An ability to manage volatility will determine the success of businesses and industries in these turbulent economic times. Speaking at the recent Irrigation NZ conference in Christchurch, Rabobank senior analyst Hayley Moynihan said uncertainty in the global economy breeds volatility reports Countrywide. But it also provides an opportunity for people who manage risk well and adapt to markets quickly.

The benefits of sound risk management and market adaptation may not always be in the form of premiums, they just may mean less volatility in the business. She sees the opportunity for this country will be in its ability to lift productivity while keeping costs under control. As a food producer and exporter, this country is well placed to weather the global economic storm, however the market requires food that is affordable and NZ needs to be mindful of this.

There will be winners and losers from the present global credit crisis. But how it impacts on farmers will depend more on the strength of their balance sheet and less on external factors such as the exchange rate or the dairy payout, Rabobank NZ general manager Ben Russell said.

Mr Russell told about 200 southern dairy farmers at the launch of the global dairy report in Invercargill reports the Southland Times, that the current credit crisis was the worst since the Great Depression of the early 1920s. Mr Russell said there would be “far fewer” farm sales and farmers who relied on achieving capital gains in land would be disappointed as moderate price drops were expected. “You don’t want to be in the business of selling property,” he said. However, farmers with strong balance sheets would have an opportunity to grow their business, he said. “There will be weaker sellers out there,” he said.

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The global dairy market has entered a new era with growing world consumption of dairy products, combined with reducing growth in supply, expected to underpin sustained higher, though volatile, prices into the future, according to a recently-released industry report.

The report by leading agribusiness lender Rabobank, says despite current short-term challenges facing the sector – including a recent moderation in dairy commodity prices – the medium to longterm outlook is robust, with the market for dairy moving into a fundamentally changed era.“In this new era, global demand for milk at any price point has shifted upwards, based on income growth in many parts of the world, and favourable demographic and cultural trends that have increased the number of people that are aware of dairy, have access to dairy, want to consume it and can afford to do so,” the report says.

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