Published 19 August 2006
Dairy farmers are expecting only a minimal rise in gross farm revenue for the coming season, the Ministry of Agriculture & Forestry’s 2006 farm monitoring report into the status of the sector shows.
The report said farmers were budgeting on an overall 3% rise in milk solid production & an 8% increase in cattle sale returns for the year, but expected a lower payout to offset that. This translated to a rise of just 1% in their gross farm revenue.
MAF’s policy group monitors the production & financial status of farms annually in terms of their cash income & expenditure. Trends, issues & sector concerns are also monitored.
The reports are based on model farms designed to best typify average farming operations within specific regions. Information for each model is drawn from real farmers & a wide cross-section of agribusiness, and prices & projections are based on their opinion, not MAF’s.
The report said production jumped in the last year but the gains made didn’t translate into farmer profit. Milk solid production rose 4% but didn’t lead to an increase in profitability because the payout was lower & expenses higher.
The report’s co-ordinator, MAF Policy’s manager of North Island regions, Phil Journeaux, said the lift in milk solids production resulted in a 10% increase in gross farm revenue, despite the lower payout. Farm working expenses, however, rose by 14%, with significant increases in wages, feed, fertiliser, repairs & maintenance. Fuel costs rose by 18% and rates jumped 14.5%.
“The average property has recorded a disposable loss, offset by new borrowing & off-farm income. Of the 100 farms monitored, 71 recorded a disposable loss, up from 59 the previous year,” Mr Journeaux said.
The report concluded that most farms are once again budgeting for a disposable deficit from their operations, offset by other cash sources: “This is a direct reflection of the difficulty of farming with a $4 payout with current on-farm cost structures & ever-increasing prices of inputs.
“Overall, though, farmers remain confident the industry is heading in the right direction, despite the current payout level.”
Website: MAF dairy farm monitoring report
Attribution: Company statement, story written by Bob Dey for this website.