Higher Red Meat Returns Boost Farm Resilience in NZ
Red meat farmers are using higher farmgate returns to make their farms more resilient, says Federated Farmers meat and wool industry group chair Richard Dawkins.
"I think the fall in operating profit will grab attention instead of where it ought to be focussed, on revenue," says Leferink.
"This is real money coming into the New Zealand economy. I mean revenue for the half-year is up 21% to $11.3 billion. While we've got close to the $20 billion barrier in the past, this time, we've got a real chance of breaking it.
"That said, the declared drought in Northland along with drought-like conditions in the upper North Island could act like a brake. We've also seen GlobalDairyTrade retreat in recent trading events due in part to increased volume.
"That's to be expected since we are in a global commodity market."
But Leferink points out Fonterra's interim result means that every Kiwi benefits from what farmers and Fonterra does.
"Almost $7 billion dollars is spent locally by Fonterra supplier-shareholders, so it's like a shot of adrenalin into the bloodstream of our economy, the provinces.
"We also know that with every dollar in the payout farmer's receive, it puts $300 into the back pocket of every man, woman and child. If we include the dividend, a forecast $8.75/kgMS means we are talking thousands of dollars.
"That's the dairy dividend everyone has a stake in."
"Leferink says the fall in profit is concerning and reflects the higher cost of milk.
Profit is a direct marker for value-add and the overall performance of the co-op as a company, he says.
"As shareholders we need to ask questions because the dividend leaves a little bit of a sour taste in an otherwise spectacular half year," says Leferink.
