Dairy prices lift the gloom for farmers but their future meanwhile is being plotted by Beehive planners with a vision

Fonterra’s  boss  might have been  ultra-cautious   but  out on  the country’s dairy farms there  was a  subdued  cheer  at the  news  that the wholemilk powder price had leapt  14%  at  the  latest  GDT  auction..

The  GDT  index  rose  8.3%,  the biggest  rise   since  November  2016,  and the fourth   successive gain.   Fonterra’s  CEO   Miles  Hurrell  says  it’s  “really  surprising—no-one  saw a number of  this  magnitude”.

It dispels  some of the   gloom generated  by the  Covid-19 pandemic.  And it generates  the  hope  that  Fonterra pitched  its  forecast  for  the season too  low,  in  the  broad range  from $5.40kg/MS  to $US6.90.

Hurrell  suggested   suppliers    should not  get “too excited” by the WMP  result. Fonterra had put out excess product for immediate shipment, which resulted in “a bit of a flurry in that first event” ..

“[This] suggests to me that some of our customers out there had caught themselves short – had seen Covid having an impact on their business – but things had bounced back faster than what they’d realised I think”.

But  other   commentators   have  noted    that  the  market  in   China  has  come  back to  life.  At  the  same   time  the  dairy  industry  in the  US  has  been  hard  hit  by  the  dislocation caused  by the pandemic,  with  dairy farmers  in the big  milk-producing  regions  having to   dump  milk  through April  and  the  beginning of   May.

According  to   some   analysts,  the  GDT auction  result signalled a rebalancing after the hit taken earlier in the year because of Covid-19.   Back  in  February, WMP  was  at   $US3,233 a  tonne;  this  week   it  was  at  $US3,208.

Clearly,   greater volumes    will  be  up   for  auction  as  the  new  season   gets  under  way,  and   prices   might  ease  back.  Yet if    dairy  markets   are   seen  to  be  moving  back  to normality,  NZ  might  still have an advantage  over  other  milk-producing  nations.

That   should  be  drawing   relief   not  just   in  the  country’s  dairy sheds   but  also  back  in  the  Beehive.

According to the latest trade data from Statistics NZ the value of dairy exports reached about $7.4bn, compared with $6.5bn in 2019 and $6b in 2018, in  the period between February 1 and June 17 in  each of these years.

When  NZ   has  lost     what   other   major  export-earners  (tourism  and  international  earners) have contributed,  it is  vital   that   the  dairy  industry   should be  encouraged    to  maximise  production,  and  earnings.

But  while   the government  splashed     out  $80m   on   sports   bodies  this  week,   its  17-page plan to  lift  primary  exports  by  $44bn   over the  next  10  years  appeared  to   focus largely on  getting 10,000  more   New Zealanders  working  in the sector  overall  in the  next  four years    than   on  what  the  dairy  industry  could do in  lifting export receipts.

All  Agriculture  Minister   Damien  O’Connor    could offer    is:   the  plan  is  a  “direction based  on a  vision”.

 He  reckons  the  sector  could not  rely on  volume growth to generate  greater  returns.

NZ,  he  says,  needs to  create  new  billion-dollar, category-leading products  and  services,  while  respecting   the environment.

So  where’s   the government  leadership  on – for example – R&D,   which  might  lead  to “category-leading”  products?   Or for  that  matter  on  gene-editing,  leading  to  more productive pastures, or  higher-producing  animals?

3 thoughts on “Dairy prices lift the gloom for farmers but their future meanwhile is being plotted by Beehive planners with a vision

  1. “…..a direction based on a vision”? And we are expected to swallow this nonsense from a bunch of student politicians who have never done a decent day’s work in the life?

    Like

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