As debate rages in New Zealand’s farming industries over the Ardern government’s plan for charges on agricultural emissions, prices at Fonterra’s Global Dairy Trade fortnightly auction have fallen to their lowest level in nearly two years.
The average price at the sale fell 3.9% to US$3537 (NZD$6054) a tonne, after falling 4.6% in the previous auction.
Prices have generally been falling since hitting a record high in March, and are now at their lowest level since January last year.
Wholemilk powder fell 3.4% to US$3279 a tonne and skimmilk powder 8.5% to US$2972 a tonne, while butter was marginally up at US$4868 a tonne (though a long way down from its peak in March above US$7000 a tonne) and cheddar 0.9% to US$4802 a tonne.
“The global dairy market has been bearish for the last six weeks, with more negative drivers stacking up since the last auction,” according to NZX dairy analysts.
They said a drop in demand was the dominant factor even though NZ milk production was down 4% on last season.
“We know that consumer demand is light and falling, resulting in buyers and traders not wanting to be stuck with excess stock.”
The NZX analysts said that Chinese buying of wholemilk powder was notably weaker, but buyers from other countries also looked reluctant to buy.
“There will likely be some bumps in that path, but there is no heat in the market for it to head up any time soon,” the NZX analysts said.
“For buyers this means some breathing space, for the sell side this means concerns around later dated contracts as we start looking into the 2023-24 season already.”
If there are concerns among dairy farmers over trends at the GDT auctions, it’s nothing to that stirred up by the government’s plan on emissions. Even Fontera sounded cautiously disapproving with Fonterra chair Peter McBride saying the government’s changes created an imbalance within the sector that needed to be addressed during consultation.
“Like DairyNZ, we have reservations about the government’s current approach to the levy price setting process, governance, and sequestration accounting, we will be seeking changes on these issues and working with DairyNZ to support farmers to engage in the process.
“It’s important that the final package works for the primary sector as a collective, so all voices need to be heard during the consultation process over the next six weeks.”
McBride said Fonterra supported the split gas farm-level levy as it enabled farmers to directly benefit from decisions they made on-farm.
Doing nothing was not an option, he said.
“Globally, our customers want to understand the emissions profile of the dairy products they buy, yes, we are already one of the most emissions-efficient producers of dairy in the world. But we need to work hard and be innovative just to maintain this valuable advantage.”
Other critics have pointed out that the most important part of the government’s proposed agricultural emissions pricing scheme is the price, but the government has failed to provide a clear indication of what the price will be and how it will be set.
They say this uncertainty is already undermining the concept.
4 thoughts on “World dairy prices tumble further as farmers face the prospect of being charged for livestock emissions”
Until this government get real and stops importing dirty coal and replaces it with our own gas, I really don’t want to hear of any more attacks on New Zealand farmers.
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Brings to mind “geese” and “golden eggs” and not killing the bird’s that lay them.
Reblogged this on Unorthodox Truth.