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Sunday, June 2, 2013

$7 kg declares Leferink

That's the very, very good price dairy farmers are rubbing their hands over right now. They are creaming it, there's no doubt about it.

“The forecast farmgate milk price of $7 per kilogram of milksolids (kg/MS) for 2013/14 is going to get a lot of attention,” says Willy Leferink, Federated Farmers Dairy Chairperson.

“Boy oh boy did we need some morale raising good news. In plain-English, it means that farmers could get about 0.58 cents per litre for milk they will produce between June and May 2014."

But Willy doesn't want the news to sound too good, for fear that we townies will think the dairy industry is doing too well. He cites the weather as a ready-made excuse for further benefits to be bestowed upon his industry:

“Yet a $7 kg/MS forecast milkprice assumes the weather will play ball in a benign local and international climate devoid of shocks or conflict.

“To underpin future payments like this we need water storage. No one in town would accept waiting for rain in order to boil a kettle but this is how our farm system has largely rolled."

The 'boiling kettle' analogy is spurious and typical of dairy-think and part of the reason that the local dairy-men were able to frighten some Environment Southland councillors into giving them yet another sizable subsidy at this annul plan round. Same old game, same old plays.

16 comments:

fredinthegrass said...

Same old comment, Rg

robertguyton said...

I'm not one to abandon my beliefs easily, Fred.

fredinthegrass said...

I admire your tenacity - but your beliefs..............?

robertguyton said...

I test my beliefs regularly, Fred. I work with people whose thinking is diametrically opposed to mine (on this issue, and most others) and always seek to debate with them, try my arguments against theirs, so as to be assured that I'm not just entrenched ideologically. As to what my beliefs are, I suspect you are just extrapolating, approximating, guessing and assigning beliefs that aren't really there. Such is the 'power' of the internet. I'm on RadioLive at 11:20. Ring up and challenge me :-)

fredinthegrass said...

Damn - missed opportunity - away with my beloved testing our will/not power in the shops. Plumped for dwarf fruit trees that our town section can accommodate.
As for your beliefs, Rg, I say again I admire your tenacity, but your beliefs.............?
Look forward to the day we may meet - although I confess to a greater desire to "tour" your forest garden than to a debate on some of the issues you raise on your blog.

robertguyton said...

I won't raise the subjects, Fred.

Graham Clarke said...

I wouldn't get too excited about $7 . It certainly isn't creaming it unless you are debt free in which case you would expect a reasonable return on many millions of equity. $7 is a moderate payout allowing all bills to be paid, a reasonable return for level of risk, hours worked and equity invested.$8 would be considered by most to be in the cream and would put a smile on faces like your cider drinking friends.2 Litres of milk is a lot more complicated and expensive to produce than a bottle of coke but is still the same price in my supermarket (and milk is somewhat better for you). I think if milk could be produced by adding sugar and bubbles to water then $7 could really be regarded as creaming it

robertguyton said...

Graham - by your reasoning, no price would be a good one for a dairy farmer. $7 is regarded by the industry as a very good one. That's all I am saying. $7 is a very good price. $3 would be a poor price. $15 would be an outrageously excellent price. $7 is a good price. That's the creamy bit. It's not a chunk of tough cheese, is it. Nor a knob of goat shit neither. I have never seen the industry leaders describing $7 kg as a 'moderate payout'. I think, with all due respect, that you are playing down a very good payout to try to counter the perception that dairy farmers are getting an excellent return for their milk.It's clear they are. The other aspects of dairying are the factors dairy farmers accept when they take on the challenge. Using them as excuses every time a good payout is announced seems a little duplicitous, if you don't mind my saying so. Oh, yes, but... doesn't ring true from players in our 'most successful industry', does it?

robertguyton said...

That said, I note you did say, "$8 would be considered by most to be in the cream."

Graham Clarke said...

Moderate is a good place to be. My comments are based on actuals- I apologise for the 3 year old data but http://www.dairynz.co.nz/publications/economic%20Survey/dairynz_economic_survey_2010_11/ has cost of production at an average of $4.95/kg but interest payment are required on top of that most farms would add $1.20 to that.Adjust actual costs to 2013 and it is up in the order of $6.50 to produce and has no return on investment at that.As you can see the margin starts to narrow very quickly. What i would concede however is that anything over break even is excellent given the world economy .There are many industries not faring as well.

Graham Clarke said...

A check on the same document shows interest at $1.54/kg for an average farm. Its worse than I thought! but there has been some easing of rates since then to be fair

woolblind willy said...

Frighten some ES councillors? That's an intesting spin on it, having read the anouncement on the ES website Robert - "The decision was made on the basis that the Water and Land 2020 & Beyond project identified that the whole community was contributing to water quality issues, one way or another, so the dairy industry should not be the only sector singled out for an extra contribution to the planning component of that project". Don't you think others should contribute?

robertguyton said...

willy - that was indeed part of the rationale for the subsidy that eventuated, but much more was proposed to be cut from the differential and the impassioned performance from those councillors fighting for the industry showed that they were fearful of lash-back from farmers, whom they called 'the community' and scathing of the council and staff (Cr Horrell), that is, more than willing to slate the organization he worked for in favour of that he is a paid-up member of, in my view. The proposal to remove dairy from W&L2002 came from Cr Rodway. It was a measure that settled down the 'motivated' Fed Farmer-councillors, and the chairwoman, who had adopted her stentorian voice to call her people into line for the vote. I've been there long enough to recognise the methods. They we used in exactly the same way last year to secure the $700 000 subsidy from the SouthPort dividends, to the dairy farmers. I thought you guys eschewed subsidies?

robertguyton said...

Graham - Willy Leferink calls it,
"morale raising good news" but you seem reluctant to raise a smile, preferring instead to down-play the price and cite the 'difficulties' instead, making real my claim that farmers are doing what they can to make it seem as though it's not good news at all.
If you see what I mean :-)

woolblind willy said...

So am I wrong in asuming the "whole community" in the council statement means everyone, urban included?

robertguyton said...

To me it does. To the author of the article it does. To some of the councillors it meant the dairy farmers.
Guess you had to have been there.