Tue, 04/09/2007 - 05:23 — Editor
# White Gold in perspective

Averages can be very misleading, but are sometimes helpful in providing perspective.

**The New Zealand dairy industry:**

- Produces 1.3 billion Kg of milk solids per annum
- From milking 4 million cows
- This is about one milking cow per person, and 325 Kg of milk solids apiece
- Has about $60 billion worth of assets, and approaching $30 billion of debt
- Per cow, assets of $15,000 and debt of $7,500
- Per Kg of milk solids, assets of $46 and debt of $23
- Has over the last 10 years paid out in real terms between $3.50 and $6.00 per Kg of milk solids
- Has over the last 10 years had costs before interest and tax of between $2.00 and $3.50 per Kg of milk solids produced
- In 2006 and 2007 lost on average after interest between 20 and 60 cents per Kg of milk solids – perhaps $100 per cow and per person. Income lost through exceeding optimal production intensity was a minimum of $650,000 per day.
- In the 2007-2008 season the dairy industry will receive perhaps an additional $2.00 per Kg of milk solids over payouts for 2006 and 2007, and make on average between $350 and $550 per cow and per person

**Miscellaneous:**

- $6.00 per Kg of milk solids is equivalent to $0.48 per litre of milk
- In 2007 the NZ real estate industry made $1.2 billion in commission - $300 per person and per cow
- The extra $2.5 billion revenue for the dairy industry this season is about the same as the industry’s debt servicing costs
- Few dairy farmers have industry average levels of debt. There are two camps and those in the low debt camp will do extremely well in the 2007-2008 season, but many of those in the high debt group will still be relying on asset growth for profit.
- Since Fonterra was formed in 2001 (6 years), dairy farm assets have on average increased by $30 per Kg of milk solids and debt by $10 per Kg of milk solids
- Cumulatively, Fonterra has in its six years of operation paid out $26.35 per Kg of milk solids