The full scale of the dairy downturn nationally has been revealed after new statistics showed a $4.9 billion fall in dairy-related income from the 2014-15 season.
The statistics from DairyNZ showed the value of milk production to the national economy dropped from $18.1b in 2013-14 to $13.2b in 2014-15.
Waikato has taken a $1.8b loss in dairy revenue, from $4.2b to $2.4b over the same period.
The statistics are taken following the dairy season from June to May and were released at DairyNZ’s annual meeting at Morrinsville on Tuesday .
The losses came as no surprise to farmers and industry experts.
“You had to be hiding under a bridge staring at goats if you were surprised by these,” Waikato Federated Farmers president Chris Lewis said.
Most farmers and people that work in the associated industries would know the past season had been tough.
“These numbers help put into context how bad it’s actually been for farmers and the regional economy,” he said.
It reinforced the message that Waikato needed a strong dairy industry which was environmentally and economically sustainable.
“The two must go hand in hand,” he said.
The milk price had plummeted this season to $3.85 a kilogram of milksolids before the recent lift to $4.60/kg. The outlook for the current season was for a drop in production and this would be reflected in next year’s statistics, Lewis said.
It was a credit to farmers that they were resilient enough to withstand the strong income swings the industry had experienced over the past few seasons.
According to the DairyNZ data, numbers employed in the industry had remained largely unchanged. Lewis said this reflected the importance farm owners placed on their employees.
The fall in income was a reflection in the fall of the farmgate milk price farmers faced through that period, DairyNZ chief executive Tim Mackle said.
Fonterra’s milk price dropped from $7/kg as its opening forecast on May 28, 2014 to $4.40/kg exactly a year later. In 2013-14, the milk price rose from $7 to $8.40/kg on May 28, 2014.
“We have almost halved the total income. It also shows the enormity of the impact of volatility,” Mackle said.
What farmers spent on the average cow dropped slightly from $1580 to $1460 a cow, reflecting attempts from farmers to tighten their belts, he said.
“The reduction in per cow costs has been nowhere near as significant as the total income in revenue and that’s because farmers wear most of it.”
Nationally, the amount of dairy land had increased from 1.7 to 1.8 million and the number of milking cows had lifted from 4.9 to 5 million. Dairy herd numbers and average herd size was largely unchanged at 11,970 and 419 respectively.
Waikato data around herds and cows and farmers and dairy land had remained largely static. The province had 4020 total dairy herds, the average herd size slightly increasing from 345 to 351 cows and the number of milking cows increasing from 1.39 million to 1.41 million. The region covered in the statistics was from Papakura in South Auckland to Ruapahau in the south.
The number of dairy land had also increased from 485,897 hectares to 486,319ha.
Mackle said this increase was a result of the conversions taking place around Taupo.
Waikato University agribusiness professor Jacqueline Rowarth said impact was being felt in the region’s rural towns the most.
“I drive deliberately through rural towns and they are closing.”
Many rural service retail providers had cut back on part time staff and were not offering overtime to their full time staff, Rowarth said.
Source: StuffNZ
