The favourable influences of regular rain and good pasture growth should show in the milk figures when compared with last year’s widespread late-summer and autumn drought.
Daily collection figures last week for six of Fonterra’s eight regional zones were 4-8% higher than last January, which illustrates how quickly milk production fell away last season.
While no one is predicting yet a repeat of the bumper autumn of 2012, rain patterns and soil-moisture figures promise a strong finish to the season for the majority of dairy farmers.
Farmers have a powerful incentive in the $8.30 a kilogram milksolids payout forecast to maximise production and prolong milking with supplementary feed if needed.
Fonterra’s latest formal forecast for the season, required by the Dairy Industry Restructuring Act (DIRA), said total milk supplied in the season ended May 31 would be 17.8 billion litres.
That number, published on December 16 to inform the industry, is 6.7% more than was collected last season.
The expected increase represents 90 million kilograms of milksolids, worth $750 million to the supplying farmers.
Fonterra also forecast that its total cost of milk for 2013-14 would be $12.9 billion paid to its 10,500 New Zealand supply farms, compared with $8.6b last financial year (ended July 31).
That means 20% of the forecast $4b additional revenue will result from production increases and the remaining 80% from the $2-plus/kg price increase, flowing from high world dairy commodity prices.
After the peak of the season’s milk had passed through its plants, Fonterra’s December forecast was higher than its September DIRA forecast of a 5.5% seasonal increase.
The standout regions for milk production are Bay of Plenty and the upper and central South Island, which are more than 6% ahead of last season in production.
Westland Milk Products chief executive Rod Quin said farms in his home catchment, West Coast, were 6.5% ahead of last season.
He expected that number to increase from March, weather permitting, because of the impact of last autumn’s drought.
Before Christmas, when Westland raised its payout forecast to $7.90-$8.30/kg MS, it said milk flow was up 16% for the season, including the production from 20 new supply farms in Canterbury.
Canterbury milk accounted for 18% of the company’s volume from 34 farms, Quin said.
Not all regions have had a good summer so far, with the upper North Island, Waikato, lower North Island and lower South Island below the 3% gain.
However, their daily comparisons indicate a trend towards much better autumn production than last year.
