Lower North Island dairy
This report contains the key results from the Ministry of Agriculture and Forestry’s 2008 dairy monitoring programme. The full Pastoral Monitoring Report 2008 will be available in December 2008.
Key points
- Drought affecting most parts of the region in summer/autumn 2008 led to a third consecutive year of lower than average production.
- Farmers fed supplements to maintain milk production, which decreased by only 1 percent overall in 2007/08. However, production varied widely and individual properties varied from a 20 percent increase to a 20 percent decrease on the previous year.
- The record payout resulted in a cash operating surplus of $491 000, up 158 percent on 2006/07.
- High feed costs, due to the drought, reduced potential farm profits with the feed cost on the model farm increasing 46 percent to $383 per cow.
- Farm profit before tax in 2007/08 increased more than eight times to $311 000, and much of the cash surplus is expected to be applied to reducing overdrafts accumulated in the two previous poor seasons.
- The cash operating surplus in 2008/09 is forecast to decline by 32 percent to $335 000, due to the forecast reduction in milk payout. This is despite production being forecast to increase by 2.2 percent to near normal levels.
- Expenditure is forecast to continue increasing in 2008/09 due primarily to higher fertiliser and fuel prices, and higher charges for grazing and silage.
Table 1: Key parameters, financial results and forecast for the lower North Island dairy model farm
Lower North Island dairy model budget and expenditure
Table 2: Lower North Island dairy model budget
Table 3: Lower North Island dairy model expenditure
Lower North Island dairy model farm profitability trends
Figure 1: Lower North Island dairy model farm profitability trends
Information about the model
This model represents approximately 1080 seasonal supply dairy farms in the bottom half of the North Island, including the regions of Manawatu, Horowhenua, Wairarapa and southern Hawkes Bay. The dairy farms supply the Fonterra Co-operative Dairy Company.
Generally, they are well-developed farms, have good soil fertility levels, and a modest level of well-maintained buildings, plant and equipment. On average, the farms are 130 effective hectares in size, milking 360 cows. They have an additional runoff of 15 hectares.
Most of the lower North Island has reliable summer rainfall, however many farms in the Manawatu and East Coast are, by New Zealand standards, somewhat drought prone. Approximately 300 farms have irrigation, mainly in South Wairarapa, Hawkes Bay and Manawatu.
The model budget is prepared for an owner-operator farm, with labour employed, and represents an estimated 70 to 80 percent of dairy farms. The other 20 to 30 percent fit into the sharemilking or partnership categories.
The model is created from information drawn from 28 dairy farms and a wide cross section of agribusiness representatives. The aim of the model is to typify an average dairy farm for the lower North Island. Budget figures are averaged from the contributing properties and adjusted to represent a real dairy farm. Income figures include off-farm income, new borrowing, and other cash income.
For more information on the model contact: Gillian.Mangin@maf.govt.nz
Published by:
MAF Policy
Ministry of Agriculture and Forestry
Pastoral House
25 The Terrace
PO Box 2526
Wellington 6140
New Zealand
Tel: 64 4 894 0100
Fax: 64 4 894 0720
Web: www.maf.govt.nz
ISSN 1178-4385 (Online)
© Crown copyright – Ministry of Agriculture and Forestry 2008
The information in this report by the Ministry of Agriculture and Forestry is based on the best information available to the Ministry at the time it was drawn up and all due care was exercised in its preparation. As it is not possible to foresee all uses of this information or to predict all future developments and trends, any subsequent action that relies on the accuracy of the information in this report is the sole commercial decision of the user and is taken at his/her own risk. Accordingly, the Ministry of Agriculture and Forestry disclaims any liability whatsoever for any losses or damages arising out of the use of this information, or in respect of any actions taken.
Contact for Enquiries
Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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