Every dog has its day and the dairy industry has caught the wind of favour and is having its day now, says former Federated Farmers president and Manawatu dairy farmer Charlie Pedersen.
Pedersen has been dairy farming at Himatangi for 35 years and also owns two farms in Waimarino on the Central Plateau. During this time, he has seen many changes in the industry and in the fortunes of farmers.
«The fortunes of different types of farming have changed considerably and although the industry is in good shape now, this hasn’t always been the case. There have been periods which have not been so good and in the past some dairy farms were converted to beef or deer farms but those which have since converted to dairy, have done well,» Pedersen said.
He believes the biggest advantage the dairy industry has is the versatility of the raw product but it is also its weakness.
«The funny thing about dairying is producing milk which has a shelf life of less than 24 hours unless it is processed and refrigerated. It is valuable one day but becomes a dreadful substance the next. However, once processed, there is so much that can be made and sold through the co-operatives,» he said.
The advent of the Fonterra co- operative was one of the biggest changes he had seen in his farming career and it was the envy of farmers around the world.
«In 1930, we had more than 300 processing co-operatives and the idea of only three today which are farmer-owned, is an extraordinary thing. It has been fascinating to watch the process unfold and is a tale of amazing pragmatism.»
Pedersen said the dairy industry was only in good shape because farmers were highly self- critical and had not allowed the co-operatives to rest on their laurels.
«There is no-one in the game with a better reputation than Fonterra and New Zealand also has a great reputation on the international market. Occasionally we have a stuff-up and we beat ourselves up about [it] more than anyone but we shouldn’t.
«Farmers are constantly trying to do better behind and beyond the farm gate. I reckon it’s a good thing we are producing milk and not televisions or cellphones which are becoming higher in quality but cost less. Milk prices have continued to keep up with rising costs and make gains in real terms.»
With this year’s payout tipped to be a record $8.65, Pedersen said many farmers had a cost structure of between $3.50 and $4 per kilogram of milksolids.
«Dairy farmers have enjoyed some good payouts in recent years and from what I have seen, many farms are in really good shape and there won’t be many who need a large chunk of cash to fix up the farm. I predict the majority of farmers will retire debt and in fact, I am impressed by the number of farmers who are already doing this. The downside of that is the wider community are not feeling the full effect of the good dairy returns.»
With a good payout in the pipeline, Pedersen said he had no concerns for the coming season and was confident New Zealand dairy farmers and the industry would go from strength to strength.
«The fundamentals at play, of high demand, and our great reputation, underpin my belief of good returns for now.
«Demand for food, meat, milk and fruit is the strongest it has ever been in my time farming. I don’t think the problematic pure clean, green image is the key to marketing, rather it is our stability and trustworthiness. We are known for being decent honest people who produce good food,» he said.
For the coming season, Pedersen predicts the payout to be in the high $7 range. As long as there are no more adverse events such as the drought which hit a large part of the country and the flooding in the South Island, he expects farmers will do well.
«This year’s drought was the as bad as I have ever experienced. It is worse than last year but we learnt a lot of lessons from 2013. The key is to act early and reduce numbers as soon as possible. Be conservative,» he said.
Source: Stuff
