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New Zealand dairy farmers hopeful for a better year in 2016

Business is expected to improve in 2016 for small and medium-sized New Zealand dairy farmers whereas prospects are less positive for their counterparts who produce beef and lamb. On the one hand 2015 was an unlucky year for small businesses, but on the other several large multinationals saw their sales shoot up.
According to a survey conducted by the confederation of New Zealand breeders, many members described 2015 as being very difficult and – it would be odd otherwise – just over half is not optimistic about 2016. More than 1,100 members were interviewed of which 52% are expecting the same market conditions as last year. The most significant result of the survey is that confidence is greater amongst dairy farmers who are continuing to battle against low milk prices. Roughly 41% of the dairy farmers interviewed are forecasting improved market conditions although this percentage drops to 29% when considering the overall survey results.
2015 will be remembered as the year of low milk prices and adverse natural events, such as droughts and floods, which have had a major impact on New Zealand’s biggest sector of the economy and put it under enormous pressure. According to a UN report, global dairy prices have fallen by 39% since February 2014 and are the lowest in five years.
The Bank of New Zealand has observed no signs of recovery in the dairy sector in the short term. What is more, sanctions against Russia and the slowdown in China on demand for whole milk powder and butter – down by 71.57% and 28.61% respectively – are weighing on the global dairy sector.
In this bleak scenario, it is at least encouraging to see relatively high levels of optimism amongst dairy farmers, especially after what they have endured in the past two years. At the same time, however, one should not overlook the fact that El Nino is currently causing a drought which is worsening day by day.