Clinton spends most of his time in Ireland where he has 410 cows, owns 208ha and rents around 100ha more in 14 different parcels. He visits NZ and his farming businesses here frequently and said he’s watched input prices leap even during visits.
“I’ve only been in this country four weeks this visit and since then the petrol price at the pump has gone up 5%,” he said.
“The dollar has also strengthened over that time so what’s going on? The price of oil might have gone up half of 1% but oil’s only part of the cost of petrol.”
Clinton’s carried out some analysis to make comparisons on input costs that show just how “out of kilter” NZ has become.
Clinton said over the years he saved a significant sum by importing machinery and inputs like tyres from Ireland, getting them here at a cheaper price even taking into account the cost of shipping.
Of added concern is what he said is the apparent fall in competitiveness of the NZ farmgate milk payment compared with international dairying returns recently. While NZ might have lagged behind because international pricing in places like Europe was artificially held high, the playing field was more level now. In fact NZ had advantages now it didn’t have in the past with less dependence on Europe and its free trade agreement (FTA) with China so prices should be much more aligned.
Clinton called on analysis carried out by Irish Farmers Journal milk price league tables analyst John Boylan. He ranks NZ farmers’ forecast farmgate milk payment of $6/kg milksolids (MS) lowest in a list of six countries and companies around the world by converting farmgate payments from Ireland, the UK, Friesland Campina, Arla, the US and NZ into US cents/litre and then to NZ$/kg MS.
Using a milk constituents percentage of 7.6% for fat and protein for the five other countries, NZ was $1- $2/kg MS behind. And when he corrected for the fact NZ has a higher MS constituents percentage the comparisons look even worse.
Last season NZ prices had been closer to the others but this year it had lagged behind.
Boylan believed there could still be an upside to NZ’s payout with continuing rises in globalDairyTrade (GDT) auction prices and the dry summer conditions in NZ having an impact on milk supply.
The GDT auction at the end of February saw whole milk powder (WMP) prices jump 5.8% and the auction trade weighted index make its fifth consecutive rise.
