Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
The favourable forecast wasn’t unexpected and reflects the recent trend of increasing global dairy prices, which has fostered more confidence amongst the markets.
“This is great news and comes after a turbulent few years where the industry has been under the pump,” says Andrew Hoggard, Federated Farmers dairy chair.
Based on Fonterra’s forecast and current production cycles, about $280 million dollars is expected to flow through the New Zealand dairy sector and provincial communities this season.
“If you take on board the amount of milk we are producing at present this means the average dairy farm will be about $23,000 dollars better off.
“This will enable farmers to invest in their business and farm infrastructure, which has perhaps not been a priority in the past two years in trying to survive the challenging times.
“We’ll also have more money to [spend on achieving] our environmental goals, the focus for many farmers in spite of modest returns from their businesses.”
NZ dairying employs at least 40,000 workers and contributes much to regional economic development.
“The regional economies and service centres will also be boosted as farmers prepare to spend again, now they are more certaint about their businesses.”
Fonterra’s predicted payout of $6.50/kgMS would mean a further $650m going into provincial economies.
