NEW ZEALAND – Dairy farmers are celebrating two pieces of good news. The week started with a six per cent increase in the online dairy auction, GlobalDairyTrade (GDT) and ends with Fonterra Cooperative Group receiving clearance to buy the milk processing assets of New Zealand Dairies (in receivership).
â€œA hat trick of consecutive GDT increases is topped off by a local foreign asset coming into New Zealand hands,â€ says Willy Leferink, Federated Farmers Dairy chairperson.
â€œIt is of huge relief to farmers and sharemilkers caught up in the receivership, that Fonterra can now complete its purchase of the Studholme plant. Everyone can plan with greater certainty for the future and that is vital.
â€œIt also comes in a week when dairy prices seem to have firmly come off the floor. Given recent downward payout revisions by Westland and Fonterra this is a huge shot in the arm.
â€œThe extent of drought, especially in the United States, means commodity markets realise dairy production will suffer from exporting countries dependent on feedgrains. The United States is the worldâ€™s third largest dairy exporter and runs a high-input system.
â€œUnlike a factory that can be switched on or off, reducing a farmâ€™s capital stock takes as much as two seasons to recover from. The tail from this drought will be felt well after it finishes.
â€œIt is why our heart goes out to our farming colleagues in North America because we know what they are now going through.
â€œOf course, the nagging thought going through our minds is that it is still very early spring here and we have the El Nino factor. While positive to see commodity prices trending upwards we need our weather to play ball.
â€œNot only the weather must I add, but the policies and spending choices by central and local government too,â€ Mr Leferink concluded.
Source: The Dairy Site