NZ Dairy in a Nutshell

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