Dairy farmers are being advised to stick to budget, despite
Fonterra's forecast of an $8.30 milk price.
South Island Dairy Development Centre executive director Ron
Pellow told farmers at the Lincoln University Dairy Farm's
(LUDF) spring focus day last Thursday to keep within their
budget to give breathing space for when the milk price drops
Mr Pellow reminded farmers that in the 2006-07 and 2007-08
seasons, Fonterra's milk price jumped from $4.33/kg of milk
solids to $7.87.
However, the Lincoln farm's expenses increased significantly
and then the milk price fell to $5.25 in the 2008-09 season.
''This time, we want to make the most of it by keeping to the
budget we have set and put the money in the bank.''
He said this season's farm budget was set early in the
season, before Fonterra revised its forecast to $8.30, so the
budget was based on a payout of $5.80, with expenses budgeted
''History of past seasons with large increases in forecast
payout suggest even more rigour is required to maintain costs
this year as `ag-inflation' will occur across many on-farm
''Avoiding these cost increases will enable LUDF to both
retain the increased payout and ensure costs are held in
future years with lower probable payouts.''
''Ag-inflation'' could include price increases for things
like nitrogen or supplements as farmers sought to maximise
production to cash in on the higher payout. Mr Pellow said
the farm's management team remained committed to its goal of
farming within a nitrogen limit, despite the challenges of no
longer being able to use Eco-N, which contained dicyandiamide
(or DCD), and were committed to using less nitrogen to induce
''Farming within a nitrogen limit is voluntary for us at the
moment, but talking with local councils, it could become
quite a challenge for farmers in the future. So we will
continue to demonstrate best practice for farmers to follow.
''To date this season, we have used less nitrogen and it has
worked well for us, but that is probably due to the weather
DairyNZ developer Steve Lee said regular applications of 25kg
of nitrogen per hectare would be made instead of the previous
rates, which varied from 25-40kg/N/ha, meaning significantly
less nitrogen would be applied this season compared with last
- David Hill.