Dairy production season starts with a hiss and a roar

After three seasons of decline, dairy production across the country is set for new record high.

New data shows that for the season to September, production is 5.6% ahead of last season.

ASB Rural Economist Nathan Penny said some of the reason for the healthy production numbers in annual change terms is that last season's growing conditions were so poor. 

"Indeed, at different times last season, weather was either too wet or too dry in some parts," he said.

"In contrast, this season so far the weather and thus growing conditions have been favourable, helping production start strongly," said Mr Penny

Farmers have also been in position to take advantage of the favourable weather, and he said farm cashflows are positive. 

"Accordingly, farmers are spending more on pasture maintenance (via fertiliser application) and on animal health and this spending is helping boost production per cow," he said.

Because of the growth, the ASB doubled its 2018/19 production growth forecast from 2 percent to 4 percent with production on track to set a new record high. 

The extra milk also means a lower milk price forecast with the ASB trimming its milk price forecast by 25 cents to $6.25/kg.