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New Zealand's Drought is Impacting Farms and Prices

Thursday, 4 April 2013 at 12:36pm

The drought is having a marked effect on the North Island of New Zealand's milk production.  It is also impacting parts of the South Island but is more area specific.  Given that the back bone of New Zealand’s milk production is from grass grown on farms the drought has a significant impact on the feed available to dairy stock.  Water is a key component to grass growth.  When you do not have it for an extended period of time grass production slows and eventually stops.

When this gets to the more severe end of the spectrum it is referred to as a drought and grass production is greatly impacted.  To some degree alternative feeds can be utilised but this is always expensive and very rarely can it fully substitute grass.  And it certainly impacts the economics of a farming operation.

In the South Island, where Waibury generally operates, you have the ability to irrigate.  Depending on the reliability of the irrigation scheme you are associated with and or the conditions of your water supply can ensure the effects of drought are minimised. 

It is quite clear that the New Zealand drought is having an impact on the supply of Global dairy products as the price of base dairy commodities have lifted significantly in the last 2 auction events on Global Dairy Trade.