Why Fonterra accepted defeat in the dairy aisle
OPINION: Fonterra's sale of its consumer dairy business to Lactalis is a clear sign of the co-operative’s failure to compete in the branded consumer market.
Federated Farmers dairy industry chair Andrew Hoggard made the comment as Fonterra trimmed its 2015-16 season from $4.15/kgMS to $3.90/kgMS
"More and more farmers will be really feeling the pressure," says Hoggard.
"This cut , which was not unexpected given the string of low auction prices, means we need to be even more pro-active around budgeting and scenario planning, and make the most of the support available from DairyNZ, accountants and farm advisors."
Federated Farmers and DairyNZ will this week commence a series of six regional meetings for sharemilkers and their farm owners. Sharemilkers, particularly those who do not own their herd, are the most vulnerable in the current market conditions.
"Our message to these guys is to stay the course if you possibly can. Some flexibility from farm owners can go a long way, so getting both groups in one room to talk through the options can only be a good thing," says Hoggard.
Hoggard is also calling for the Reserve Bank to cut the official cash rate this Thursday.
"There are already plenty of reasons for the Reserve Bank to cut the OCR. This is another one. Anything that can ease the pressure on farmers' bottom line will help get as many dairy farmers as possible through the current season. There will be a new level of resilience that comes out of what we're experiencing, but that will be lost if farmers are forced out of the industry. Economic factors support a cut in the official cash rate and that would be a welcome boost after today's news."
