Divestment means Fonterra can focus on its strengths
OPINION: Fonterra's board has certainly presented us, as shareholders, with a major issue to consider.
Fonterra is reducing its 2011-12 forecast payout by 15c/kgMS as a result of declining commodity prices and a soaring Kiwi dollar.
The revised forecast comprises a farmgate milk price of $6.35/kgMS, down from $6.50/kgMS. The season's distributable profit range forecast of $570 million – $720m, equating to 40-50ckgMS/share remains unchanged.
Fonterra chairman Henry van der Heyden notes price declines in the five out of the last six Global Dairy Trade (GDT) trading events.
Overall, the GDT-Trade Weighted Index is down 5.7% since December 13 2011 when the forecast of $6.50/kgMS was announced.
He says the New Zealand dollar's continuing strength, higher levels of global milk production, and uncertainties in international markets led to the board decision to lower the Fonterra farmgate milk price forecast.
Fonterra chief executive Theo Spierings says the trends are indicating for stronger global production continuing into 2012.
"While we have had a strong start to the season in New Zealand, with record milk flows, we are also seeing higher milk production levels in the US and Europe.
"International milk powder demand, however, currently appears robust which should help offset the impact of the stronger milk supply growth.
"In the past few weeks, global markets seem to be reacting to the ongoing economic difficulties in Greece, the potential for conflict in the Middle East and China's reduced growth forecast. These events appear to be having a negative influence on most commodity prices.
"We think dairy commodity prices are likely to remain under some pressure through to mid-2012," says Spierings.
Fonterra will announce its interim results and dividend on March 29.
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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