At its media conference Fonterra provided ample context so the assembled hacks might see the silver lining, not just the cloud. For example, chairman John Wilson said the new season forecast was historically high, but reflected current market conditions. “Our farmers understand the realities of dairy commodity price cycles, and will exercise caution at this early stage in the season,” he said.
He could have pointed out that the opening forecast of $7.00 is up $1.20 on the 2012-13 season that ended at $5.80/kg, or $6.12/kg including the 32c/share dividend.
Bank economists also did their best to add context to the reportage, although these comments were largely buried as metro media strained to accentuate the negative.
ANZ’s statement was balanced, and consistent with the other banks: “On the face of it the decline in the payout between years is a drag on the economy over the coming year, but that dynamic is exaggerated.” The coming year’s payout will still be the fourth-highest on record, and from a spending point of view farmers will be in a similar cashflow situation.” ANZ also said average farm profitability is still expected to be nearly $3500/ha – nearly three times the seven-year average of $1150/ha.
Plenty of potential for a positive headline then, but Fairfax et al think the only good news is bad news.
