New Zealand milk production could fall further than expected

Fonterra has maintained its milk volume forecast for the 2015-16 season in the range of 2-3% lower than the amount collected last season but has hinted that it could fall further.

Under the Dairy Industry Restructuring Act, Fonterra is required to update its current season forecast milk volumes by early September.

Miles Hurrell, Group Director Co-operative Affairs, said although Fonterra had forecast a 2-3% decline in volumes there was evidence that farmers were pulling back on production.

This, Hurrell said, could lead to a further downward revision of forecast volumes as New Zealand moves through the season.

“Farmers are responding to the lower forecast farmgate milk price by returning to more traditional farming practices.

“They are reducing the use of feed supplements, and lowering stocking rates per hectare as they concentrate on utilising pasture.

“Market data from several independent sources show that cows are being culled at higher rates than last season while many of our farmers are also providing early advice that they are expecting significant year-on-year volume reductions.

“In addition, currently our daily milk collection average is lower than for the same period last year,” he said.

However, Hurrell also pointed out that it is still early in the season and that any forecast at this point is very dependent on weather conditions, which have so far been poor for production.

“Given these variable factors, we have decided to maintain our current forecast milk volume at this very early stage of the season,” he said.

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