Tuesday, 31 May 2016 07:55

Long-term looks good

Written by 
Fonterra chief executive Theo Spierings. 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."

More like this

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

Editorial: A new era for two co-ops

OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.

Should co-op sell its consumer brands?

OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.

Featured

'One more push' to eliminate FE

Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.

Winston Peters questions Fonterra divestment plan

Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.

National

Machinery & Products

New McHale terra drive axle option

Well-known for its Fusion baler wrapper combination, Irish manufacturer McHale has launched an interesting option at the recent Irish Ploughing…

Amazone unveils flagship spreader

With the price of fertiliser still significantly higher than 2024, there is an increased onus on ensuring its spread accurately at…

» Latest Print Issues Online

Milking It

Tough times

OPINION: Dairy industry players are also falling by the wayside as the economic downturn bites around the country.

MSA triumph

OPINION: Methane Science Accord, a farmer-led organisation advocating for zero tax on ruminant methane, will be quietly celebrating its first…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter