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Herd scheme values for dairy businesses announced

  Aug 03, 2022

Herd scheme values for dairy businesses announced

Herd Scheme Values For Dairy Businesses Announced

Inland Revenue have recently announced this year’s livestock Herd Scheme Values. The Herd Scheme Values are the National Average Market Values as determined by a process involving a review of the livestock market as at 30 April.

This year the values for diary have seen a strong increase across all types with values being the highest since 2014. The values for dairy this year have seen a strong increase across all types with values being the highest since 2014. Values for R1 heifers have rebounded strongly from last year’s drop. The impact of change to the live export rules in 2023 is offset by surging commodity prices and demand for high quality replacements.

A Mixed Age Dairy cow now has a national average market value of $1,697 compared to $1,528 last year – a rise of 11%. Rising two-year heifers have increased in value by 14%, as have R1 heifers to $1,472 and $809 respectively. 

Continued restrictions caused by Covid-19 have not resulted in a drop in demand for dairy products, with most countries ending restrictions part way through the 2022 income year. The farm gate milk price for 2022 is forecast to be a record for Fonterra, early indications for the 2023 are very favourable and could see the 2022 record being broken. Increases in commodity prices have also seen significant increases in inputs, particularly in relation to imported fertiliser. 

Continued cost increases will put pressure on farming businesses even with record dairy prices. Uncertainty continues in relation to environmental changes with carbon reporting requirements for all farmers remaining unknown, even though all farmers need to ‘know their numbers’ by the end of 2022.

Availability of labour remains a significant issue for the 2023 season even though borders have reopened. This will put significant pressure on the farmers when the new milking season starts. Total cow numbers have continued to fall, but per cow production continues to increase which is a positive outcome both for labour units required, but also environmentally.

Consider your livestock election choices carefully. We can discuss your valuation options with you on review of your 2022 Financial Statements and Taxation Returns.

If you would like more detailed information about the Herd and NSC Livestock Valuation methods or about the values themselves, please contact us.

Happy Calving Season

Lastly, we would like to wish all our dairy farming clients a safe and successful calving season ahead. Spending time with your team prior to calving will help you create a plan that works for everyone. If you put your team (that includes you and your staff) first, then the positive results will follow. While you can’t control the weather, a team that feels appreciated are more likely to have the right attitude and skills, they can make the difference between a crazy calving and a manageable one so again focus on people and reap the benefits – both in calving and for the rest of the season.

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