increase font size
Fonterra chief executive Theo Spierings.
Fonterra chief executive Theo Spierings says the long term fundamentals for global dairy remain positive.
Demand is expected to increase by 2-3% a year due to the growing world population, increasing middle classes in Asia, urbanisation and favourable demographics.
"In addition to global supply growth slowing, we are seeing imports into major dairy markets improving compared to a year ago," he says
"China dairy consumption growth remains positive and its demand for imports has been steady over recent GlobalDairyTrade events.
"We expect these drivers to result in the globally traded market rebalancing.
"We will remain focused on securing the best possible returns for our farmers by converting their milk into high-value products for customers around the world."
There is no change to the current 2015/16 season forecast farmgate milk price, which is being held at $3.90/kgMS.
Tough number to hear
It's a tough number for farmers to hear but it's the reality of where the market is at present, says Shareholders Council chairman Duncan Coull.
"The signal farmers have received from their board is that while there are encouraging signs and the market should move in a positive direction over the next 12 months, it will be slow to do so.
"However, we farmers are well tuned to volatility... and will have this front of mind as we work through our budgets for the coming year."
Coull says the $4.25/kgMS is a forecast for a season not even begun.
"So, as we move through the year it is vital that farmers continue to read the signals being delivered by the market and our co-op, and act appropriately.
"Fundamental to this is Fonterra communicating any significant pricing shifts to our farmers in a timely and transparent manner."
Coull also acknowledged that the opening advance rate of $3.0/kgMS indicated the strength of the co-op's balance sheet.
"Farmers can look to this as an indication that their business is in a strong position, and that their board is aware of the current situation onfarm and has a desire to relieve cashflow pressure where possible.
"However, the current environment is placing additional stress on us all, so [we must] continue to stay engaged in our communities and support our friends and neighbours."
In a follow-up to this old mutt’s piece two issues ago about Fonterra directors getting to grips with the co-op’s financial state and loudly sharing their dismay in the Koru club, another of the Hound’s spies has passed on more news in the ‘Fonterra director watch’ category.
Fonterra says there’s an urgent need to improve return on capital invested in the co-op by farmers and unit holders.
Fonterra has taken a $126 million hit over the sale of its stake in Venezuelan consumer joint venture, Corporacion Inlaca.
Fonterra is pulling out of a European joint venture as part of its portfolio review following last year’s disastrous financial results.
Fonterra says it has returned to profitability with a net profit of $80m for the first half of the 2019 financial year.
Chinese dairy giant Yili will pay $588 million for dairy co-op Westland Milk, it was announced overnight.
A significant number of lifestyle block owners may have to pay a capital gains tax on their family home, warns…
The proposed sale of Westland Milk to Chinese company Yili is causing alarm among social media users.
Traditionally, bovine viral diarrhoea (BVD) has been considered a disease of cattle. But lately it has been found to cause infections…
Landcorp is paying members of its contentious environmental reference group (ERG) $1500 a day each – far more than other…
More questions are being asked about the Government’s contentious $10 million loan to Westland.
Cows and bulls searching for ‘moo love’ now have a mobile app to help their breeders.
