The dairy farming community may soon experience a financial easing with an expected 5% decrease in feed costs for the current season. This anticipated reduction is primarily due to a downturn in product prices.
Recent updates from DairyNZ’s Econ Tracker indicate a general decline in total farm working expenses, influenced significantly by lower feed and fertiliser prices. However, it’s noteworthy that other operational costs within the sector are still subject to inflationary trends.
As revised by DairyNZ, the national breakeven forecast is now at $7.79 per kilogram of milk solids (kgMS), marginally adjusted from the earlier forecast of $7.78/kgMS. This breakeven milk price is the cost per kilogram of milk solids that a farm needs to cover its operational expenses for a season, not including capital expenditure and loan principal repayments.
Interestingly, this breakeven point is below DairyNZ’s projected average payout of $8.06/kgMS. This projection is based on the estimated milk receipts for the 2023/24 season, along with dividends from dairy companies. The projected breakeven and average payout gap suggests a potential financial cushion, especially for owner-operated farms.
It is crucial to note that these forecasts, available on the DairyNZ Econ Tracker, are national averages and might not mirror the specific situations of individual farms. Additionally, DairyNZ provides a quarterly update on the primary factors influencing feed costs, also available online.
This resource is intended to support the dairy farming community and the wider sector in informed financial management, encompassing planning, forecasting, and budgeting.
