FONTERRA supplier Anthony Hill has labelled the dairy company’s opening milk price a “good start,” but says profitability on his Middle Tarwin dairy farm will be determined by the season.
If fact so convinced is he that seasonal volatility is eating into his profits, he will no longer chase premium farmgate milk prices in autumn and winter. Instead, in the next few years, he will move his herd to 100 per cent spring calving to produce cheaper milk from grass.
Currently about 75 per cent of his 550 milking cows calve in August and 25 per cent in March.
Producing a lot of milk during off-peak milk months, when the white stuff is worth more, Anthony’s farmgate milk price always sits at 15-20c/kg of milk solids more than the weighted average. So the opening price for him is $6-$6.05/kg of MS, he said.
“Is all this off-peak (milk) profitable? Just, at the moment,” he said.
“This year we had a bad spring, didn’t get as much feed as we would have liked — silage — so I’ve spent $80,000-$100,000 on hay I didn’t budget for.
“A good season is the key to it. Climate change, I never used to believe it, but I think it is happening. Climate change is definitely the hardest thing we have to deal with going forward.”
Looking at the global market, Anthony said he wanted farmers to get their fair share of market returns and believes commodity prices during the past two years have been the most stable in the past two decades.
“All we want as a farmer is for them to pay what the market delivers, we can’t expect any more but we can’t expect anything less either,” he said. “It is not where they start (the season), it is where they end. If everything stays the same, the way it is today, with the dollar and commodity prices I expect it to finish in the mid sixes ($/kg of MS).
“Even if we get a massive milk price, inputs might erode a lot of it — fuel, grain, hay — if you can get it.”
By: SIMONE SMITH
Source: The Weekly Times