Higher dairy prices will pave way to higher tech on farms - ANZ

Fonterra last month increased its forecast for the current season just ended to $6.15 per kg of milksolids. Photo / Mark Mitchell

Higher dairy payouts have put dairy farmers in a good position to take advantage of new technologies that will redefine farm efficiency in the years ahead, New Zealand's biggest rural lender - ANZ - said.

The bank's managing director commercial and agri, Mark Hiddleston, said improved payouts this year would give farmers the opportunity to pay down debt built up over the 2014/5, 2015/6 seasons, when prices fell well below breakeven for most farmers.

"While dairy and other commodity markets remain changeable, a higher payout provides an opportunity for our dairy farming customers to pay down some of the debt they've built up, and to reinvest in their businesses," Hiddleston said.

"We are seeing the next agricultural revolution where technology and innovation will drive improvements in farm productivity, efficiency, while reducing environmental impact."

Hiddleston said the Fieldays agricultural event at Mystery Creek, near Hamilton, would give businesses a chance to check out the latest innovation and thinking.

ANZ rural economist Con Williams said some of the apps and technology - aimed at improving the bottom line for agri-businesses - shows growth in adoption across the sector.

Technology continues to pervade business and change the way many things are done.

"It's no different down on the orchard or farm with apps being increasingly used to support a range of business practices," he said.

"There are a whole range of benefits, but essentially it's about the ease of doing business, being more efficient and productive, making better decisions, mitigating risks, meeting compliance requirements and improving the bottom-line."

Despite a challenging global backdrop, Williams believed the outlook for New Zealand agri-businesses was positive.

"The operating environment looks positive for the key livestock sectors," he said.

"We are most cautious on beef, with a large supply increase anticipated from the US and Brazil."

For dairy, current market indicators suggest a high-$5/kg milksolids to high-$6/kg range for the milk price, he said.

The main horticulture sectors had challenging growing and harvesting conditions this year, impacting on the overall quality of crops. That said, "decent" prices are still expected, supporting overall revenue.

Economists said recent data showing the country's merchandise terms of trade rose 5.1 per cent in the March 2017 quarter to its highest point since 1973 highlighted a significant step up in commodity exports.

Fonterra last month increased its forecast for the current season just ended to $6.15 per kg of milksolids from $6/kg - and a world away from the initial forecast of just $4.25/kg.

In addition, Fonterra's opening forecast for 2017/18 of $6.50/kg was above most analysts' expectations.

However, DairyNZ says it may take two or three years to repair the damage done to farmers' balance sheets after the slump and Fonterra will this year start claiming back the $400 million or so in soft loans that it dished out to farmers during the decline.

Despite what was at the time a gloomy outlook for dairy, Mystery Creek last year attracted 130,684 visitors - just shy of the record attendance in 2006.