light on how these choices also have a wider impact on total farm business sustainability. By making these decisions via a wholeof-system approach, we’ll not only secure short-term strength, but in the longer-term, confidence for the future. Early in the project, we defined the levers a farmer can use to improve both financial and environmental performance, and their key indicators. The main tactics we’ve identified are:  making the most profitable use of your pasture  optimising feed eaten to reduce methane  reducing nitrate surplus and leaching  managing marginal land  reducing phosphorus, sediment and pathogen

DairyNZ strategy and investment leader Jenny Jago. tactics can be implemented, and what other ways we can help farmers improve profit and reduce footprint. To achieve that, we’ve set up farmer groups and a rural professional group. What we learn from these groups will be passed on to other farmers, giving them tangible steps to take on-farm. Visit co.nz/stepchange to find out more about the project and where to look for opportunities on your farm. Speak to your consulting officer. Talk to other farmers about what you’re doing to increase profit and reduce.

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www.age.co.nz Thursday, June 25, 2020

Important new tool to slash nitrate leaching from dairy cows

DAIRY FARMING

The latest research from Lincoln University’s Pastoral Livestock Production Lab offers new hope to dairy farmers in the search for tools to reduce nitrate leaching to the waterways, with the genetic disposition of the cows themselves delivering a big part of the solution. The Pastoral Livestock Production Lab is a key constituent of the University’s Faculty of Agricultural and Life Sciences Department and the Centre of Excellence for Designing Future Productive Landscapes, where students, postgraduate researchers and academics are dedicated to creating and implementing more productive, resilient and sustainable agroecosystems for the future. The latest findings show that grazing dairy cows with low milk urea nitrogen breeding values (MUNBV) have a 28% reduction in the urinary urea nitrogen loading rate per urine patch than cows with higher MUNBVs. The lowest MUNBV animals in the study excreted 165.3g less urinary urea nitrogen per day than the highest MUNBV animals.

INTO THE FUTURE 2020 The milk urea nitrogen breeding values (MUNBV) vary from cow to cow.

˜ e latest ÿ ndings show that grazing dairy cows with low milk urea nitrogen breeding values (MUNBV) have a 28% reduction in the urinary urea nitrogen loading rate per urine patch than cows with higher MUNBVs.

and the entire agriculture sector.

As an example, at four cows per hectare, this difference equates to 241kg urinary urea less deposited on to pasture, resulting in 41kg less nitrate leached per hectare per year.

“Most farmers’ herds will naturally comprise a mixture of low MUNBV cows and higher MUNBV cows, with the trait being identified through testing the milk. Simply identifying the animals with low MUNBVs will enable famers to breed from their existing stock and change the makeup of their herd over time.”

The research, completed by PhD student Cameron Marshall (recipient of the Lincoln University Doctoral Scholarship), also showed that the low MUNBV cows also yielded an increase in milk protein percentage.

“Cameron’s work shows that the cows themselves are an important tool in helping to cut nitrate leaching and nitrous oxide emissions, and in helping farmers meet their regulatory reductions. To be able to do this and increase milk protein at the same time is a huge winwin for the sector.

Research into the differences between low MUNBV and higher MUNBV animals will continue, with Cameron Marshall studying the data to identify where further benefit-yielding research should be directed.

Lincoln’s Professor of Livestock Production Pablo Gregorini says the findings are very significant for farmers

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Thursday, June 25, 2020 Wairarapa Times-Age

Thomas Orlowski tending to the milking on a Waikato dairy farm. He’s a keen farmer and encourages anyone looking for a new career to consider dairying – ‘it’s a wonderful lifestyle – you’re out in the fresh air surrounded by wonderful animals and people’.

Jobs aplenty in dairy DAIRY FARMING INTO THE FUTURE 2020

Statistics show of the 48,000 people employed in the dairy sector, 34,000 are working on dairy farms – the remainder in processing and support operations. Opening the door to new people will also help fill the gap this coming season that farm employers have in the recent years of low unemployment filled with new migrant staff, who are now impacted by border restrictions.

DairyNZ wants people who have lost jobs due to Covid-19 know there is plenty of work on dairy farms, and that they might well earn more than in their previous role. With the national unemployment rate forecast to rise sharply due to Covid-19, DairyNZ is encouraging people to consider work on dairy farms in a new Go Dairy campaign that also includes entry level training to help their transition to farming. Immediately, there are 1000 jobs up for grabs on dairy farms, says DairyNZ’s chief executive Dr Tim Mackle. “As the new season gets under way, even more positions are likely to become available. For people who are looking for work and like the idea of caring for animals and the environment, there are lots of jobs – and career progression opportunities.” While the Go Dairy career changers campaign, which is supported by Federated Farmers, aims to create awareness of the job opportunities, there is a big emphasis on ensuring new staff understand what is involved in farm life. “We want a win-win situation – for new dairy farming employees to be happy and fulfilled in their new lifestyle and jobs, and for farm employers to have great talent working for them,” Dr Mackle says.

He adds that dairy also pays one of the highest average wages of all the primary sectors. While new entrants to dairy farming would start off in the more junior roles, they can anticipate a rewarding career pathway.

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lit

TRAINING: DairyNZ is finalising the details of the Go Dairy ‘farm ready’ course for career changers who are serious about a farming career. The course will provide information about life and work on a farm and teach the basics of animal handling and vehicle safety.

“Even though they are new to farming, many people already have skills that are readily transferrable and valued on dairy farms,” he says. “This is because dairy farming these days is quite diverse and there are many roles, from doing the farm books, to working with machinery, working with animals, and managing staff, and making full use of technology along the way.

Once on farm, Go Dairy career changers will be supported on the job by the farm employer and colleagues. As many farm staff already do, they can choose to go on to learn more and obtain formal qualifications through courses provided by Primary ITOs, Dairy Training, regional polytechnics and other training providers. To find out more: Visit godairy.co.nz/career-changers Or dial 0800 4 DAIRYNZ (0800 4 324 7969).

“Skills from previous work – and a determination to give their best – will see people new to farming quickly progress from a farm assistant position to herd manager and then other management roles, and even ownership later on.”

Transport (2008) Ltd At

KEY FACTS FOR GO DAIRY CAREER CHANGERS PAY: The annual pay scale in dairy farming averages $42,000 for farm assistants starting out in farming careers, rising to $50,000-$55,000 for herd and assistant manager positions, and $70,000 upwards for farm managers.

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