North Otago surprised by early, strong arrivals

Calves have arrived ``early and strong'' on North Otago dairy farms, Lyndon Strang says.

The Federated Farmers North Otago dairy section chairman said most farmers had started calving about five days ahead of schedule.

``That's pretty much across the board.''

He could not determine the cause, but said it was going well and there was ``plenty of feed available''.

Fonterra's announcement this month of forecast earnings per share of 50 to 60 cents, making the total payout available in the 2016-17 season $4.75 to $4.85 per kilogram of milk solids, was good for farmers but unlikely to help sharemilkers, Mr Strang said.

``It's getting close to that $5 mark, but sharemilkers don't generally get a cut of that. It needs to come up more and we can start getting some of that going to sharemilkers.''

Fonterra chairman John Wilson said world milk supply and demand were expected to come into balance during this season.

``Farmers globally are producing less milk in response to lower prices and we are forecasting a 3% reduction in our New Zealand milk collection for this season.''

DairyNZ chief executive Tim Mackle said the increased Fonterra dividend was good news for farmers with shares. Another positive was that New Zealand dairy farmers have cut their costs to a level far below recent years.

``We've revised our break-even milk income required for the average farmer in 2016-17 to $5.05 per kilogram of milk solids,'' Dr Mackle said.

``It was $5.25 per kg for 2015-16 and $5.77 in 2014-15.''

The break-even cash price includes farm working expenses (excluding adjustments for unpaid management and depreciation), interest and rent, tax and drawings, and nets off livestock and other income received.

The average farm working expenses were now back to an anticipated $3.55 per kg of milk solids this season, the lowest level since 2009-10, he said.

``Being able to reduce the break-even milk price tells us that dairy farmers have cut costs further than we thought. This cost control is resulting in more efficient dairy businesses, which is key to resilience.''

Some farmers were operating above the $5.05 level, Dr Mackle said.

Mr Strang said that applied to North Otago dairy farmers who relied on irrigation.

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