Next year’s dairy payout should stay around $6 per kilogram of milksolids, ASB’s chief economist told farmers at the Central Districts Field Days.
Nathan Penny, addressing 30 people at a seminar, said food prices generally were increasing and international demand for all food including dairy products was already occurring. He said the milk payout was part of that.
“But yes the economy is more resilient. Dairy struggled for several years. But what surprised us was the rest of farming, horticulture, beef and forestry filled the gap. What we saw in 2015 was that exports still grew even though dairy was down.”
Penny said the milk price internationally had lifted structurally and as a result he expected next year’s payout to be solid. But he said production and pricing would be dependent on the weather.
“The New Zealand economy in general is pretty good. The Kiwi dollar won’t fall against the American dollar much at all.”
But he said New Zealand could cop fallout if US President Donald Trump started a trade war with China.
“Trump on his first day in office dumped the TPP. He is unpredictable.”
Penny said a trade war against China was a bigger risk to New Zealand than tariffs on trade to the US.
He said in terms of doing business with the US, agriculture was not talked about and he didn’t expect further trade barriers this year.
“US agriculture will be less competitive as their costs go up. But China is a major market for New Zealand and we don’t want to see a trade war between the two. It will impact on us.”
Source: Stuff
