DairyNZ cuts breakeven price for dairy farmers to $5.05/kgMS

Tuesday 2nd August 2016

DairyNZ has revised down its anticipated breakeven price for the average farmer to $5.05 per kilogram of milk solids for the current season from $5.25 for 2015/16.

The industry body said that reflects the cuts in costs that have been introduced by farmers to try to survive a diary downturn that is now in its third season.

Fonterra Cooperative Group yesterday kept its anticipated payout at $4.25/kgMS with earnings per share of between 50-60 cents, taking the average payout for the season to around $4.75-$4.85.

DairyNZ chief executive Tim Mackle said the fall in the breakeven price reflected the work done by dairy farmers to balance their budgets .

"The reduced milk price has meant farmers have really fine-tuned their management and analysed their costs of production," he said. "This should bring the average farm working expenses back to an anticipated $3.55 per kg MS this season, the lowest level since 2009/10.”

He added that farmers had cut costs far more than previously thought. "This cost control is resulting in more efficient dairy businesses, which is key to resilience.”

The next round of the GlobalDairyTrade auction is due to take place overnight tonight. Prices were broadly flat at the most recent sale on July 20.

BusinessDesk.co.nz

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