increase font size
Federated Farmers Dairy chairman Andrew Hoggard.
Dairy farmers are welcoming the launch of milk price futures and options contracts.
Federated Farmers Dairy chairman Andrew Hoggard says the contracts won't be for everyone, but this will give NZ dairy farmers a risk management tool that makes their businesses less susceptible to large price fluctuations.
"It will put us on a more level playing field with most of our international competitors who already have this sort of tool available to them," says Hoggard.
"Price volatility within a season is extremely difficult to address because production is based on a biological system, so having certainty about the price you will receive at the end of the season will remove a lot of pressure for dairy farmers."
Hoggard urged dairy farmers interested in the NZX milk price and futures options contracts to get professional advice.
"While it will provide farmers with certainty on price there's always someone on the downside when futures are traded. Farmers must get sound independent advice so that they're aware of how this approach changes their risk profile and what this might look like for them at the end of the season."
NZX has formal approval from the Financial Markets Authority and the Reserve Bank of New Zealand for its proposed futuers trading, expected to launch next month.
NZX head of markets Mark Peterson says this is a milestone in commodity risk management for NZ's agricultural sector.
"With 95% of their product sold overseas, NZ dairy farmers are highly exposed to the global dairy market. They have few tools available to help them manage milk price risk which leaves farmers at a disadvantage to their overseas counterparts in the US or Europe, who have access to a wide range of risk management tools.
"Although futures and options contracts will not be suited to everyone, they are a key step towards building a meaningful risk management culture."
Once the contracts are available for trading on NZX's derivatives market, all parties will be required to trade through an NZX broker.
OPINION: Recent media commentary from Southland Federated Farmers has raised concerns among our rural communities, particularly around Environment Southland’s approach to winter grazing inspections and nitrogen reporting. But let’s be clear, much of what’s been said simply doesn’t reflect reality.
OPINION: Environment Canterbury's (ECan) decision recently to declare a so-called “nitrate emergency” is laughable.
A shameless political stunt is how Federated Farmers is describing the Canterbury Regional Council decision to declare “a nitrate emergency” on the back of its latest annual groundwater quality survey.
Federated Farmers say Environment Canterbury's decision to declare a 'nitrate emergency' is a shameless political stunt that won't help anyone.
Farmers want the Government to scrap controversial freshwater rules that "put river spirits and ideology ahead of practical water use", says Federated Farmers board member Mark Hooper.
Listed rural trader PGG Wrightson chair Garry Moore and his deputy Sarah Brown have been voted out by shareholders.
It was love that first led Leah Prankerd to dairying.
DairyNZ has appointed Dr Jenny Jago to a newly created leadership team role - science partnerships & impact advisor - as part of a strategic refresh of the organisation's science leadership.
OPINION: Public pressure has led to Canterbury Police rightly rolling back its proposed restructure that would have seen several rural police stations closed in favour of centralised hubs.
When I interview Rachel Cox, she is driving - on her way to her next meeting.
With Fonterra's UHT plant at its Edendale site less than a year from completion, demand continues to grow for products the plant will produce, such as Anchor Whipping Cream.
OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.
OPINION: Politicians and Wellington bureaucrats should take a leaf out of the book of Canterbury District Police Commander Superintendent Tony Hill.
