Seasonal milk pricing: "holy smoke or holy grail"

Abstract

Historically the New Zealand Dairy Industry has paid seasonal milk producing farmers the same price for milk irrespective of the month in which it was produced. Over the last ten years a number of attempts have been made to review this practice. Some schemes have been put in place that more closely reflects to the farmer the value of the milk in the month in which it was produced. Many of these have been short-lived although the failure was not always brought about by the scheme itself. The issue of seasonal milk pricing is currently being debated as New Dairy Group have indicated that it is reviewing its payment system. Some farmers have also raised the prospect of seasonal milk payments improving on-farm profitability. However, very few attempts have been made to evaluate the benefits of seasonal milk payments starting on the farm and through to the market. This is important to the NZ Dairy Industry as the value chain from the farm to the market place is co-operatively owned and any effects at one point are likely to impact elsewhere in the business. The aims of this project are to review previous work and research in the area of seasonal milk payments, and then to make an attempt to model the outcomes of seasonal milk pricing on one of the farms owned by Puketiro Farm Partnership.