New Zealand dairy farmers pessimistic of milk market

Rabobank and Nielsen's quarterly Rural Confidence survey shows that more dairy farmers in New Zealand are expecting conditions to deteriorate over the next year. 

Dairy farmers are hit by the double whammy of low commodity prices and limited demand in overseas markets.

The survey, done across New Zealand last month, showed that 29 percent of farmers expect that agricultural economy will worsen over the next year. The fraction of the survey was up 7 percent from the last quarter. Participants who think the situation will improve dropped from 59 percent to 26 percent.

Among those surveyed, dairy farmers were the most pessimistic with 39 percent forecasting a gloomy market, up from 4 percent last quarter and 13 percent positive of the future, down from 49 percent.

Fonterra, the near dairy monopoly co-operative in New Zealand, saw its milk price component of the farmer payout plunge to NZ$6.00 in late November. Last year's milk price was NZ$7.59.

Going by last season's production figures, the reduction would eliminate around NZ$211,000 off the average farmer's payout.

US$1=NZ$1.8237 (Dec 11)