increase font size
Fonterra chief executive Miles Hurrell says the co-operative is confident about international prices remaining strong.
Fonterra farmers will start the new season with strong cashflow, thanks to an opening forecast with a record midpoint of $8/kgMS.
The co-op will pay its farmers 60% of the forecast midpoint as advance payments each month for milk.
If the payout remains at the forecast midpoint of $8 until the end of the season, Fonterra and its farmers will pump$12 billion into the New Zealand economy.
Federated Farmers dairy chair Wayne Langford says farmers are happy with "a very strong start" to the new season.
"This will see farming businesses in a much better cashflow position through the first half of the season when the majority of expenses occur," Langford told Rural News.
"The value a payout like this will bring to all New Zealand is huge, especially as we work out way out of the Covid-19 crisis."
Fonterra has passed the $8 mark only once in its 21-year history: in 2013-14 farmers received a final milk price of $8.40/kgMS plus a 10c dividend.
Fonterra chief executive Miles Hurrell says the co-operative is confident about international prices remaining strong.
"The $8 midpoint is great news for farmers; the forecast farmgate milk price is a key marker that farmers look for.
"This is the biggest opening forecast we have come out with and farmers will be rapped."
However, there are an number of risks and this explains Fonterra's $1.50 forecast milk price range - $7.25 to $8.75/kgMS announced last week.
Hurrell points out that Covid is far from over. The impacts of governments winding back their economic stimulus packages, foreign exchange volatility and changes in the supply and demand patterns that can enter dairy markets when prices are high could be dampener.
And as always, potential impacts of any geopolitical issues around the world could also trigger a sudden drop in dairy prices.
ASB economist Nat Keall says the wide opener is appropriate given the season has just begun and the remaining uncertainty continuing to impact global dairy markets.
ASB's own forecast is towards the upper end of the range - at the $8.20 mark.
Keall notes that even if the milk price ends up being near the bottom of the range - which he thinks is unlikely - it would still represent a strong result for farmers.
Over the past ten years the farmgate milk price has averaged around the $6.25/kgMS, so a $7.25 result would still be well above average.
"Still, we think that's an unlikely scenario. For the season to finish near the bottom of Fonterra's range, prices would need to start trending substantially lower far earlier than we expect, or drop away more sharply when they do.
"With global dairy supply still relatively constrained and demand from China likely to remain high, we continue to think the odds are against a swift or a sharp correction."
Hurrell agrees that global demand for dairy, especially New Zealand dairy, is continuing to grow. China is leading the charge as its economy continues to recover strongly.
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.
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.
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.
Fonterra has delivered a fifth straight year of record organic milk price for farmer suppliers.
Fonterra says favourable weather conditions supporting pasture growth is boosting milk production.
Like many manufacturers around the world, European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. But they are heading to the world’s largest agricultural machinery event in Hanover next month with a degree of cautious optimism.
Established in 2021, the John Deere Technician of the Year Awards champion the important contribution parts and service technicians make to the Australian and New Zealand agriculture, construction and forestry industries.
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.
New Zealand is closer to eradicating bovine TB than ever before, but possums remain a threat, says Beef + Lamb New Zealand.
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.
The ACT Party says media reports that global dairy giant Nestle has withdrawn from the Dairy Methane Action Alliance shows why New Zealand needs to rethink its approach to climate.
OPINION: Ageing lefty Chris Trotter reckons that the decision to delay recognition of Palestinian statehood is more than just a fit…
OPINION: A mate of yours truly recently met someone at a BBQ who works at a big consulting firm who spent…
