Some farmers could struggle to break even at the current milk price forecast for the dairy sector. DairyNZ’s head of economics, Mark Storey says rampant inflation and high interest rates have seen total expenses increase on average by 33% over the past three years and forecast to be around $8.96/kgMS for the 2023/24 season. The current Fonterra forecast range for this season has an $8.00 mid-point – which looks fine relative to history but Mark Storey says rising costs and interest rates mean many would struggle to break even at that level. Mark Storey says dairy sector debt has decreased by $5.4 billion – dropping from $41.7 billion in 2018 to $36.3 billion in 2023, which places farmers in a much better financial position than they otherwise would have been, now that debt-servicing costs are rising rapidly.
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