Tuesday, 11 December 2012 08:59

Feds welcome Fonterra revision

Written by 

Fonterra's dairy farmer supplier-shareholders are welcoming an early Christmas gift, with the cooperative lifting its 2012/13 forecast payout by 25 cents per kilogram of milk solids (kg/MS).

 

"This will be a huge relief putting clearer air between our costs and projected revenue," says Willy Leferink, Federated Farmers Dairy chairperson.

"I must confess we were expecting this revision and I imagine the markets were as well. It was probably a case of getting the Fonterra Shareholders Fund away first.

"As Fonterra noted, GlobalDairyTrade prices have increased by an average of 17.7% since August. Over recent times farmers had seen more gains than falls on the platform too."

But before people end up confusing revenue with profit, Leferink says the Ministry for Primary Industries National Dairy model had forecast a cash deficit of $19,000 inside the farm gate this season.

"Fonterra's revision upwards looks like turning that from red to a modest black. The cash surplus is more likely to be around $21,000 if the current forecast sticks," he says.

Farm working expenses and interest payments now represent $4.99 kg/MS, he says. On the old milk price of $5.25 kg/MS that didn't leave much freeboard, if any.

"The latest milk price revision of $5.50 kg/MS is also a long way short of the $6.08 kg/MS farmers were paid for their milk last season," Leferink says.

"Federated Farmers advice is to maintain austere budgets and prioritise spending that saves your farm business money, like your Federated Farmers membership. There could be economic shocks to come like what is brewing in the United States with its 'fiscal cliff'.

"We also need to be mindful that without wide scale water storage, the Kiwi economy is acutely vulnerable to the vagaries of rainfall in some of our key farming areas. There are pockets of dry now appearing too.

"Having seen one headline wax-on about a six-figure payout, I must again caution not to confuse revenue with profit. This expected revision is welcome and is great for morale before Christmas but it will not set the tills alight," Leferink says.

More like this

Top student off to co-op

Massey University's top agricultural student for 2020 is off to join Fonterra and continue his interest and passion for the dairy industry.

Council admits its failures

The Fonterra Shareholders Council admits that it’s failing to achieve the trust and respect of its farmers.

Payout lifts

The forecast milk payout for this season has gone up by 40c and Fonterra farmers can thank Chinese consumers.

Featured

 

Govt link key to DairyNZ strategy

DairyNZ chairman Jim van der Poel says a constructive relationship with the Government is vital for the industry-good organisation.

Top student off to co-op

Massey University's top agricultural student for 2020 is off to join Fonterra and continue his interest and passion for the dairy industry.

National

Machinery & Products

Let aura feed the mob

In a move that appears to have been repeated by many equipment manufacturers, Kuhn confirms it currently working on several…

Battery charger range recharged

Projecta's popular ‘Charge N’ Maintain’ automatic battery charger range has now been recharged – with the introduction of new features…

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Eyes have it

OPINION: Painting eyes on the backsides of cows could save their lives, according to new research by Australian scientists.

Walkers versus cows

OPINION: A North Yorkshire teacher has become at least the second member of the public to be trampled to death…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter