Friday, 02 June 2017 07:55

Back in the black — Editorial

Written by 
Andrew Hoggard. Andrew Hoggard.

Dairy has got its mojo back. After two challenging seasons, last week brought two items of great news for Fonterra farmers.

The current season’s farmgate milk price jumped 15c to $6.15/kgMS and, with Fonterra’s forecast dividend of 40c a share, the co-op’s farmers can look forward to a $6.55/kgMS payout for the year to July 31.

Fonterra also forecast an opening price of $6.50/kgMS for the 2017-18 season, starting June 1.

This is music to farmers’ ears: the improved forecasts follow two very poor seasons in 2014-15 and 2015-16, when farmers struggled to break even. At $6.50, most farmers will be set up for a season in the black.

Farmers were expecting Fonterra to deliver good news; five consecutive Global Dairy Trade auctions had hoisted the price index and, crucially, the return for whole milk powder, the price setter.

The solid payout figures are not only cheering-up farmers and their families; rural towns will also get a much-needed financial boost.

Federated Farmers says based on Fonterra’s forecast ($6.15) and current production cycles, an extra $280 million is expected to flow through the New Zealand dairy sector and wider provincial communities this season.

Given the amount of milk we are producing at present this means the average dairy farm will be $23,000 better off. This will enable investment in farm businesses and infrastructure, little seen during the last two tough years.

And Feds dairy chairman Andrew Hoggard points out that farmers will, importantly, also have more money for pressing on towards their environmental goals, which many have kept in view despite their modest returns.

The New Zealand dairy sector employs at least 40,000 workers and is widely acknowledged as a large and crucial contributor to regional economies. So now the regions and their towns and service centres will again be boosted as encouraged farmers resume spending.

All this said, Fonterra and its farmers are wary of the fickleness of the global dairy trade. Farmers will be mindful of the recent downturn and the short-notice volatility of markets. 

But for now, farmers will have a bit more money to spend and rural NZ will reap the rewards.

 

More like this

Election chill dampens mood in farming

Although the National Party ended election night the largest party by a healthy margin, its margin wasn’t big enough (unlike 2008, 2011, and 2014) to make its return to the Treasury benches a foregone conclusion.  

Fonterra eyes 3% growth

Fonterra chairman John Wilson says weather conditions over spring will be crucial to this season’s milk production.

 
 

» Latest Print Issues Online

Milking It

Fewer cows, more Canadians

Canada now has fewer cows than at any time since the early 1990s and, say analysts, it’s partially millennials’ fault.

P... p... pea milk

They say it’s never been easier to avoid dairy, thanks to an ever-expanding array of plant-based ‘milk’ -- rice, soy,…

 

» Connect with Dairy News

 
 

Markets

South Island wool sale eases

South Island wool sale eases

The 4700 bales on offer saw a 74% clearance with mixed results, however all prices paid locally are still above…

Wool continues to ease

Wool continues to ease

The 7250 bales of North Island wool on offer saw a 72% clearance with most types easing further.