Friday, 14 June 2019 13:43

Fonterra hails first fixed milk price event

Written by 

Fonterra’s first fixed milk price event attracted 215 farms, offering over 11 million kgMS to the co-op for $6.75/kgMS.

 The co-op says the strong participation shows farmers appreciate having a tool that can help reduce their risk to milk price volatility. 

There was strong interest shown from smaller farms; over 60% being smaller farms producing less than 200,000 kgMS per season.  

Participating farms ranged from those that produce less than 40,000 kgMS to those that produce 1 million kgMS a season.

Fonterra’s Group Director of Farm Source Richard Allen says it was great to see a lot of smaller farms participate, as well as farms from right across the country.

“Ultimately, it’s not about winning or losing but about having a price you can bank on,” he says.

“While most farms can operate in a volatile market, some farmers – maybe young or near retirement – can’t or aren’t willing to take on as much risk. Without a way to reduce their risk, these farmers may not enter dairy or may choose to leave the industry. If the co-op can help them reduce their exposure and stay in the cooperative, with no downside risk to other co-op members, it’s a win-win.”

Allen urged those farmers on the fence to have a closer look at Fixed Milk Price.

“There’s a perception out there that tools like these help only the large farms, but as this event showed, that’s clearly not the case.”

About 60% of participating farms applied for less than 20% of their farm’s estimated production: 30% of participating farms can be considered medium sized (200,000 to 400,000 kgMS/season), and just over 10% can be considered large (over 400,000 kgMS/season).

Fonterra says there were no major issues with using the online application process were recorded.

The co-op made 15 million kgMS available for the first monthly event so all applicants will receive the fixed price for the volume they requested.

The June event was the first opportunity to participate: Fonterra expects to hold up to 10 monthly events per year and offer up to 5% of its total New Zealand milk production.  

Fonterra says the service fee paid for by participants covers the administration of the programme and the cooperative will have greater certainty on margins by locking in fixed contract prices with its customers.

“This means that even if the milk price drops, we will continue to receive the fixed price for these products, which supports the Fixed Milk Price and ensures there is no risk to the co-op,” Fonterra says.

More like this

Independence necessary — Editorial

OPINION: News that a group of Fonterra farmers want an independent review of the Fonterra shareholders council may well be the beginning of the end of its ‘lapdog’ reputation.

Fonterra lifts milk price

Good news for Fonterra farmers – the co-op is increasing its 2019-20 forecast farmgate milk price by 30c/kgMS.

Watchdog or lapdog?

More Fonterra farmers are joining the call for an independent review of the co-op’s shareholders council.

Lack of interest

The final list of candidates for Fonterra’s board election is out. Surprisingly only one candidate came through the farmer nominated process.

Watchdog or lapdog?

At last we see Fonterra shareholders asking questions about its supposed watchdog, the shareholders council.

» The RNG Weather Report

Featured

A big future ahead

Age hasn't been a barrier for young vegetable grower of the year Austin Singh Purewal.

 

Sheep and beef doing its bit

No increase in stock numbers in the sheep and beef sector is anticipated as the industry moves towards carbon neutrality, says Beef + Lamb NZ head of nutrition Fiona Windle.

Fonterra lifts milk price

Good news for Fonterra farmers – the co-op is increasing its 2019-20 forecast farmgate milk price by 30c/kgMS.

» The RNG Weather Report

» Latest Print Issues Online

Milking It

Lack of interest

The final list of candidates for Fonterra’s board election is out. Surprisingly only one candidate came through the farmer nominated…

DairyNZ poll

Talking about elections, the DairyNZ board election is shaping up to be a much more exciting affair.

 

» Connect with Dairy News