Fonterra’s $3.2b capital return to farmers set to boost rural incomes and NZ economy
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
Fonterra farmers start the new season this week on a high note.
Last week the co-operative announced its 2022/23 opening forecast farmgate milk price, set at a range of $8.25 - $9.75/kgMS, with a midpoint of $9/kgMS.
The co-op is maintaining its 2021-22 forecast price of $9.10 - $9.50/kgMS. At a midpoint of $9.30/kgMS, this would be the highest forecast milk price in the co-op's history.
Chief executive Miles Hurrell says this would see the co-op contribute almost $14 billion into the New Zealand economy through milk price payments.
Dairy prices have eased in recent Global Dairy Trade (GDT) auction, however prices are expected to remain at historically high levels due to subdued supply and surging demand.
China's recent lockdowns of cities hit by Omicron has created a dip in demand but this is expected to be short lived.
Hurrell says the strong opening forecast reflects continued demand for dairy coupled with contstrained global supply.
"The long-term outlook for dairy remains positive, despite recent geopolitical and Covid-19 related events impacting global demand in the short-term.
"On the supply side, growth from key milk producing regions is expected to remain constrained as high feed, fertiliser and energy costs continue to impact production volumes.
"These demand and supply dynamics are expected to support dairy prices in the medium to long-term."
But Hurrell warns that we are in an increasingly volatile global environment and are managing a wider range of risks than usual.
This includes the potential for further impacts from Covid-19, financial markets and foreign exchange volatility, global inflationary pressures, a tightening labour market, increasing interest rates, geopolitical events, as well as the possible impact on demand from higher dairy prices.
"This is why our 2022-23 forecast range is so wide at this point in the season," he adds.
According to ASB, Fonterra's plan to sell it's Anchor and Mainlands brands could inject $4.5 billion in additional spending into the economy.
New Zealand’s trade with the European Union has jumped $2 billion since a free trade deal entered into force in May last year.
The climate of uncertainty and market fragmentation that currently characterises the global economy suggests that many of the European agricultural machinery manufacturers will be looking for new markets.
Dignitaries from all walks of life – the governor general, politicians past and present, Maoridom- including the Maori Queen, church leaders, the primary sector and family and friends packed Our Lady of Kapiti’s Catholic church in Paraparaumu on Thursday October 23 to pay tribute to former prime Minister, Jim Bolger who died last week.
Agriculture and Forestry Minister, Todd McClay is encouraging farmers, growers, and foresters not to take unnecessary risks, asking that they heed weather warnings today.
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OPINION: Voting is underway for Fonterra’s divestment proposal, with shareholders deciding whether or not sell its consumer brands business.
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