increase font size
Fonterra chief executive Theo Spierings makes a point to journalists while chairman John Wilson looks on.
Fonterra chairman John Wilson says he is absolutely confident dairying will recover back to sustainable pricing levels for farmers.
However, he says the recovery is taking longer than everyone anticipated.
The key factor remains the extra milk coming out of Europe. But Wilson told Dairy News that there are signs Europe's milk growth is slowing. Fonterra has been talking to European dairy co-ops and agri analysts, Wilson says.
Over the last two years milk production has ramped up in the EU, backed by higher prices and new investment on farms.
According to Fonterra's latest global update, production in the EU in December increased 5% over the same month the previous year.
The EU has seen growth in milk production in each of the nine months following the removal of quotas on April 1, 2015. Production for the 12 months to December increased 2% compared to the same period the previous year, or an increase of 3.2 billion litres. Over this period Ireland was up 13%, Netherlands 7%, Poland 3% and the UK 2%.
The EU is also pumping most of the extra milk into export markets. EU exports increased 10% in November compared to the same month the previous year. Increases were seen in most of the major dairy categories with only SMP decreasing over the month. Exports have increased 7% for the 12 months to November, largely as a result of fluid and fresh dairy up 15%, whey powder and SMP up 9%, and infant formula up 7%.
But now it is becoming uneconomical for farmers in some regions. Some EU countries are introducing caps on stocking rates to minimise damage to the environment.
Wilson says Fonterra now supports analysts' view that Europe's milk production growth will slow to 1.5% compared to global demand rising by 2-3%. Demand for more milk will come from China, Asia and Africa.
"Once we reach a position where demand is greater than supply, prices will improve," Wilson says.
However, he is unable to suggest a timeframe. "We are still confident prices will rise but picking the exact time period is hard."
Wilson says other factors, such as US milk production and geo-political events, are also impacting milk prices.
According to Fonterra's global update, US production in January was in line with the same month last year. While the rate of milk production growth has continued to slow, for the 12 months to January it remains up 1% on the same period last year.
But most US milk is used in the burgeoning local market.
In the past, much has been made of the concept of farm to fork, but an Australian expert in food science and marketing with experience in the dairy industry, Dr Angeline Achariya, says the reverse of this slogan is critical to win modern day consumers.
A four year trial has reaffirmed that mixing plantain into dairy pastures can help reduce nitrogen losses to freshwater while maintaining milk production and profitability, say researchers.
Fonterra has opened its upgraded Chengdu Application Centre, bringing New Zealand dairy expertise closer to customers in one of China's fastest-growing regions.
Tatua chair Stephen Allen says he leaves the co-op with a deep sense of gratitude for the people who have contributed to its success.
Federated Farmers president Colin Hurst and his family raised a glass of milk last week to toast the start of a new addition to their farming operation at Makihihi, south of Timaru.
Celebrating 50 years in the rural landscape of Central Canterbury and beyond, Ashburton-based Carrfields, has been the exemplar for all aspects of modern agriculture via its extensive range of services including supply, growing, agronomic advice and marketing.
For Taupiri dairy farmers Logan and Sian Dawson, their involvement in the NZ Dairy Industry Awards has been a key catalyst in the growth of their business - the experience helping shape how they approach the farm ownership pathway they are pursuing today.
West Otago dairy farmer Luke Kane has been awarded the 2026 Rabobank Dr John Morris Business Development Prize.
OPINION: As the general election approaches, political parties are churning out policies in the hope of attracting more votes.
An LIC bull, Tronnoco AR Sadio-ET S3F, bred by Tony and Keri O'Connor of Tronnoco Farming Co Ltd near Timaru, has won the 2026 Mahoe Trophy.
With forecasters advising El Niño conditions will develop through winter and strengthen into spring and summer, Ballance Agri-Nutrients is encouraging farmers and growers to think ahead about nutrient planning and be prepared to work around challenging weather conditions.
