Dairy prices down, from farm gate to grocery store (AStatistics NZ Media Release)
Global dairy prices have fallen over the last two years, meaning lower payments for farmers, and lower prices for consumers.
Falling prices, rather than lower volumes, have pushed down the value of dairy product exports over the past two years. The value of exported dairy products fell $1.5 billion between the December 2013 quarter and the March 2016 quarter, down 37 percent.
The lower export value was driven largely by price, as the volumes of milk products exported have remained relatively steady.
The percentage of New Zealand's annual export value that comes from dairy has generally increased over the last decade. However, in the most recent year from 2014 to 2015, it dropped from 32 percent to 26 percent of New Zealand's goods exported. The main contribution to this fall in value was milk and cream, which includes milk powder. Butter also fell, while cheese rose 5 percent.
"Like humans, cows (cattle) form close friendships and
choose to spend much of their time with 2-4 preferred individuals.
They also hold grudges for years and may dislike particular individuals."
Fonterra Farm-Gate Milk Price
Most of New Zealand's dairy product exports are sold by Fonterra. Their forecast farm-gate milk price for the 2016/17 dairy season is currently $4.25 – well down from the peak of $8.40, in the 2013/14 season. The farm-gate price is what Fonterra pay to dairy farmers per kilogram of milk solids. According to Dairy NZ, for the average New Zealand dairy farm to break even, the price needs to be $5.25.
"Cows display emotions and have been shown to produce more milk
when they are treated better as individuals."
The prices dairy cattle farmers receive (the output prices) are at a nine-year low. They have fallen by more than half since the recent peak in 2014.
In the March 2016 quarter alone, the dairy cattle farming prices received (outputs) fell 6.0 percent, as measured by the business price index. By comparison the average price paid by households for the cheapest-available 2 litres of blue-top milk, as measured by the food price index, was $3.28 in March 2016. This is compared with the high of $3.71 in November 2014. Dairy export prices rose 5.1 percent in the March 2016 quarter, influenced by milk powder (up 4.2 percent).
"Cattle get excited when they solve problems. When faced with a challenge
of finding out how to open a door to reach food, their heartbeat went up,
their brainwaves showed excitement, and some even jumped into the air."
Globally, the prices of dairy products have been falling in 2016. The global dairy trade (GDT) price index mostly fell in the March 2016 quarter, with some rises through April. The GDT however, represents a small proportion of dairy products exported by New Zealand. For example, the total volume of dairy products exported by New Zealand in the March 2016 month was 223,000 tonnes – the GDT only traded a total of 42,286 tonnes in the same period.
"Cattle have an excellent sense of smell. They can detect odours up to five miles away.
They can also hear both low and high frequency sounds beyond human capability."
Number of Dairy Cattle
With lowered milk-solid payouts due to weak international demand and increasing global supply, the number of dairy cattle decreased in 2015, for the first time since 2005. Agricultural production statistics show there were 6.5 million dairy cattle at 30 June 2015, down 213,000 (3 percent) from the same time in 2014.
"Cows like to sleep close to their families, and sleeping arrangements
are determined by individuals' rank in the social hierarchy."