#Fonterra payout a welcome confidence boost

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Fonterra’s record milk price opening forecast for the new dairy year is just what the doctor ordered for a $14 billion industry still bleeding income from the drought.
But as an optimism recharger, it’s being welcomed as priceless.
The dairy company’s $7/kg milk price forecast for the new season starting Saturday surpassed economists’ expectations and should seal the success of next month’s agribusiness extravaganza, the National Fieldays in Hamilton.
If the forecast is not nobbled by any global or weather shocks, it will mean a $12.3 billion injection for the economy over the next 18 months – $2b more than for the season just ending, said BNZ senior economist Doug Steel.
But as Steel and Ross Nesdale, marketing manager of Power Farming, one of the country’s biggest tractor and farm equipment companies, noted, it is of even more value as a confidence booster.
The cream on top is that to help ease cashflow pressure on farmers, Fonterra will unusually advance 71 per cent ($5/kg) of the $7/kg early in the season.
Industry organisation DairyNZ has calculated that through extra feed costs and lost milk production, the average North Island dairy farmer lost about $100,000 in farm income this season, some much more.
This is why industry leaders such as DairyNZ chief executive Tim Mackle do not expect farmers to be breaking out the champagne – but those who have run up big overdrafts, buying extra feed on no milk income, may be able to sleep easier.
The strong milk price opener is thanks to continuing robust international dairy prices, which have been boosted by New Zealand’s drought.
For Kiwi consumers there is a sting in the tail. Prices of fresh milk, yoghurt and specialty cheeses will have to rise at some point, said Fonterra Brands NZ managing director Peter McClure.
This is because Fonterra, which collects about 90 per cent of the country’s raw milk, charges his division the same price for milk as international prices earn.
But McClure said given Fonterra Brands was trying to halt falling domestic consumption of milk through milk in schools and community initiatives, it was taking its time evaluating the market.
«We are not going to lurch into anything silly.»
National Fieldays chief executive Jon Calder said the milk price announcement was positive for the four-day Mystery Creek event, starting on June 12.
Despite the drought’s economic impacts, visitor ticket sales were slightly ahead of last year’s, which at 128,500 were the second highest on record.
Fonterra chairman John Wilson said the bumper opening milk price was not only because of strong global prices, which had risen 60 per cent in the past year, but also possible because of Fonterra’s strong balance sheet.
It was an acknowledgment that the company’s 10,500 farmer shareholders had had a tough time this year.
Wilson cautioned farmers to be careful in managing their budgets around the current $5.80/kg milk price because of the significant fall in milk production.
 
Source: Stuff

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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