Divestment means Fonterra can focus on its strengths
OPINION: Fonterra's board has certainly presented us, as shareholders, with a major issue to consider.
After a challenging year, dairy farmers will go into the festive season buoyed by high farm gate milk prices.
Major milk processors Fonterra and Open Country Dairy are signalling a forecast payout of well over $7/kgMS for the season.
Last week, Fonterra lifted its forecast milk price by 25c to a range of $7 to $7.60/kgMS. OCD has announced a range of $7.30 to $7.60/kgMS for December and January. And for February to May next year the independent processor will pay suppliers $7 to $7.30/kgMS.
Whole milk powder (WMP) prices, a key driver of the milk price, have hit their highest level since December 2016, reflecting a global dairy market that is tipped slightly in favour of demand.
Fonterra shareholders council chairman James Barron says the lift in the forecast price will give farmers some confidence going into Christmas.
“The farm gate milk price is at a sweet spot,” he told Rural News.
OCD chief executive Steve Koekemoer told its suppliers that stronger pricing being received in market and the foreign exchange now starting to flow through have resulted in the further upside.
“All settlement periods have stepped up, with the biggest moves being the November and January periods.
“You will notice that all our forward periods are now in the $7 range as we gain more confidence in the supply/demand for the balance of the season.”
For Fonterra farmers, a positive first quarter result will also help boost confidence.
Barron says farmers are happy to see the co-op deliver under its new strategy of a triple bottom line: healthy people, healthy environment and healthy business.
However, he points out that challenges loom on the horizon: weaker Chinese economy, unrest in Hong Kong and Chile and the pressure on profit margins of value added products due to high milk prices.
Federated Farmers vice president Andrew Hoggard says it’s still early days, and the proof of Fonterra’s turnaround will be if they get a dividend again at the end of this financial year.
Hoggard says farmer shareholders will be happy to see the co-op move in the right direction.
“I mean, they weren’t happy when our co-op was moving in the wrong direction,” he told Rural News.
Fonterra announced a positive first quarter result, achieving a gross margin of $740 million, up from $646m last year.
Operating expenditure is down by $104m, and debt is reduced by $595m compared to same period last year.
Chief executive Miles Hurrell says the cooperative has made good progress moving to its new strategy and has had a strong first quarter.
Meat co-operative, Alliance has met with a group of farmer shareholders, who oppose the sale of a controlling stake in the co-op to Irish company Dawn Meats.
Rollovers of quad bikes or ATVs towing calf milk trailers have typically prompted a Safety Alert from Safer Farms, the industry-led organisation dedicated to fostering a safer farming culture across New Zealand.
The Government has announced it has invested $8 million in lower methane dairy genetics research.
A group of Kiwi farmers are urging Alliance farmer-shareholders to vote against a deal that would see the red meat co-operative sell approximately $270 million in shares to Ireland's Dawn Meats.
In a few hundred words it's impossible to adequately describe the outstanding contribution that James Brendan Bolger made to New Zealand since he first entered politics in 1972.
Dawn Meats is set to increase its proposed investment in Alliance Group by up to $25 million following stronger than forecast year-end results by Alliance.
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