New Zealand dairy farmers don’t sound as down in the dumps as university research suggests their Australian rivals are, but a year ago it would have been a close-run thing.
Results from a study of dairy farmers in Australia’s major dairying regions by public research institute Curtin University in Perth indicated the majority – 55% of those surveyed in 2023 – did not express positive levels of satisfaction with dairy farming, the study authors said.
The report, titled “A survey of Australian dairy farmers’ attitudes to their business, its challenges and transitioning to alternative enterprises”, stated dairy farmers were grappling with “serious business challenges”, including rising operation costs, labour shortages, unstable milk prices, changing consumer preferences, long hours with minimal downtime and unstable weather patterns.
Using a phone-based representative survey and interviews with 147 dairy farmers, the university said it combined quantitative and qualitative analysis to determine the challenges and primary concerns of participants and explore potential solutions.
Four key variables that contributed significantly to a model of transition intentions were identified: level of satisfaction with dairy farming; openness to exploring other agriculture alternatives; preference to receiving financial and/or other support to remain in the industry; and preference to receive financial and/or other support to transition to a different form of farming.
“This model accurately predicted the probability that farmers were considering transitioning away from dairy farming and the probability they were considering staying ... This deepens our understanding of the challenges faced by farmers ... and provides ... critical insights to facilitate transition pathways that will enhance farmers’ future sustainability,” the report said.
Dairying is Australia’s third-largest rural industry. It produced 8.3 billion litres of milk worth A$6.2b ($6.8b) in 2023-2024. The total value of Australia’s dairy exports was A$3.6b ($3.9b).
New Zealand produced 20.5b litres of milk. It exports 95% of production. In 2023-2024, dairy exports were valued around $23b.
Australia had 3889 dairy farms in 2024 according to Dairy Australia. New Zealand had 10,485, DairyNZ said.
While the industry profiles are very different, Federated Farmers dairy industry group chairman Richard McIntyre said there were “huge similarities” in the challenges faced by both countries’ dairy farmers.
“Dairy farming also brings some unique challenges in the sense that we’re dealing with biological systems. When the milk price goes down or costs go up, it takes time to make changes to your farming system. That makes things really difficult when we see quite fast fluctuations.”
McIntyre said the Curtin research in 2023 “mirrors exactly what we are seeing in our own research”.
The federation surveys more than 1000 farmers twice a year.
Farmer confidence levels hit record lows in 2023, he said.
“Those confidence levels have remained low ever since, right through 2024, even with a change of government removing some of the regulatory pressure farmers were under.
“Our next survey is getting under way this month, with results due for release mid-February ... With an increase in the milk price, slowing inflation and interest rates starting to come down, we’re anticipating we may finally start to see a lift in confidence levels.”
On whether many Kiwi farmers would prefer to leave the industry, McIntyre said if you’d asked many of them during 2023, “I suspect the answer would have been similar to the response given by Australian farmers, but I don’t think the answer would be the same today.”
In mid-2023 dairy farmers experienced a sudden drop in milk price from $8/kg milk solids to $6.75. The break-even milk price at the time was around $7.51, excluding principal repayments on debt.
“That meant on average, farmers were losing 76c for every milk solid they produced that season. They were effectively going to work every day, slogging their guts out to provide for their families and coming home poorer than when they walked out the door at 4am that morning.
“Things are looking much more positive today ... People are seeing a much brighter and more optimistic future for dairy farming.”
John Stevenson, chairman of the Fonterra Co-operative Council, a farmer-elected watchdog for the big co-op’s nearly 8000 farmer-owners, did not think the Curtin study results would be echoed among New Zealand farmers “at the moment, although we do face some similar challenges ...”
He said there were “significant” differences between the two countries’ industries, including the export ratios and how the milk price paid to farmers was calculated.
“New Zealand’s milk price is particularly influenced by GDT [Global Dairy Trade auction] prices, which we saw a lift in at the end of last year.
“Australia is mostly a domestic market, with more than 70% of their milk sold locally. Their product mix is more weighted towards consumer products.
“Fonterra’s forecast farmgate milk price in Australia is $8.15/kg milk solids, while in New Zealand it is $10. Due to different markets, in some prior years, the Australian milk price has been higher than New Zealand’s. In general, Australian dairy farmers can face more drought ... which means many are more reliant on grain and other supplementary feed.”
Stevenson said it was “a good time to be a Fonterra dairy farmer in New Zealand”.
“But it’s not all beer and skittles – as Kiwi dairy farmers, we do still face plenty of challenges, such as high costs, recruitment and regulation.”
The Curtin University report said upon being asked how satisfied they were with their current operations, 36% of those surveyed had a neutral response and 19% expressed a negative opinion. A positive attitude towards dairy farming was expressed by 45%.
“The results indicated that the majority of the farmers, 55%, did not express positive levels of satisfaction with dairy farming.”
Most farmers (89.8%) saw rising operational costs as a primary challenge to their business, and most also identified long working hours with minimal downtime (72.8%) and labour shortages (70.1%) as significant obstacles.
In terms of severity, unpredictable weather patterns were considered a serious concern by 64.6%, with an average serious concern rating of 6.6 out of 10.
Around half the farmers (51%) indicated mental health and wellbeing impacts were a primary challenge. Farmers who experienced mental health and wellbeing issues relating to dairy farming activities showed lower satisfaction levels.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the $26b dairy industry, agribusiness, exporting and the logistics sector and supply chains.
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