2017 – The Year In Dairy

Here’s a very quick roundup of some of the happenings concerning the dairy industry in 2017, and a look ahead to 2018 and beyond.

WHAT HAPPENED IN 2017?

Major news stories in 2017 involving the dairy industry tended to centre on water quality and irrigation. This was likely amplified by election campaigning as it was a hot topic for both Labour and The Greens. 

After the formation of the new government coalition, it was announced that Crown subsidies for new irrigation schemes would change. Existing commitments will be honoured but after that, it is unclear how the scheme will run, if at all.

In late December MPI announced an investment of around $7.15 million in 28 new Sustainable Farming Fund projects. These are community-led projects led by farmers, growers and foresters to tackle shared problems and trial and apply new practices to develop new opportunities with economic, environmental and social benefits. SFF  is a scheme that falls in line with The Green Party’s desire to put together a package for farmers to assist them in moving to more sustainable practices or transition away from dairying altogether.

November saw the formation of a new Government with very different aspirations to the previous. Read our article on what this could mean for the dairy industry.

The new government announced that agriculture would be brought into the Emissions Trading Scheme in future. No further movement on this just yet.

Besides a dip late last year dairy prices were optimistic and slowly but steadily increasing for much of 2017.

Dry conditions are expected to have affected production levels by the end of the 2017/2018 season according to BNZ senior economist researcher Doug Steel in an article published recently on the Dairy News site.`“Total NZ milk production for the 2017-18 season will be down by about 2% on the previous season, which includes the second half of the season being down about 5% on a year ago.”

Butter prices saw an unprecedented surge in 2017. This continues with butter being the biggest mover in the latest auction, lifting 8.8 percent to US$4897 a tonne.

Dairy is still seen as a desirable career path for many, with the next generation of young farmers coming through acutely aware of their roles as both guardians of the land as well as primary producers. View the industry through the eyes of 2017 New Zealand Dairy Trainee of the Year, Clay Paton, who also picked up Best Video Award for his inspiring entry.Early 2018 predictions

The milk price forecast for the 2017-18 season remains at $6.30/kgMS, although Fonterra’s latest view is $6.40/kgMS).

Growth elsewhere across the dairy export regions is still tracking higher but at different rates; and growth in Europe will still be key to the price direction in the first half of the year.

2018 AND BEYOND

Our climate, scale and well-developed quality assurance systems give us a competitive advantage in the global dairy industry. Independent dairy consultant Keith Woodford believes the future for dairy in New Zealand could be even brighter but it needs a major change to happen before it gets there, he says in an opinion piece for The Country.

Drawing on a recent trip to Holland, Keith reports of a “science-driven industry focused on exports of value-add products.” Dutch farmers keep their cows grazing green pastures in summer, but house them inside at other times, largely solving the nitrogen leaching issue that arises from concentrated urine patches that occur in late autumn and winter. Keith sees this as the answer to our similar issue in New Zealand. 

Moving to environmentally friendly and comfortable cow houses also presents new opportunities for 12-month milking and therefore, other value-add products. Keith believes our industry leaves itself open by being structured predominantly for the manufacture of whole-milk powder, a product only wanted in large quantities by developing countries – a somewhat diminishing target market.

The rise in popularity of A2 milk (milk without A1 beta-casein) should also be considered a major opportunity in 2018 and beyond. Looking to our closest neighbour, Australia, A2 milk is the largest selling brand nationally in supermarkets, at double the price of standard milk. Premium priced A2 based infant formula has also carved out a 30% market share from nothing just over two years ago.