Daniel Payton Perrin Ag Consultants

Payout news will help farmers tackle the summer dry

This week’s record forecast payout announcement by Fonterra is good news for dairy farmers as they tackle the effects of the summer dry, says Perrin Ag senior consultant Daniel Payton.

The co-operative has lifted its 2021-22 forecast farmgate milk price range to $8.90 – $9.50/kgMS, up from $8.40 – $9.00 per kgMS.

“As temperatures soar across the country, pasture is scarce and many farmers are priority feeding their milking herd by culling cows.

“Many dairy farmers are also reviewing their feed plans to help reduce the impact of heat stress on their herds and milk production,” says Payton.

“This payout news means using supplementary feeds will become more cost effective as farmers take steps to survive the dry.”

With a record forecast payout, it can be tempting to keep cows in milk for as long as possible. However, Payton says it could have a detrimental effect on cow condition.  

“Cow condition is king! Don’t be tempted to milk as many cows for as long as possible just to reap the rewards from the payout if there is no marginal economic benefit and cow condition at dry off is compromised.

“Failure to reach cow body condition score targets at dry off will result in greater dry cow feed requirements trying to regain condition pre-calving. The impact of calving cows in sub-optimal condition may also mean reduced milk production and reproductive performance next season”.

Payton also expects input costs to rise again, as suppliers make the most of a buoyant dairy market.

“Everybody will be wanting a bite of the cherry.”

Payton has seen first-hand how cost control and financial discipline can slip in high payout years. He encourages farmers to keep unnecessary spending in check.

“In order to reap the benefits of a high payout, it is more important than ever to remain disciplined. Resist the temptation to buy the ‘wants’ and instead ensure the business remains focussed on the ‘needs’.”

Lee Matheson

Managing Director
Principal Consultant

B.Appl.Sc (Hons), FNZIPIM (Reg)

Lee came to agribusiness consultancy via the unlikely pathway of a suburban Wellington upbringing, an Honours degree in plant science and a six-year career in the financial markets. In his role as the firm’s MD, Lee doesn’t get out on-farm as much as he used to but makes the most of it when he does. While having swapped the paddock for the boardroom, Lee continues to provide advice in the areas of farm business strategy, farm system innovation, corporate governance, investment analysis and economic research.

Outside of Perrin Ag, Lee loves to spend his time coaching rugby, watching his three kids play sport and gardening with his wife Haidee.

“I love the challenge of empowering people in our primary sectors and the excitement of seeing clients achieving their aspirations. If we can encourage farmers to engage with their consumers, take a more active involvement in their supply chains and view their businesses through a wider lens, then I think our industries have a great future.”