The 2015/16 dairy season was the most challenging year yet for dairy farmers, according to new figures from industry body DairyNZ.
Last season’s $3.90/kg milk solids milk price was the lowest in more than a decade and impacted farmers who last season were, on average, operating at a break-even cost of $5.25/kg milksolids, the figures released at its annual meeting in Ashburton.
Despite an obvious shortfall in farm income, last season farmers made positive steps in reducing their costs of production, DairyNZ chairman Michael Spaans said.
“Our data shows farmers have become more efficient and fine-tuned their farm management – so much so, that in August we revised the average farm’s break-even cost down to $5.05/kg milksolids for 2016/17.
“This is a rare positive from a period of low milk prices and something farmers should be immensely proud of. Farmers’ abilities to sharpen the pencil and remain focused is key to maintaining our industry’s international competitiveness.”
Compounding last season’s challenges was the low milk price in 2014/15, although this season had been somewhat buffered by the $8.40/kg milksolids price of 2013/14.
Many farmers in 2015/16 increased debt to cover costs with no significant retrospective payments from the previous season.
Nationally, dairy farmers produced 1.862 billion kilograms of milksolids, worth $8 billion in 2015/16.
The industry’s milk production benefited the New Zealand economy by $12.2 billion from dairy exports in 2015/16 and provided around 35,000 full-time jobs on-farm and a further 14,500 jobs in milk processing and wholesaling.