Better year for dairy predicted

A return to the days of many farms being converted to dairying is not expected, a leading rural financier says in The ODT. Rabobank senior protein analyst Hayley Moynihan said a more conservative approach by farmers, tighter credit and lower farm values would not see a return "to the heady days of new dairy conversions". However, milk prices would see most farmers return to cash profitability this year and, if expenditure was controlled, potentialprofits would be comparable to 2007-08, she said. Mrs Moynihan expected milk production to grow 2% this year due to herd expansion, feed supplements and moderate climatic conditions over most of the country. The beef sector might prefer to forget 2009 due to lacklustre prices as the economic downturn hit New Zealand's key export markets."The rising share of manufacturing beef proved a blessing as the world endured the impact of a severe economic downturn and consumers bought cheaper beef cuts." As a result of the shift in production, the United States now accounted for about 55% of New Zealand's production, up from 50% in 2008. Mrs Moynihan said beef trade with Russia, the European Union and other "new" destinations had either ceased or diminished in importance. As economies improved, beef purchases should increase but it would be slow, with a steady recovery in prices rather than a surge.The NZ  beef kill was also expected to fall as the beef cow herd rebuilt, due to an end to drought and few dairy cows culled. "However, the prospect of achieving prices significantly above five-year averages is unlikely without a major depreciation in the NZ dollar." The rise in sheep meat prices last year was described by animal proteins senior analyst Wendy Voss as defying the global downturn, reaching levels 26% higher than 2008 and 39% higher than the five-year average.