Dairy Report: Perceptions of who-pays-what for m.bovis culling needs balance. But new dairy season payout estimates underline the sector's sustainable strength

By Guy Trafford

One of the unfortunate outcomes of the whole mycoplasma bovis situation is that the government decision to support MPI, DairyNZ, Federated Farmers and Beef and Lamb NZ in their collective desire to eradicate MPB has fuelled the urban rural divide more than anything seen for some time - if judging by the responses read and heard on blogs and talk back is an indicator.

The unfortunate timing of the funding package, not that any timing is likely to be good, is that it has coincided with the methamphetamine (P) measuring fiasco which has put many people out on the street, the revelation that many hospitals have substandard buildings and plenty of other historical grievances that people are happy to roll out as examples that have not received adequate funding or compensation.

Adding to the confused picture is that within farming circles people are not unanimous in their support of the decision.

At the moment the proven source of MPB in New Zealand, if known, is not public knowledge. If it does turn out to be from slack practices from members within the agriculture community even more fuel will be added to the fire. But Keith Woodford’s latest article has certainly given thought to another route the disease may have come in from.

The government contribution works out at approximately $240 per tax payer, not inconsiderable. However, this figure pales in comparison to what farmers will be paying as industry members. How the contribution share is to be calculated doesn’t appear to be announced as yet but given there are 1,200 dairy farmers and about 25,000 sheep and beef farmers then their share is in the vicinity of $7,600 each.

Despite this, unless the message is well managed by industry leaders only the $240 cost will be heard.

Early indications are that about 80% of the industry cost will be borne by the dairy industry and 20% from sheep and beef farmers. It will come in the form of a levy spread over several years.

DAIRY

The latest Global Dairy Trade has had a step backwards with a -1.3% drop from the previous auction. In the past WMP have managed to often buck the trend. But not this time dropping -1.1% to US$3,205 a tonne, although on increased volumes.

China’s dairy imports are back on the increase for March, up +3% on the same month last year and up +12% on the twelve months ending March 2018 - which is just as well given all the major exporting regions are up on volumes.

Fonterra’s New Zealand June to April milk collection volumes for the season just finishing is down -2% however, the Australian segment for a similar period (July- April) is up a massive +26%. This result is credited to a favourable climatic season as well as increasing numbers of suppliers switching to Fonterra.

Both Westland and Synlait dairy companies have come out with their milk price indications for next season. Both are sticking fairly close to Fonterra’s earlier price release indication. Westland are forecasting a price range of $6.75 - $7.20. While Synlait are also staying with a $7.00 indicator. They have also said the 2017/18 is likely to finish around $6.78. Westland is lower at $6.10 to $6.30/kg. Fonterra's likely final price is $6.75.