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Milk Price- Please read Mod note in post #1

delaval

24/6/16

Recently we saw three posters close their accounts over disagreements in the dairy threads. While there is a lot of frustration and discontent with current milk prices and the processing industry, the recent tendency for dairy threads to become tit-for-tat arguments isn’t tolerable for those not involved.

All farming sectors go through difficult periods and during such times there may need to be changes in how threads are moderated.

Dairy threads are going to be more closely monitored and subject to stricter moderation for a while.

To that end we won’t tolerate baiting of posters, constantly reviving old arguments, posters with agendas or crusading for a cause.

Whether it’s discussion of the business or politics of the dairy or other sectors, we expect civility and tolerance toward each other and other opinions as diversity of opinion is needed as a source of different ways of looking at a situation.

"The aim of argument, or of discussion, should not be victory, but progress." - Joseph Joubert

Also please be aware that what you may post as light-hearted banter can be read totally differently by someone adversely affected by the subject matter and evoke a reaction you hadn’t intended.

The ‘Off-Season’ forum, and its anonymous posting, is available for anyone to chat about their situation.

The Mod Team.

I was wondering would it be a help if we posted our milk prices. I would hope that if someone is low that help could be given, on the other hand if high perhaps your tips could help us all.

I would suggest posting your processors base inc Vat for comparison
Post your Nett price for others to help or be helped
I think that solids should be included.
I suggest any seasonal/liquid contract price be excluded or seperated.

I feel that we as farmers do a lot of bitching about processor prices and rightly so IMO. I also feel that we should not worry about it as we can do nothing about base price but we certainly do something about it at farm level.

What do you all think?

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mahoney_j

keep going wrote: »

At the end of the day the only figures that matter are your own.ive a tendency to look at the practice on farm walks rather than figures and then go home and do your own sums in relation to my place

atlantic mist

the russia market is closed to eu and usa, this has opened up the market for new zealand

you'd have to wonder why they keep dropping price on the farmers out there they have markets for all products no mountain like were building in eu

i know they get a dividend on top of yearly payout and coops only made up of dairy producers so not sharing divends with other enterprises

are they pushing it to see how far they can go to reduce supply from other regions?

Dawggone

atlantic mist wrote: »

are they pushing it to see how far they can go to reduce supply from other regions?

There could be a grain of truth to that....or conspiracy theory?

trixi2011

atlantic mist wrote: »

the russia market is closed to eu and usa, this has opened up the market for new zealand

you'd have to wonder why they keep dropping price on the farmers out there they have markets for all products no mountain like were building in eu

i know they get a dividend on top of yearly payout and coops only made up of dairy producers so not sharing divends with other enterprises

are they pushing it to see how far they can go to reduce supply from other regions?

Unless something has changed the russia ban applied to oz and nz

kowtow

trixi2011 wrote:

Unless something has changed the russia ban applied to oz and nz

Notwithstanding that unless Russian consumption has changed significantly the embargo has displaced, rather than depressed global demand.

Too many commentators blaming Russia for my liking.

I suspect the Russian ban will begin to resolve itself this year but not so sure it will have anything but a short term relief effect unless wider supply / demand position is reversed.

The overhang being created by EU intervention is also looming larger.

WheatenBriar

Commodity buyers of all ilks, like to talk down their buying price and quietly make a killing quietly somewhere at either the producers or the shareholders expense
That's the biggest influence a Russian ban would have had

C0N0R

kevthegaff wrote: »

How are guys coping over there Mehaffey with the low payout?

One of the farms I worked on was owned by a couple, was a nice 100ha 400 cow farm. They bought 240 ha across the road which some of it had irrigation rights on. in the second year we milked 800 cows walking them across the road. After I left an underpass was installed and more development work was done on the new farm. This was 2013. The whole thing is now up for sale, couple owned four other farms and I hear they have to sell four in total. System of production was high input high output, didn't last I guess. From what I hear there will be no shortage of farms for sale soon.

Mehaffey1

C0N0R wrote: »

One of the farms I worked on was owned by a couple, was a nice 100ha 400 cow farm. They bought 240 ha across the road which some of it had irrigation rights on. in the second year we milked 800 cows walking them across the road. After I left an underpass was installed and more development work was done on the new farm. This was 2013. The whole thing is now up for sale, couple owned four other farms and I hear they have to sell four in total. System of production was high input high output, didn't last I guess. From what I hear there will be no shortage of farms for sale soon.

Anyone who isn't low input will be losing a lot of money and hanging on. Everyone is running lower than normal stock levels and trying to cut feed that's bought in. We're as low input as it gets these days with no bought in feed (except for round straw bales) this year. Expenses set at around 3.70dollars per Ms.

Being the second year of poor prices, the drought last year and the fear of drought this year many arent holding on to much.

