Latest / Early Edition with Ryan Bridge / Mark Storey: Dairy NZ Head of Economics on the improving conditions for the sector

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Mark Storey: Dairy NZ Head of Economics on the improving conditions for the sector · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Darien Z's quarterly econ tracker is out. The last one
• 0:03
  Speaker 1: predicted a payout including dividends eight dollars thirty four a
• 0:06
  Speaker 1: break even point of eight dollars zero seven per kg
• 0:09
  Speaker 1: of milk solids. Now the payout is up eight dollars
• 0:12
  Speaker 1: eighty four predicted break even eight dollars ozho nine joining us,
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  Speaker 1: Mark Story, darien Z, head of Economics, Mark, good morning,
• 0:19
  Speaker 1: Good morning, Roy, thank you for being with me. What's
• 0:21
  Speaker 1: pushing this? What's driving this?
• 0:24
  Speaker 2: Yeah, two things are driving that revised those revised forecasts.
• 0:28
  Speaker 2: The first is the improvements in the forecast milk pay
• 0:33
  Speaker 2: out price and protective from Frontira and announcements in August,
• 0:38
  Speaker 2: so the revenue side's going up. And the second is
• 0:41
  Speaker 2: the reserve banks forecast of interest rate costs adjustments and
• 0:46
  Speaker 2: banks beginning to respond to that. So those two, those
• 0:49
  Speaker 2: two factors are in combination are driving and improved outlooks
• 0:52
  Speaker 2: for our dairy farmers this season.
• 0:54
  Speaker 1: How much is that worth to your average farmer, the
• 0:57
  Speaker 1: reduction and interest rates.
• 1:00
  Speaker 2: Well, if we're looking at it, it obviously it depends
• 1:03
  Speaker 2: a lot for farm to farm, But if we're looking
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  Speaker 2: at you know, I guess it's coming into well, we're
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  Speaker 2: looking at rates of you know, an extra half percent,
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  Speaker 2: more than a half percent in the remainder of this season.
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  Speaker 2: We've done some analysis which has looked at what the
• 1:24
  Speaker 2: difference would be between you know, fast rates coming in
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  Speaker 2: the December this year, if we were dropping down to
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  Speaker 2: seven and a half percent from from eight point five
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  Speaker 2: at present, and we're looking in the low tens of thousands.
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  Speaker 2: But the more that flows into the season after that, yeah,
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  Speaker 2: it obviously or makes a healthy difference.
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  Speaker 1: So that it's quite significant then, isn't it that? How
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  Speaker 1: are you feeling, how farmer's feeling? It must be it
• 1:52
  Speaker 1: must be a positive step. I guess a positive outlook.
• 1:57
  Speaker 2: Yeah, it's definitely always cautiously posit. It's early in the
• 2:00
  Speaker 2: season yet, so everyone's relying on forecasts of revenue and
• 2:05
  Speaker 2: forecasts of expenses at the same time. But it's looking
• 2:10
  Speaker 2: positive computer to previous seasons. Anything, any payout pies with
• 2:14
  Speaker 2: an eight in front of it tends to be good.
• 2:16
  Speaker 2: And if it starts getting up towards the nine, then
• 2:18
  Speaker 2: farmers are generally sitting in a fairly positive situation. Expenses
• 2:22
  Speaker 2: are still high and they are staying quite stubbornly high,
• 2:26
  Speaker 2: so things like wages, fertilizer, feed, et cetera haven't come down,
• 2:33
  Speaker 2: and perhaps as much as a bad of rights. In fact,
• 2:35
  Speaker 2: in this forecast where predicting that they've gone up. That's
• 2:38
  Speaker 2: reflecting you know, there's inflation staying in the system and
• 2:41
  Speaker 2: those prices are quite sticky. But overall farmers are getting
• 2:45
  Speaker 2: in a better position and hopefully can start paying down
• 2:49
  Speaker 2: some of their debt this season.
• 2:51
  Speaker 1: Good good. I am pleased to hear it. And when
• 2:53
  Speaker 1: I'm looking at an n ZIE forecast saying where at
• 2:56
  Speaker 1: zero percent growth as a country through to March next year,
• 2:59
  Speaker 1: I'm please to hear a little a spot of good news. MAK,
• 3:03
  Speaker 1: thank you very much. Mark stroy Durians he'd hit of
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  Speaker 1: economics with us this morning. For more from news Talks,
• 3:08
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