Low milk price will be hot topic at DairyNZ AGM

Low milk price will be hot topic at DairyNZ AGM

Monday October 6, 2014

The future profitability of dairy farming in the wake of falling international prices for dairy products is likely to be a hot topic when the dairy farming industry and research body, DairyNZ, goes to Timaru next week for its Annual General Meeting (AGM).

DairyNZ is holding its Annual General Meeting in South Canterbury next Thursday, October 16, at 11am at the Grosvenor Hotel in Timaru.

DairyNZ chairman John Luxton says it's the first time DairyNZ has held an AGM in South Canterbury. "Our board usually moves around the country to visit different farming areas and alternates between the North and South Islands. Last year we held our meeting in Hawera in Taranaki and previous AGMs have been held in Invercargill and Lincoln," he says.

All New Zealand dairy farmers across all dairy companies pay the industry body a levy each year and combined with other research funding, it has an annual budget of $89 million, says Mr Luxton. "A lot of that money goes into research, environmental initiatives and the development of innovative technologies and solutions to meet the future needs of dairy farms. Now with the looming prospect of a lower milk price, dairy farmers will be focused on reducing production costs. It's a timely reminder of the volatility of our industry."

Mr Luxton says that in May this year, dairy farmers voted in record numbers to keep the levy.

"We had a great turnout for that recent levy vote and had 82 percent of farmers supporting the levy on milksolids to fund the work of DairyNZ. It was a great vote of confidence," he says. "We have more than 14,000 individual levy-paying farmers across the country and regional staff based all around the country including South Canterbury."

He says the past season saw record milk production from New Zealand farms, and showed the vital economic contribution dairy farming makes to regions like South Canterbury.

"Last season the payout was the highest on record and farmers in South Canterbury increased their milk production by around 7 percent to 90 million kilograms of milksolids. That yielded $700 million dollars in milk production revenue for the area. That's money that circulates in a community because nearly half a farmer's milk income is spent on farm working expenses like feed, seed, fertiliser, animal health, staff and maintenance.

"There are more than 1900 people employed in the South Canterbury dairy sector and that's around 7.4 percent of regional employment. And that's not including all the self-employed farm owners and sharemilkers running dairy farm businesses locally. Fonterra's Clandeboye manufacturing site has more than 800 staff and processes up to 13.2 million litres of milk per day. This equates to more than 40 per cent of all milk collected by Fonterra in the South Island. Dairying is a big part of the local economy and we need it to be a resilient industry that can withstand fluctuating milk prices.

"The new Oceania dairy factory built in Glenavy shows confidence in dairying in the region. The construction and running of this plant will provide considerable economic benefit for the region and it will employ around 70 people at peak production," he says.

"Everyone needs dairying to remain competitive, but we know that we also need to farm responsibly and focus on reducing our environmental impact."

John Luxton says the next season will be a tough one for farmers because of the forecast lower milk price. "But the long term prospects are still strong for dairying, and we have an industry strategy for delivering another $3.7 billion worth of additional export earnings to the New Zealand economy by 2020.
"We want to make dairy farming work for everyone so a lot of our focus at DairyNZ is on helping farmers with how to farm profitably but with a lower environmental footprint.

"That's a pretty topical issue in Canterbury at the moment because of the new Canterbury Land and Water Regional Plan. We've been reviewing all the technical work to understand the implications for dairy farmers so we can give them good advice," says Mr Luxton.

DairyNZ AGM
11am, Thursday October 16
The Grosvenor Hotel, 26 Cains Terrace, Timaru
You can view the DairyNZ Annual Report 2013/14 at www.dairynz.co.nz

-ENDS-

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