Crying shame is(for us St least) grass is going mad and we had over 100mm of rain in the month of January compared to about 12mm last year. If the payout was anywhere respectable we'd be pumping feed and milking like hell but now is too little too late.

keep going

Local ag adviser gave us a run down on his recent trip to nz and its not a pretty picture.most farmers pay no capital only interest onloans and work on the basis that they will make theircmoney on rising land prices.told a great story about a chat with a banker out there who told them thay had successfully decreased their problem loans by 60 % in one year.how did they do it , rolled overdrafts and short term debt into a mortage and bobs your uncle, problem solved on paper anyway until the next time.it has alot of a feel of a bubble about it

Mehaffey1

On the subject of farm sales they've actually held off and price of land has stayed similar to the last few years. Sad to hear about your old employers Conor, my boss told me one of his friends who is managing a farm here has been given his 6 week notice with the owner stepping back in for everyday work. By the end of March the landscape may look in disarray in terms of sharemilkers/managers being shown the way out.

Mehaffey1

WheatenBriar wrote: »

Commodity buyers of all ilks, like to talk down their buying price and quietly make a killing quietly somewhere at either the producers or the shareholders expense
That's the biggest influence a Russian ban would have had

Synlait at least have the decency to say they are making a lot of money on milk while Fonterra emphasise how much of an all in this together Co op they are, still making good profits.

keep going

Mehaffey1 wrote: »

On the subject of farm sales they've actually held off and price of land has stayed similar to the last few years. Sad to hear about your old employers Conor, my boss told me one of his friends who is managing a farm here has been given his 6 week notice with the owner stepping back in for everyday work. By the end of March the landscape may look in disarray in terms of sharemilkers/managers being shown the way out.

Is it true there was only 5 share milking offered in the whole of nz last year and this step on the nz dairy ladder is now almost a thing of the past

Mehaffey1

keep going wrote: »

Is it true there was only 5 share milking offered in the whole of nz last year and this step on the nz dairy ladder is now almost a thing of the past

Nope. There were a bit less than the year before due to the fall in payout but a lot more than 5 lol. In challenging payout years it can be possible that more sharemilking positions are available due to a lot less money and confidence around to take on the debt level needed to start as a sharemilker.

In terms of is sharemilking looking to be a thing of the past then perhaps so. Many people are looking to contract milking which is a simple $ per Ms produced per season plus a percentage of total ms produced. Needs a lot less of a loan to start into but in high payout years they can possibly miss out.

The way of the 50% sharemilker is slowly on the way out as interest would be growing in equity partnerships. Many 50%sharemilkers now are family owned farms with the son or daughter running it and leasing stock back to the farm.

jaymla627

Mehaffey1 wrote: »

On the subject of farm sales they've actually held off and price of land has stayed similar to the last few years. Sad to hear about your old employers Conor, my boss told me one of his friends who is managing a farm here has been given his 6 week notice with the owner stepping back in for everyday work. By the end of March the landscape may look in disarray in terms of sharemilkers/managers being shown the way out.

It really seems the whole new zealand dairy industry is a timebomb waiting to go off, re the owners stepping back-in like above is it not just one desperate last attempt to salvage the business on their own part that really is just a token gesture....
Where kiwi banks are getting their funding from and weather they will be able to access another chunk of new cash to prop up farmers for another loss making season is going to be intresting things could get very messy quickly if banks start calling in loans and land values plummet

Mehaffey1

jaymla627 wrote: »

It really seems the whole new zealand dairy industry is a timebomb waiting to go off, re the owners stepping back-in like above is it not just one desperate last attempt to salvage the business on their own part that really is just a token gesture....
Where kiwi banks are getting their funding from and weather they will be able to access another chunk of new cash to prop up farmers for another loss making season is going to be intresting things could get very messy quickly if banks start calling in loans and land values plummet

Some owners may only have stepped back off the farm in the last few years comforted by the high milk price. If they had run their figures at normal milk prices say $5.50 then the books would've shown they couldn't afford to step back.

What also makes it tough is that many 20%sharemilkers can get strong armed as they are variable order contracts down to 17.5-18% in low payout years.

Something has to give and we hope it's the Gdt picking up. If next season doesn't open with a payout with a 6 as the first number then it will be doomed.

Dawggone

Mehaffey1 wrote: »

. If next season doesn't open with a payout with a 6 as the first number then it will be doomed.

Doomed?
Strong word.
Is it really that difficult Mehaffey?

trixi2011

Mehaffey1 wrote: »

Synlait at least have the decency to say they are making a lot of money on milk while Fonterra emphasise how much of an all in this together Co op they are, still making good profits.

Synlait have a lot of value added products on the go such as a2 milk night milk and a few more. Saw an arictal last year that they were selling some of this value added product into america of all places. Add to that they still have a market in china for baby milk powder afaik.

Mehaffey1

Dawggone wrote: »

Doomed?
Strong word.
Is it really that difficult Mehaffey?

Look to your average farm round these parts say stocked at 3.4 cows/ha. Feeding maize/palm kernel/ home grown silage and wintering block/run off for young stock.

