4 Prices Received and Paid
4.1 Milk Payment
In 2021-22, owner-operators in DairyBase® received an average cash payout of $8.68/kg milksolids sold (net of the industry good levy but includes advance and final payments). This was $0.51 less than the previous season. The 2022-23 New Zealand Dairy Statistics publication reported an average nominal payout (including dividend payments) of $9.26/kg MS.
International dairy prices (Graph 4.1) decreased steadily during the 2022-23 season. Between May 2022 and May 2023, the price of whole milk powder, skim milk powder, cheese and butter decreased by 18 percent, 33 percent, 21 percent and 13 percent, respectively.
The 2022-23 average nominal milk payout reported by the New Zealand Dairy Statistics publication of $9.26 per kilogram of milksolids was $1.00 above the decade average in inflation-adjusted terms ($8.23) (Graph 4.2). Although the milk payout per kilogram of milksolids decreased in 2022-23, it is still the second highest of the last 9 seasons.
4.2 Livestock Prices
The value of mixed aged dairy cows decreased to $1,628 in 2022-23 (from $1,697 in the 2021-22 season). Dairy cow values, in nominal terms, were close to the decade average of $1,574. Historically, dairy cow values have followed the trend in milk prices, often with a slight time lag (Graph 4.3).
4.3 Feed and Fertiliser Prices
The price for barley and wheat increased by about 13 percent and 12 percent respectively in the first half of the season and decreased in the second half of the season to values below those observed at the beginning of the season (Graph 4.4). During the 2022-23 season, the price per tonne of barley varied between $578 (June 2022), $654 (September) and $510 (May 2023). The price per tonne of wheat varied between $585 (June 2022), $653 (September) and $525 (May 2023). In contrast to the change in the price of barley and wheat, the price of PKE decreased in the first half of the season (from $462/tonne in June to $395/tonne in December) and remained relatively stable in the second half of the season.
During the 2022-23 season the price of urea and Di-Ammonium Phosphate (DAP) fertilisers decreased steadily, especially in the second half of the season (Graph 4.5). The price per tonne of urea decreased from $1,454 in June 2022 to $1,330 in January 2023 and $1,049 in May 2023, this represented a 28 percent decrease in price during the season. The price per tonne of DAP decreased by about 10 percent, from $1,362 to $1,229. The price per tonne of superphosphate remained relatively constant, and although it decreased during the middle of the year (from $497 to $442), it returned to its opening price by May 2023 ($500).
4.4 On-farm Inflation
Statistics New Zealand compiles the movement of on-farm input prices in the Farm Expenses Price Index for dairy farms. The percentage movement of each category is weighted by a three-year rolling average of the contribution of each category to total expenditure. In the year to June 2023, the overall change in expense price index was a 7.4 percent increase. The price movements of individual categories for the 2022-23 season are shown in Graph 4.6. The categories that experienced price reductions were fertiliser (-1%), cultivation, harvest & purchase of animal feed (-3%), livestock purchases (-7%) and fuel (-21%). The most notable increase was for interest rates (+43%).
The Producer Price Index (Stats NZ NZSIOC Level 3, June 2022 to June 2023) decreased to 1.1 percent, from 16.5 percent the previous year (Graph 4.7). General inflation, as measured by the Consumer Price Index (CPI), decreased from 7 percent to 6 percent in 2022-23, but it was still high compared to other earlier seasons.