The dairy industry had to become more cost-effective because only a small percentage of New Zealand dairy farmers survive at that milk price, Primary Industries Minister Nathan Guy said.
The DairyNZ break-even point for most dairy farmers was $5.25/kg MS.
“We need to understand how they are profitability working inside the farmgate, growing more grass, harvesting it efficiently,” Guy said.
“That is a clear message we need to get through to our farmers, focus back on the things you can control, which is ultimately about less inputs, growing more grass efficiently and us being the most cost-effective producers of dairy in the world.”
The money for the farm systems study was part of $800,000 the Government put towards the Farming Systems Change programme in last year’s Budget.
MPI was looking for a third party to do the study, which would take up to a year to complete.
There would be 25 to 30 case studies along with onfarm field days on high-performing dairy farms that were four to five times more profitable than the average farm.
Those farms ranged from high-input operations to grass-based systems.
“We want to delve into the detail about how is it these farmers are high performing, predominately it’s an all grass system, some of them have inputs as well,” Guy said.
The focus for a positive future had to be onfarm cost structures that were internationally competitive, DairyNZ chairman Michael Spaans said.
“That means our cost of production has to be lower than the big, efficient producers of Europe and the United States.”
DairyNZ had reprioritised its research and development budget to allocate $600,000 plus staff to the Tactics 2 programme to give more value to farmers.
The next phase of the Tactics campaign included one-on-one visits for farmers, online resources to support sharemilkers, pasture first workshops and budget case studies of nine farms with farm working expenses below $3.50/kg MS.
NZ still had to improve productivity and continue to invest and DairyNZ was committed to its key research projects.
“We simply need to push on to ensure we not only get through this difficult time but we come out the other side in better shape, ahead of our competitors and ahead of where we are,” Spaans said.
There had been signs of dairy land values softening but some farmers were still in expansion mode, Guy said.
Nobody wanted to see a lot of mortgagee sales in the market and it was important for farmers to sit down and communicate with their banks and make early decisions.
“It is very tough for farmers’ onfarm now and I’m pleased to hear that the banks by and large are going to be standing next to farmers to support them through this volatility.”
Guy also commended the move by the Chartered Accountants Australia NZ to give farmers one hour free consultation for an independent health check of their businesses.
For a list of other support for dairy farmers see the Managing your financial and mental wellbeing brochure. Visit www.mpi.govt.nz/document-vault/11839
