The values for Dairy this year are a mixed bag, with some values increasing against the general trend of decreases.  The overall values for dairy have held up far better than sheep and beef values.

This has occurred for two reasons, firstly R1 and R2 values are influenced by live export demand, with live exporters securing dairy heifers at a premium to the local market.  Second, the demand for replacement herds following Mycoplasma Bovis has had a supportive effect on values

A Mixed Age Dairy cow now has a National Average Market Value of $1,525 compared to $1,513 last year – a rise of 0.8%.  Rising two-year heifers have dropped by a little over 4% to $1,222. Rising one-year heifers have increased by 7.59% to $737.

The impact of COVID-19 has not been as widely felt in dairy values compared to sheep and beef, but has created significant uncertainty for the future outlook in terms of the farmgate milk price and consequently market values for dairy cattle.

COVID-19 is likely to see some retrenchment in international markets, which could see demand for traditional New Zealand dairy products fall, but at the same time there is increased demand for some of our niche products, particularly for pharmaceuticals.  It remains to be seen what impact this will have in the short term.

Changes to the proposed water quality standards have provided some relief for farmers, and dairy farmers in particular.  However, water quality standards will continue to pose a risk to production capacity where nitrogen fertiliser is essential to maintain milk volumes.  Labour shortages are also likely to create issues due to the unavailability of migrant workers as a result of COVID-19.