The latest Waikato, BOP Dairy 2023 report is available to download now.
Key Points 2023:
-The 2022/23 season started well, but wet weather from mid spring onwards caused a range of issues. While pasture growth was generally good, the quality was poor, and many farms were well down on production by Christmas. A wet summer and autumn saw production recover to levels similar to 2021/22, although there was some variation around this.
-The current winter has been wetter again, and colder, and farmers have fed a lot of supplements, and resorted toon/off grazing to prevent pugging damage. Going into the new season, pasture covers are below target, as is cow condition, which does not augur well for the coming season.
-While expectations at the start of the 2022/23 season were for a good payout of above $9.00/kgMS, the expected final payout is now around $8.20/kgMS. This, coupled with ongoing cost increases and rapidly rising interest rates, sees the model farm run at a loss, which is only partially offset by dividend income.
-The situation deteriorates further in 2023/24, with the budgeted payout reduced further, to $7.00/kgMS, and while farmers are looking to trim expenditure, this is hard in the face of ongoing cost increases. Added to this is again a lift in interest rates, resulting in a substantial loss for the farm business. Many farms will look to ameliorate this by suspending principal repayments.
-Fonterra is making a capital repayment in August and this, coupled with the dividend payment, more than offsets the loss. While this is fortuitous, non-Fonterra suppliers and share milkers are not in the same position, and the capital repayment is essentially a one-off exercise.
-Farmer morale is low. The wet winter has seriously reduced morale, along with the poor financial situation and ongoing issues around labour and environmental compliance.
Previous year reports available below.
Waikato & BOP:
2016- Southland Dairy Report
2015- Southland Dairy Report