Higher costs of production, increasing debt levels, dairy’s environmental footprint and difficulties attracting people to work on farms was all discussed at the Pasture Summit Conference in New Zealand this week.
Mark Grenside from ANZ Bank said that debt levels on New Zealand dairy farms increased by NZ$6bn (€3.58bn) during the two low milk price years of 2015 and 2016. This equates to an average debt level increase of NZ$500,000 (€300,000) per dairy farm.
He warned that New Zealand banks, under pressure from their Australian parent banks and the National Reserve will no longer fund cashflow in future downturns.
Mark Neal from Dairy NZ presented data to show that over the last 12 years, average operating expenses on New Zealand dairy farms recording their data in Dairy Base (Profit Monitor equivalent) was NZ$4.90/kgMS (€2.92/kgMS).
This is before debt servicing costs are included, which are usually in the region of NZ$1.20/kgMS. Milk price is expected to be in the region of NZ$6.25/kgMS (€3.74/kgMS) for the 2018/19 season.
“In the 1980s the average debt level in the Waikato district was NZ$10/kgMS (€5.97/kgMS) and farmers were making an EBIT (net profit before interest) of NZ$2/kgMS (€1.20/kgMS). Today the debt level is more like NZ$30/kgMS (€17.90/kgMS) and EBIT is NZ$0.50c/kgMS (€0.30c/kgMS). We're in this together,” Grenside said.
He said that all new banking proposals must allow for capital debt repayments. Farmer with existing debt are expected to make debt repayments or at least display the capacity to do so. For the last 20 years or so, most loans issued to farmers required interest-only payments, but this has now come to an end.
On the market
Reference was made to the amount of farms currently for sale in New Zealand, with anecdotal evidence saying that over 1,000 farms are currently on the market across the country. There are over 120 farms for sale in the Taranaki district alone.
Day one of the Pasture Summit was held indoors in Hamilton, New Zealand.
Leonie Guiney said that the current hardship experienced by some was an excellent opportunity for young people to take advantage of opportunity, but said that the traditional route to land ownership in New Zealand may have to change.
The health benefits of pasture-fed dairy products was outlined by Jeremy Hill of Fonterra. However, he said that Fonterra’s customers see pasture-fed as being only part of what they want. He said that premiums are available in some markets for pasture fed dairy products.
Teagasc
The conference also heard from Teagasc researchers Brendan Horan and Laurence Shalloo who spoke about resilient systems and maximising profitability.
The messages were clear; increasing pasture utilised per hectare increases profitability.
Milk yield per cow is a poor indicator of profitability and total costs increase by NZ$1.53 for every NZ$1 spent on supplementary feed.
Donagh Berry from Teagasc and Jeremy Bryant from Dairy NZ spoke about the cow of the future. Both said that more emphasis needs to be placed on health traits.
Interestingly, it emerged in the discussion that the parentage of about 25% of New Zealand cows doesn’t match up with what is recorded.
Former Dairy NZ researcher John Roche presented a paper on marginal milk. He said that in New Zealand there’s no economic or biological justification for feeding supplement to dairy cows once pasture management is optimised.
The Pasture Summit was held over two days in the North and South Islands of New Zealand. The conference is organised by farmers in Ireland and New Zealand interested in enhancing the competitiveness of grass based dairy production.
The next Pasture Summit will take place in Ireland in 2020.
Scenes from day two of the Pasture Summit Conference in Hamilton, New Zealand, 2018.
Read more
Good grazing for late November in Kilkenny
New Zealand diary: milking cows and watching movies
Higher costs of production, increasing debt levels, dairy’s environmental footprint and difficulties attracting people to work on farms was all discussed at the Pasture Summit Conference in New Zealand this week.
Mark Grenside from ANZ Bank said that debt levels on New Zealand dairy farms increased by NZ$6bn (€3.58bn) during the two low milk price years of 2015 and 2016. This equates to an average debt level increase of NZ$500,000 (€300,000) per dairy farm.
He warned that New Zealand banks, under pressure from their Australian parent banks and the National Reserve will no longer fund cashflow in future downturns.
Mark Neal from Dairy NZ presented data to show that over the last 12 years, average operating expenses on New Zealand dairy farms recording their data in Dairy Base (Profit Monitor equivalent) was NZ$4.90/kgMS (€2.92/kgMS).
This is before debt servicing costs are included, which are usually in the region of NZ$1.20/kgMS. Milk price is expected to be in the region of NZ$6.25/kgMS (€3.74/kgMS) for the 2018/19 season.
“In the 1980s the average debt level in the Waikato district was NZ$10/kgMS (€5.97/kgMS) and farmers were making an EBIT (net profit before interest) of NZ$2/kgMS (€1.20/kgMS). Today the debt level is more like NZ$30/kgMS (€17.90/kgMS) and EBIT is NZ$0.50c/kgMS (€0.30c/kgMS). We're in this together,” Grenside said.
He said that all new banking proposals must allow for capital debt repayments. Farmer with existing debt are expected to make debt repayments or at least display the capacity to do so. For the last 20 years or so, most loans issued to farmers required interest-only payments, but this has now come to an end.
On the market
Reference was made to the amount of farms currently for sale in New Zealand, with anecdotal evidence saying that over 1,000 farms are currently on the market across the country. There are over 120 farms for sale in the Taranaki district alone.
Day one of the Pasture Summit was held indoors in Hamilton, New Zealand.
Leonie Guiney said that the current hardship experienced by some was an excellent opportunity for young people to take advantage of opportunity, but said that the traditional route to land ownership in New Zealand may have to change.
The health benefits of pasture-fed dairy products was outlined by Jeremy Hill of Fonterra. However, he said that Fonterra’s customers see pasture-fed as being only part of what they want. He said that premiums are available in some markets for pasture fed dairy products.
Teagasc
The conference also heard from Teagasc researchers Brendan Horan and Laurence Shalloo who spoke about resilient systems and maximising profitability.
The messages were clear; increasing pasture utilised per hectare increases profitability.
Milk yield per cow is a poor indicator of profitability and total costs increase by NZ$1.53 for every NZ$1 spent on supplementary feed.
Donagh Berry from Teagasc and Jeremy Bryant from Dairy NZ spoke about the cow of the future. Both said that more emphasis needs to be placed on health traits.
Interestingly, it emerged in the discussion that the parentage of about 25% of New Zealand cows doesn’t match up with what is recorded.
Former Dairy NZ researcher John Roche presented a paper on marginal milk. He said that in New Zealand there’s no economic or biological justification for feeding supplement to dairy cows once pasture management is optimised.
The Pasture Summit was held over two days in the North and South Islands of New Zealand. The conference is organised by farmers in Ireland and New Zealand interested in enhancing the competitiveness of grass based dairy production.
The next Pasture Summit will take place in Ireland in 2020.
Scenes from day two of the Pasture Summit Conference in Hamilton, New Zealand, 2018.
Read more
Good grazing for late November in Kilkenny
New Zealand diary: milking cows and watching movies
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