Well, it bloody well doesn’t!
Warning: I am grumpy because I have just lost my job due to impeding farm sale – more on that later.
About 25 per cent of New Zealand’s overseas revenue is generated by dairy farming, which is done by about 36,000 people. That’s not many people to bring in a huge chunk of the country’s income.
When the payout drops, which can happen overnight, it can affect your dairy farming business very badly very quickly. Milk prices are volatile, sensitive to international demand and currency changes. Farmers put their seasonal plans in place, including stock numbers and a budget – if the milk price plummets, you pretty well have to suck it up because you haven’t got much wiggle room.
What your income will be by the end of the season is anybody’s guess, but meanwhile people like me have to make big-dollar decisions like whether or not to order supplementary feed, whether to keep cow numbers up or cull, how many calves to rear, do I book in grazing or not – you need a crystal ball.
Milk price is not the only thing affecting farmers’ incomes, as the weather also plays a huge part in the amount of production you can do. Some farmers say three things need to align to have a good season: reasonable milk price, favourable exchange rate and good weather – I’d be tempted to add low interest rates in there, too.
In New Zealand, because farmers are not subsidised, keeping costs low is a common goal, although with costs like labour and compliance getting out of hand, we have long lost our status as the world’s lowest-cost milk producer.
Once, when the milk price went low, my daughter and I lived on potatoes and my Mobil card for a month, which I can see the funny side to now, but it was ridiculous, really, just to stay within the overdraft limit and pay the bills. Unacceptable, really, for anyone, but extra annoying when you are still doing a 70-plus-hour week for the privilege.
Anyway, what’s my point? I work so hard as a food producer, which has been very risky and often unrewarding, but one thing I have learnt is the value of a dollar. If I send a kilo of milk solids to Fonterra, it will pay me somewhere between $3.90 and $8.20, depending on what’s happening with international prices. I must note that a kilo of milk solids is roughly 12- to 14-litres of milk, so don’t do the maths wrong and assume I am raking in more than I am.
If I were spending or saving that income, it would be all good. But, of course, I have to pay rent, pay interest, pay rates, pay tax, pay levies, pay compliance costs, pay for the running costs, blah, blah, blah.
So if I am not careful, there will be none left for Lyn – or even worse, make a loss.
I am not complaining, just attempting to illustrate that a mammoth effort goes into earning that milk price and that is where 25 per cent of this nation’s income comes from and a lot of internal spending, too.
So when I hear public servants striking, people moaning about living wages and entitlements, paid parental leave and four-day work weeks and see politicians wasting money on double overseas baby-juggling trips and self-serving publicity campaigns, taking each other to court and such like, it makes me want to scream, Where do you think the money comes from?
Chips, roast potatoes, mashed potatoes, potato bake, hash browns, fried potatoes …
