Seizing the opportunity in the volatility challenge

Tim MackleChief Executive

DairyNZ

Opportunities and challenges

What’s happening in our

dairy world

DairyNZ – equipping

farmers for the challenges

What does this mean on the

farm?

Opportunities and challenges

What’s happening in our

dairy world

DairyNZ – equipping

farmers for the challenges

What does this mean on the

farm?

“The only function of economic forecasting is to make astrology look respectable.” – John Kenneth Galbraith

History repeats?

Source: DairyNZ Economics Group, UN COMTRADE (World Bank WITS)

Last cycle we had free-run…

Confidential to Fonterra

World milk supply… NZ just 3%Global Milk Production - Top 25

(Includes Buffalo Milk)

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

To

nn

es

World milk production (2009) – 680 million tonnes

Source: DairyNZ Economics Group, IFCN

Leads to volatility – it can be our friend

Volatility favours the resilient

0

5

10

15

20

25

30

35

40

45

Export volumes (milk equivalents)

Cost

milk

pro

ducti

on $

US/

100k

g m

ilk e

qui-

vale

nts

Global price band

Source: DairyNZ Economics Group, IFCN, OECD-FAO 2010-12

Arg

en

tina

New Zealand

Uru

gu

ay

Ukr

ain

e

Australia

USA

EU-27

…but we’ve got to stay competitive to win and thrive…

Opportunities and challenges

What’s happening in our

dairy world

DairyNZ – equipping

farmers for the challenges

What does this mean on the

farm?

What DairyNZ is doing to help build resilience?

We are not losing sight of..

There’s a short-term challenge, but it’s a long term game.

We need to make the right moves.

Profit from efficiency gains ($/ha)

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

PFP

$/ha

$50/ha/year

Taking on nutrient limit challenges

Good people build resilience

Resilience through research

More profit with less environmental impact

Profit

Footprint

< > 30%

The past(the last 10 years)

The present(Research proven)

The research challenge

The farmer challenge

Opportunities and challenges

What’s happening in our

dairy world

DairyNZ – equipping

farmers for the challenges

What does this mean on the

farm?

What DairyNZ is doing to help build resilience

Ju

ne July

Augus

t

Septe

mbe

r

Octo

ber

Novem

ber

Decem

ber

Janu

ary

Febru

ary

Mar

chApr

ilM

ay-100,000

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

Closing Bank Balance Taranaki

Budget

Tactics for tight times

Become fit for the future

The resilient farmer

Resilient farm system

Great place to work

Commercially strong and

sound

Environmentally-responsible

The execution challenge

Look after yourself

So in summary…

We’ve got some challenges, but tactics are in place at an industrylevel.

You need your own plan too.

We all need to execute our plans really well if we are to build a resilient industry.