1 year of poor milk price alongside a drought, no major problem, trim a few luxuries, so no new tractor this year?

2 years or poor milk price, things getting tight, drop the maize out of the system, drop a cow numbers a little to cut down on the need for pk, start thinking do we really need that third full time worker or 20ha for calves?

3 years of poor milk price, what's left to get rid of thats not essential?

Farmer Ed

In Ireland our goal is to grow up to be just like Nz. We never will archive your scale for various reasons. But we are fast achieving your milk price. We really should be careful what we wish for.

Dawggone

Mehaffey1 wrote: »

Look to your average farm round these parts say stocked at 3.4 cows/ha. Feeding maize/palm kernel/ home grown silage and wintering block/run off for young stock.

1 year of poor milk price alongside a drought, no major problem, trim a few luxuries, so no new tractor this year?

2 years or poor milk price, things getting tight, drop the maize out of the system, drop a cow numbers a little to cut down on the need for pk, start thinking do we really need that third full time worker or 20ha for calves?

3 years of poor milk price, what's left to get rid of thats not essential?

Thanks.
Would it be possible that the European system of direct and indirect supports has an advantage over the Kiwis?

Dawggone

Mehaffey1 wrote: »

Look to your average farm round these parts say stocked at 3.4 cows/ha. Feeding maize/palm kernel/ home grown silage and wintering block/run off for young stock.

1 year of poor milk price alongside a drought, no major problem, trim a few luxuries, so no new tractor this year?

2 years or poor milk price, things getting tight, drop the maize out of the system, drop a cow numbers a little to cut down on the need for pk, start thinking do we really need that third full time worker or 20ha for calves?

3 years of poor milk price, what's left to get rid of thats not essential?

Thanks.
Would it be possible that the European system of direct and indirect supports has an advantage over the Kiwis?

Mehaffey1

Dawggone wrote: »

Thanks.
Would it be possible that the European system of direct and indirect supports has an advantage over the Kiwis?

I don't know enough about the system at home to comment really, have only farmed in NZ. So my answer is the same as a politician's, both most have their merits and downfalls haha

keep going

Farmer Ed wrote: »

In Ireland our goal is to grow up to be just like Nz. We never will archive your scale for various reasons. But we are fast achieving your milk price. We really should be careful what we wish for.

nz isnt the only country where farmers are in trouble at current prices,there probaly isnt a country in the world making profit on milk with out goverment intervention

Mehaffey1

Farmer Ed wrote: »

In Ireland our goal is to grow up to be just like Nz. We never will archive your scale for various reasons. But we are fast achieving your milk price. We really should be careful what we wish for.

For all I talk about nz, which I'm limited to, I have noticed a lot of Irish focus on how dairying out here is the 'way to be', agriland articles etc.

Think it's a very simple minded way of looking at things. Why focus on doing things the kiwi way when most farmers should be focusing on improving their own systems and improving their efficiencies etc?

The only thing really to take out of Nz farming as a whole is the grass management obsession but even nz had been moving away from the grass only mindset. If the world milk price average was high would the focus not be on how to feed huge percentages of supplement to power ms production?

kowtow

keep going wrote:

nz isnt the only country where farmers are in trouble at current prices,there probaly isnt a country in the world making profit on milk with out goverment intervention

I think the US probably is in parts, although maybe not for long.

(I don't regard margin insurance as govt. Intervention, is a marketplace measure.)

keep going

kowtow wrote: »

I think the US probably is in parts, although maybe not for long.

(I don't regard margin insurance as govt. Intervention, is a marketplace measure.)

Why is margin insurance not goverment intervention, would an insurance company offer that product

Milked out

https://www.agriland.ie/farming-news/dairy-prices-may-not-lift-2017
Fixed price schemes may look more appealing yet..

whelan2

Milked out wrote: »

https://www.agriland.ie/farming-news/dairy-prices-may-not-lift-2017
Fixed price schemes may look more appealing yet..

Didnt read it but these gloom and doom articles do my head in, who knows whats going to happen. I live for whats happening now not in 2017

kowtow

keep going wrote: »

Why is margin insurance not goverment intervention, would an insurance company offer that product

There's no reason to my mind why it couldn't, given the (relatively) liquid contracts available at the CME. There is some element of state quota / reference year I think but that isn't what makes the scheme tick.

The US government have provided mortgage certainty via Fannie Mae and Freddie Mac (occasionally disastrously) - both entities which are a part of the market but were originally facilitated by Govt - for the best part of a century but I don't think anyone would class that as state intervention.

Also given that the scheme covers a margin over feed, with low feed prices, it may not actually be supporting any production at the moment?

Dawggone

Milked out wrote: »

https://www.agriland.ie/farming-news/dairy-prices-may-not-lift-2017
Fixed price schemes may look more appealing yet..

Hard to disagree with the content of that commentary.