Thursday, March 28, 2024

Costs curbed and cows culled

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DairyNZ’s economic monitoring shows average farm working expenses across the country are tracking to land at $3.85/kg milksolids (MS), down 25c/kg MS on last season’s costs.
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But that’s based on farmers achieving their targeted production and with El Nino looming, costs on a per kilogram milksolids basis could be pushed up.

DairyNZ economist Matthew Newman says feed and grazing costs are well back.

Farmers have cut the amount of bought-in feed and many are also choosing to winter or graze on all or a proportion of their stock.

The national cull shows an extra 240,000 cows were culled during the past 12 months as farmers sought to take advantage of a good beef schedule and reduce stocking rates to cut the demand for bought-in feed.

Newman estimated the high cull would translate to a drop in the national herd of about 100,000.

Lower stocking rates are helping reduce demand for bought-in feed, which is backed up by the planting statistics for maize that show Waikato and Manawatu plantings are down by close to 20%.

As well as reducing the amount of bought-in feed, where possible farmers have also switched to lower-cost supplements.

Wintering and grazing more stock on the milking platform will have transferred grazing costs into the front of the season with crop establishment costs coming in about now.

That will be somewhat counteracted by delayed payment terms offered by several companies although farmers should remember delays will push more costs into the following year’s budget.

While fertiliser costs are down farmers have been prepared to put nitrogen on to grow more grass rather than buy in feed, Newman said.

This season is the second low-payout year in a row and while last season’s income hit was somewhat masked by retrospective payments flowing into that financial year there’s been no such boost for this year’s income.

Newman said the payment schedule for milk means that in this season farmers will only receive $4.20/kg MS as milk income based on Fonterra’s advance schedule as at mid-November.

Unless there’s a dramatic upswing in global dairy prices in early 2016 next season’s retrospective payments will also be low.

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