The first Global Dairy Trade auction [GDT] for 2023 was held in the early hours of Wednesday morning [NZ time].
Dairy farmers woke to the news that overall prices had dropped by an average of 2.8 percent from the last auction where it fell 3.8 percent.
Bart Luijten and his wife Martina farm 440 cows in Winton. Luijten is also Southland Federated Farmers’ dairy chairperson.
He said the latest GDT price drop was disappointing, although not surprising.
“It’s just, where does it all end up?”
Luijten said it was the GDT drop mixed in with the rising inflationary costs for farmers which was where there was some worry.
At the same time many dairy farmers were also struggling with staff availability.
Eastern Southland farmer Dean Rabbidge was also not surprised by the global dairy trade price drop but he too labelled it disappointing.
He said the reality was that the price drop mirrored what was happening with prices of many other export earners, including meat.
Both Luijten and Rabbidge pointed out it would not be until dairy co-operative Fonterra updated its farm-gate milk price forecast when they would get an idea what the actual impact the GDT price drop might have on farmers.
“Just before Christmas they adjusted it down a little bit, but more [GDT] drops like this will see a bigger decrease,” Luijten said.
Fonterra is facing higher costs at every point of its supply chain, CEO Miles Hurrell says. (file photo)
On December 8 Fonterra set its forecast farm gate milk price at $8.50 to $9.50 per kg of milk solids, just a touch-down from August 26 when it was at $8.50 to $10.
Fonterra CEO Miles Hurrell said at the time it was a positive forecast for the start to 2023 given the current global operating environment.
“We continue to feel the impact of geopolitical and macroeconomic events, with higher costs at every point in our supply chain. It’s a similar story behind the farm gate with our farmer shareholders managing significantly higher input costs,” Hurrell said.
He said milk supply from key global exporting regions was down over the past 12 months.
“Here in New Zealand, our milk production is down 2.9% on the same point last season.”
“Global market volatility has prompted some softening of demand for whole milk powder, particularly in China and this is reflected in our forecast farm gate milk price range.”
While staffing was an issue, Luijten encouraged farmers to make sure they were looking after themselves, and that included taking a break.
“Maybe for dairy farmers it is time to take some time off, everyone has been busy right up to Christmas.”
