5 Prices received

5.1 Milk prices

Up until the end of the 2000/01 season, dairy farmers received payment from the New Zealand Dairy Board through a system of advance and final payouts via dairy companies. Seasonal supply dairy companies passed on the Dairy Board advance payout to their suppliers, in addition to a margin based on dairy company efficiency, product mix and investment policies; together known as the total payout.

The introduction of the Dairy Industry Restructuring Act 2001 opened the way for New Zealand’s largest dairy companies, Kiwi Cooperative Dairy Company (Kiwi) and New Zealand Dairy Group (NZDG) to merge with the Dairy Board to form Fonterra. Further, the Act allowed the smaller dairy companies, such as Tatua and Westland, to remain separate co-operatives. Consequently, the historic payment system became redundant. Tatua is now the last dairy cattle co-operative beside Fonterra, and has established commercial arrangements for sale of dairy products.

Payments to seasonal supply farmers are based on the “A+B±C” system, which incorporates payments for milkfat (A) and protein (B) with adjustments for milk volume (C). The payment system for winter milk supply varies between companies. Some winter milk payment systems are based on the milk volume only, whereas other payment systems are similar to seasonal supply payment systems, which incorporate components of milkfat, protein, and volume.

$9.26 average dairy co-operative payout

The weighted average dairy co-operative total payout (per kilogram of milksolids) received by dairy farmers from seasonal supply milk is shown in Table 5.1 (weightings are based on the number of herds supplying each dairy co-operative). The average payout is given in both nominal and inflation-adjusted dollars using the Consumers Price Index (CPI) provided by Statistics New Zealand. The average dairy co-operative payout of $9.26 per kg milksolids in 2022/23 was lower than the previous season ($9.52) and the second highest average payout on record. It is $2.45 above the decade average payout for milksolids which sits at $7.07.

However, when accounting for inflation, it is the fifth highest payout on record.

Season	Average dairy co-operative total payout ($/kg milksolids)	Dairy co-operative payout (inflation-adjusted)
2003/04	4.25	6.86
2004/05	4.58	7.19
2005/06	4.10	6.19
2006/07	4.46	6.60
2007/08	7.67	10.91
2008/09	5.14	7.18
2009/10	6.37	8.75
2010/11	7.89	10.29
2011/12	6.40	8.27
2012/13	6.18	7.93
2013/14	8.47	10.70
2014/15	4.69	5.90
2015/16	4.30	5.39
2016/17	6.47	7.96
2017/18	6.68	8.10
2018/19	6.35	7.57
2019/20	7.21	8.48
2020/21	7.76	8.83
2021/22	9.52	10.09
2022/23	9.26	9.26

Note:
- The “Dairy co-operative payout (inflation-adjusted)” value has been weighted to give real dollar values using the Consumers Price Index for the end of the June quarter (Sourced from Statistics New Zealand; excludes dairy co-operative retentions and deduction for DairyNZ Levy).
- From 2009/10 to 2018/19 average dairy co-operative payout was from Fonterra, Tatua, and Westland.
- From 2019/20 average dairy co-operative payout is from Fonterra & Tatua. This includes Fonterra dividend payments.
- Fonterra milksolids payout for the 2022/23 season also included the additional payment from the divestment of Soprole.

5.2 Dairy farm land prices

Dairy farm sale numbers decreased significantly
Inflation-adjusted average dairy farm land price is below the decade average

Prior to 2011/12 Table 5.2 was computed using data from Quotable Value (QV) on a calendar year basis. Dairy farm land sales are now based on data provided by the Real Estate Institute of New Zealand (REINZ) on a seasonal basis. Up until the 2019/20 season, raw data provided by REINZ was weighted by the number of farms in each region. From the 2019/20 season onwards, data is no longer weighted due to changes in the way data is provided by REINZ. The new method produces values that are consistent with changes observed and past season figures. The farms sold are considered to be economic units.

The average sale price of dairy farms increased to $4.87 million in 2022/23, $68,872 higher than the previous season ($4.80 million) (Table 5.2). When accounting for inflation, this dairy farm land price has been the lowest of the last eleven seasons.

Farms sold were 2 hectares larger on average than sales in 2021/22. The average sale price per hectare of $34,600 increased by 0.5% on the previous season.

Season	Number of dairy farms sold	Average sale price ($)*	Inflation adjusted average sale price ($)	Average land area (ha)*	Average sale price/ha ($)*	Inflation adjusted average sale price/ha ($)	Average sale price/KgMS ($)*	CPI
2012/13	197	4,375,251	5,616,198	130	33,557	43,075	36	959
2013/14	312	5,174,010	6,532,519	142	36,369	45,918	42	975
2014/15	244	5,228,018	6,573,739	132	39,577	49,764	44	979
2015/16	192	5,381,697	6,739,439	169	36,557	45,780	39	983
2016/17	217	4,808,676	5,919,480	151	37,835	46,575	40	1,000
2017/18	226	4,935,487	5,985,798	130	38,015	46,105	40	1,015
2018/19	148	5,125,837	6,114,249	144	36,846	43,951	38	1,032
2019/20	113	4,451,927	5,234,310	133	33,410	39,281	37	1,047
2020/21	198	4,810,641	5,473,105	153	31,393	35,716	35	1,082
2021/22	200	4,800,278	5,089,700	139	34,427	36,503	35	1,161
2022/23	140	4,869,150	4,869,150	141	34,600	34,600	37	1,231

Note:
- Source: Real Estate Institute of New Zealand (REINZ), Statistics New Zealand, DairyNZ.
- Number of dairy farms sold is for a season (01-Jun to 31-May) and excludes support blocks and non-economic units.
* Pre-2019/20 figures have been weighted by the number of dairy farms in each region. From 2019/20 onwards, figures have not been weighted.