Promising dairy season for the Waikato
The engine room of the Waikato is preparing to go into overdrive.
It's been raining out there, grass is sprouting aplenty, and dairy farmers and vets are preparing to roll up their sleeves and get stuck in with calving.
It all bodes well for this dairy season, with a near-record payout expecting to circulate seven times in the region.
Rabobank's recently released Global Dairy Quarterly predicted a 2 to 3 per cent increase in production nationwide.
That meant potentially an extra 11.35 million kilograms of milk solids produced in the Waikato region, based on DairyNZ production figures from the 2012-2013 season.
Morrinsville dairy farmer Bruce Arnold said things were looking rosy on the farm with calving set to begin.
"The cows are in good condition, and hopefully we'll get another good start to the season."
The persistent wet weather meant it was starting to get "tricky" but pastures had continued to grow through the early part of the winter thanks to a mild June.
"For the early part of spring, things are looking quite good at the moment.
"Coming out of the drought we were a bit behind the eight ball but we're catching up pretty quickly."
A Tatua supplier, Arnold said he was confident their payout would match Fonterra's new season forecast of $7 per kilogram of milk solids.
Looking ahead to the summer, Arnold said he was fearful there would be another drought.
"They're costing us a fortune with all this extra feed being brought in."
Matamata dairy farmer David Bennett said the kind weather so far meant their farm had grown plenty of grass.
"Most guys will be pretty well set up."
The new season was shaping up well, he said.
James Barbour said his Matamata farm, which he sharemilks with wife Melissa, had bounced back well from the drought.
They dried their herd off reasonably early to ensure their cows were in the right condition heading into calving this week.
"And they are. It will be good to get back into it after a long dry season," he said.
He was happy with Fonterra's $7 forecast, having budgeted at a much lower rate
"It's still a fairly strong indicator and there will always be a bit of variation from that either way, but we budget at a fairly low payout anyway."
University of Waikato professor of agribusiness Jacqueline Rowarth said farmers, hurt by the higher dollar and interest rates, would be happy as long as the payout did not drop relative to the cost of production.
Costs include the rising minimum wage and costs of compliance with regional council standards, which haven't been finalised yet.
Rowarth said with a good payout, farmers pay more taxes and the rural economy assists the cities to have a good lifestyle.
"And the farmers themselves can afford to put in the environmental technologies."
LIC chief executive Wayne McNee said things looked very good for the cow performance company at the moment.
"We still saw farmers continuing to milk very late."
He said farmers might have milked late last season, despite the drought, because of the high payout.
"The grass has come back, it's been warm." He said the amount of grass should mean a good calving season, and hopefully enough feed to help cows get in-calf in the coming AB season.
Farmers were still willing to spend money if it's "the right solution" for them to improve efficiencies.
"Farmers are discerning and they expect to get good value for money."
He said it has been a good year.
"We would expect next year to be an even better one."
Sam Anderson, national sales manager for dairy technology company Lely, said the coming season is "looking very good".
He said farmers were looking to invest in automated systems, and the general feeling in the wider dairy industry was "fairly positive".
While cow condition and pasture levels had been in a worse condition heading into winter compared to last year, the mild June weather had allowed the ground to recover, DairyNZ South Waikato regional leader Wade Bell said.
It meant most farmers were well positioned headed into calving. Soil moisture levels were good thanks to the rain and it had yet to have caused any major pasture damage yet.
Cambridge Vets' Peter Briston said the farmers he had spoken to were feeling confident.
"They seem pretty upbeat and they have finally seen some rain, although it's pretty miserable to work in."
The warm June had caused some health issues among dairy herds, most notably scours caused by worms and yersinia. Empty rates in his area had also been high at an 11 per cent average, which could have been caused by the drought.
"What we do wonder is if the heat of November-January had an impact on mating," he said.
"Some of those heifers are not as grown as well as we would like to see and that might impact on them at calving and mating this year," Briston said.
New Zealand Institute of Economic Research principal economist Shamubeel Eaqub said Waikato region was among the best-placed provincial regions in the country.
Eaqub, in Hamilton this week to discuss the big issues the region's housing market is facing, said a strong rural sector that was highly productive, innovative and "doing really well" would keep the region's economic engine going, while economic benefits would continue to "spill over" from Auckland.
The interest shown by companies wanting to set up in Hamilton, or investors looking for property deals would contribute to economic growth too.
The region would feel the pinch as interest rates continued to rise, however.
Eaqub stated publicly when the Reserve Bank last lifted the Official Cash Rate (OCR), which influences bank lending rates, that it was a step too far.
He reiterated that the Reserve Bank's focus was on Auckland, which translated into "a higher cost for doing business" in the regions. He said despite that he expected the Reserve Bank to raise interest rates again when it reviewed the OCR late this month.