Fonterra’s milk supply in September was 8.7% below September 2014, while the supply from June to September was 5.3% lower than the previous year.

The cut in production comes as a direct result of farmers reducing supplementary feeding after the co-op announced the low milk price forecast of NZ$3.85/kg milk solids (15.9c/l) at the start of the season. Fonterra has since raised the milk price forecast to NZ$4.60/kg milk solids (19c/l) following dairy product price increases at consecutive Global Dairy Trade (GDT) auctions.

Nigel Brunei, a market director with OMF (a New Zealand financial brokerage firm), said: “When Fonterra announced that the payment was going to under NZ$4, that caused a lot of farmers to have a really good look at their costs. They culled cows and reduced costs and they looked to reduce milk production. They reduced production because you can’t keep producing milk at a loss. This is the first indication that milk production is down and it’s down substantially.”

The cold, wet weather in New Zealand led to poor grass growth in some areas, which added to the woes of dairy farmers.

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