Farm Ireland

Wednesday 21 February 2018

Kiwi dairymen set for bumper payout

Darragh McCullough In New Zealand

New Zealand dairy farmers are heading for a record payout as global dairy markets remain buoyant.

While the final price for the 2010/2011 season will not be fixed until August, market analysts are predicting NZ$7.90/kg for milk solids. This equates to 37c/l for Kiwi farmers' milk with average protein and fat levels of 3.8pc and 4.9pc respectively.

The price represents somewhat of a bonanza for New Zealand farmers, given that average payouts prior to 2008 were consistently under NZ$5/kg (€2.80/kg) milk solids.

The typical breakeven price used by most Kiwi farmers is NZ$3.75/kg (€2.07/kg).

With the herd size in New Zealand increasing by 10 cows a year, and now averaging 376 cows, Kiwi dairy farmers' incomes are set to increase sharply.

This has fed the continuing conversion of former drystock and tillage farms into dairy units, particularly on the South Island.

However, there appears to be huge scope for further expansion, with just 12pc of key regions such as Southland currently used for dairy production.


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The value of dairy stock and land has also rocketed. Cows have doubled in value since 2007 when they were making just €500 a cow. Prime dairy land on both the North and South Island is now trading at more than €8,000/ac, several multiples of what it could be bought for in the 1990s.

Dairy industry analysts predict another good year for 2011/2012 on the back of continued growth in demand in Asian markets.

Rabobank estimates that global dairy demand is growing annually by the equivalent of the entire output of New Zealand, or four times that of Ireland's total production.

Meanwhile, the Department of Agriculture has yet to set a date for payment of monies under the Dairy Efficiency Scheme.

A spokesman for the Department said the assessment of applications for the scheme was being assessed but he said the process was almost completed.

Close to 7,000 farmers applied for the scheme and more than 6,000 are understood to have been cleared for payment.

The scheme has a budget of €6m for each of its three-year duration. The payment for each successful applicant will be close to €1,000 this year.

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