Record payout for dairy farmers is in the offing – but climate change policy pressure sours the outlook

Behind   all  the  Covid headlines  lurked a  positive  story this week.

Prices at the Fonterra Global Dairy Auction leapt 4.6% to hit an eight-year-high, as tight milk supply stokes demand for NZ’s biggest export commodity.

Almost  certainly Fonterra’s  farmer-shareholders  will receive a  record  payout this  season, and, with  a bit  of  luck, this  could  be  high enough  to end up  ahead  of  rising  costs.

And  even  though  local  consumers  may find themselves paying more  for  their milk, butter  and  cheese, the  country  benefits  from dairy  products boosting  export returns.  Some   economists  are  predicting   Fonterra’s total  payout to  its producers  will  top  $14bn   this  season.

At the  auction,the average price for whole milk powder, which has the most impact on what farmers are paid, posted the biggest gain, up 5.6%  cent to US$4082 (NZ$6041) a tonne, and is now 21% higher than at the same time last year.

Among  other products:

  • SMP up +5% to US$3,963 or NZ$5778
  • Butter up +5% to US$6,158 or NZ$8,978
  • Cheddar up +1.1% to US$5,546 or NZ$8,086 (all per metric tonne)

Continue reading “Record payout for dairy farmers is in the offing – but climate change policy pressure sours the outlook”