A dairy boss has described the industry's current climate as 'extraordinary”, and called for companies across New Zealand to trim their operations.

DairyNZ chief executive Tim Mackle is calling on farmers to cut unprofitable production from their systems in the face of a continuing decline in milk prices.

Photo: File.

'These are extraordinary times,” admits Tim. 'Open Country Dairy's milk price forecast is under $4 per kilogram of milksolids (kg MS) and all indicators show Fonterra will be forced to lower their forecast on August 7.

'This price dip is lower and longer than anything we've seen in the last decade.

'Assuming a milk price of $4 for the average Open Country Dairy supplier, that means a potential deficit of around $250,000 for the year ahead.

'It is now a necessity for many farmers to do more than just shave costs. Removing unprofitable production from our systems is good for individual farm businesses, and will send the market a signal that New Zealand farmers will not produce marginal milk at a loss.”

Tim says a zero spend policy is not a realistic solution, and outlines three stages to the rest of the season that need to be considered.

'Between now and balance day – around September/October when feed supply equals feed demand – it's about setting up for spring,” he adds.

'Animals need to be kept fed and healthy, and pastures need to be kept growing.

'Cows will need minerals and, in some cases, some supplement to achieve this. Using nitrogen fertiliser and keeping average pasture cover above 1800kg of dry matter per hectare will maintain growth rates.”

He says between balance date and summer is the time to trust pastures to make milk and get cows back in calf.

'Given where milk price is now and the cost of supplements, it's hard to see how any supplementary feeding is profitable through spring,” says Tim.

'Lower milk production should be easily covered by lower feed costs. The drop in milk production will be minimal for many farmers as better pasture quality is maintained and less silage is made.”

The DairyNZ Tactics campaign is providing one-to-one and group support for farmers in August to help them with pasture management through the critical spring period.

'Farm consultants and other farmers are a valuable second opinion on pasture management,” explains Tim.

For more information on DairyNZ's Tactics campaign, as well as their Supplement Price Calculator, visit: www.dairynz.co.nz/tactics