Breaking the cycle – farming sustainability requires change
By Phil Beatson – Genetic Development Strategist at CRV Ambreed Albert Einstein once said the definition of insanity is doing the same thing over and over again and expecting different results. The need for change in the dairy industry has prompted me to revise an article I originally wrote back in 1999 that is still very much relevant today. When it comes to the ongoing economic welfare of today’s farmers – the backbone of New Zealand’s largest industry – all sectors must work together to create change. As history demonstrates, without change, we will continue to get the same results. In 1999 the payout was at $3.42. Back then, I stated that unless growth in production was controlled and emphasis placed on consumer products, farmers faced a payout of $3.10 (in 1999 dollar terms) by 2017. The fact that $4.40 today translates to $3.01 in 1999 dollar terms has prompted this contribution. In a nutshell: I believe no one should be unduly surprised by the dairy payout being in the $4-$5 range, although this season’s $3.85 payout is a record low in CPI adjusted terms. After all, in 14 of the last 22 years (if next season’s projected payout is considered), the CPI-adjusted payout has started with a $3, $4 or $5. As illustrated in the accompanying graph, in only six of the past nine years and in two seasons at the beginning of the century has the payout started at $6, $7 or $8. Source: Dairy Statistics 2014. 2015 and 2016 values are Fonterra’s forecast payouts. These recent ’high’ payouts have been solely due to China’s demand while those in 2001 and 2002 were due to America diverting grain from dairy to biofuel production. This trend has simply continued the long-running erosion of the payout; back in the 1950s […]