Fonterra’s $3.2b capital return to farmers set to boost rural incomes and NZ economy
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
Just four years earlier, at age 22, he'd put everything on the line to take an opportunity as a lease farmer on a dream property near Drouin in Gippsland, Victoria, and he'd been slogging away through low milk prices and poor seasons ever since.
With an average farmgate milk price of A$5.60/kgMS, the 2015-16 season had been playing out quite well until Fonterra followed Murray Goulburn's lead and cut it to A$5.
''We got the email and two days later the cows were gone,'' Nelson says.
The bottom line said it all.
''That kind of budget is thousands of dollars. And you don't even need to sit down to work out that 'this is going to cost me'.''
He didn't have the equity or the reserves to support a price lower than the cost of production.
During his first three seasons he barely broke even.
''A good year would have set me up in the industry so that I would be able to weather the hard times. But I didn't manage to last long enough to get one of those," he says.
Despite the emotion of ending what had been a lifetime dream, he approached it with a clear head.
"If I had kept going I would have been liquidated. I could have held on and waited for a nice opening price or the possibility that the opening price was good. Thank god I didn't.''
Nelson says he was never interested in taking a support loan from Fonterra.
''They are double dipping on their money there.
''You go to the bank to borrow money, you don't borrow money from people who say you owe them money and then claim you have to pay interest back on that loan they've given you, for the debt you shouldn't have.''
He knows all business decisions come with risk, especially when you are starting out.
But Nelson says he would like to see the government hold Murray Goulburn and Fonterra to account for pushing their debt back on to farmers.
''Murray Goulburn need to just cop it on the chin and take out a loan themselves; their business needs to pay that off, not the farmers. Because if I make an error on the farm myself, if I spray a paddock with the wrong thing, if I put a crop in and it fails, that's my responsibility. Do I then send a bill up the line to Murray Goulburn or Fonterra?
"They've turned around and done exactly that but in the opposite direction."
For now, Nelson is working on a family friend's dairy farm, putting money back in the bank. He says he's not ready to start planning for the future, but it's unlikely he will again try to chase his dream of owning a dairy farm.
But he's happy to share his story with others.
"I'm not too proud to say I'm struggling. I'm despondent right now but I know I'll get back on track, I'll get motivated again. It will fall into place. Everything happens for a reason.''
He's also proud of what he achieved.
"I know that I was a good farmer. I know I had my budgets and I'm proud of what I was able to achieve in a short time; but at the end of the day it's been taken out of my hands and I've been thrown under the bus."
