Farmers urged to be ready for commodity price falls

Farmers should act now to ensure that their profits are sustainable in light of warnings the commodity price boom is coming to an end, according to strategic farming business specialist Peter Floyd.

Prospects for farming are starting to look less bullish as the slowdown in the US economy threatens to end the commodity price boom that has underpinned dairy farmers' incomes.

The ANZ world commodity price index last week showed a 1.7% dip in dairy prices in December 2007, the first decline since August 2006. And commentators are warning that Asian markets - up to now a ready recipient of much of New Zealand's recent dairy exports - would start to balk at paying high prices as they felt the impacts of a slowdown in the Chinese economy.

Peter Floyd, Managing Director of eCOGENT, says low lamb and wool prices, the high Kiwi dollar, oil pushing US$100 per barrel and an extended dry period forecast for much of the country will also put increasing pressure on farmers' livelihoods.

"Farmers need to act now and work smarter, not harder, by putting strategies in place to drive net profit in order to safeguard their future," he says.

"Farmers need to protect their businesses against falling profits by re-evaluating their pasture management and stock policies. Measuring and forecasting daily profit is another critical tool for ensuring a sustainable business, no matter what the market is doing," Floyd says.