The latest price for milk powder at auction is down to $5.30 a kg of milk solids. Milk solids means milk powder. Last season the price was $8.40. The reason for the drop in prices is partly because China has been buying plenty of milk powder and does not need more at the moment. Also Russia is not buying dairy products and there is more international competition from Europe and other countries. Our high kiwi dollar is probably another reason.
The average size of a dairy herd of cows is 323 and the average amount of milk solids per cow during the season is 330kg. This means an average payout for a dairy farmer will be about $330,000 less than last season. It will be difficult for farmers to find money for machinery like tractors or irrigators. Businesses which sell products to farmers will be affected too.
Why does a drop in the price of dairy products matter to us? Dairy products are our biggest export, bringing in $13.3 billion to our economy. A lower price for milk solids could reduce this by $5 billion. Farmers also pay taxes but with reduced income, they will pay less tax. The kiwi dollar could also drop.
Listen to September 22nd 2011 to hear more about milk powder prices.
Vocabulary
• payout – pay sent out to dairy farmers
• irrigators – big machines which water the ground