Rapidly falling dairy production as a result of drought in the North Island is expected to take a bite out of the March and June quarters' GDP, although strengthening international dairy prices will help counter the dry horrors reports Stuff. Dairy giant Fonterra says more than 150 dairy herds are halting milk production daily on farms north of Taupo, from which it collects more than half its annual milk supplies. The drying off is a month earlier than usual. Federated Farmers said 40 per cent of the national dairy herd was in drought-declared zones. ANZ National Bank chief economist Cameron Bagrie is doing his economic sums on the basis of general dairy production being down 2 per cent on a year ago. Last season Fonterra collected about 16 billion litres of milk. It had been budgeting on a milk collection increase of 2 per cent to 3 per cent this season, which finishes on May 31. With drought officially declared in Northland and parts of Waikato south to Taupo, Fonterra general manager milk supply Tim Deane said the end-of-season collection "will be nowhere near that". Mr Bagrie said this season's milk production story was one of decreased farm production volumes on last season, higher supporting international dairy prices, and big feed costs as pasture dried up.
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