New Zealand’s dairy industry, which is proving again it is the backbone of the country’s export industries, has been given fresh encouragement with the big co-op Fonterra signalling a record milk price for the season that has just opened.
It comes as the payout for the just-finished season stands as the highest since the co-op was formed in 2001.
So although farmers have made decisions for this season on the number of cows they are milking, they have the incentive to go hard on production levels, despite the pressure from higher costs and worries over climate changes measures, including projected charges on emissions.
Fonterra’s buoyant forecast contrasts with a recent report by agribusiness banking specialist Rabobank which said that despite global milk production looking set to decrease for the fourth consecutive quarter in Q2 2022, weakening global demand is expected to create a scenario that will see moderate price declines in dairy commodities during the second half of the year. Continue reading “Farmers start new dairy season on an encouraging note as Fonterra signals another record milk price”
City dwellers, preoccupied by Covid, may not have observed that the country’s export economy is being sustained by its primary industries. Last week came the news that Fonterra had signalled a record payout to its suppliers, pumping $13.2bn into the regions.
Some analysts think that may be on the conservative side and the final payout will surpass $9kg/MS.
In any case, the ANZ commodity price index lifted 2.8% in November, pushing it into new territory. The bank’s economists, noting that dairy prices led the charge, reported they were supported by strong gains in meat.
Again, because of the preoccupation with the pandemic, it may have gone unnoticed that meat exporters achieved record returns in the season ended in September. Total export receipts for beef and sheepmeat equalled the record returns of 2019–20 and were 17% up on the five-year average.
Beef export volumes reached a record high in 2020–21, up 8% on 2019-20 and 16% up on the five-year average. The high volumes reflected the numbers of steers and heifers processed.
The higher volumes were easily absorbed by strong consumer demand and tighter global beef supply.
Lamb export volumes in the 2020–21 season were about the same as in the previous season and the five-year average. The average export value was 4% down on the record high of 2019–20, but 8% above the five-year average. Continue reading “Wool growers, too, have something to cheer about as dairy leads the charge in brightening farmers’ prospects”
Just as the dairy season hits its peak, Fonterra farmer-shareholders are confronted with a key decision on the capital structure of the big co-op. The board is asking them to vote on the proposal at the annual meeting next month.
Consultation on the proposal with farmer-owners has been ongoing throughout the year, with some tweaks announced in September before a second round of discussions. But Fonterra leaders have been clear they wouldn’t put the reform forward for voting if they believed the support wasn’t there
Farmers have had little time to enjoy the news that the co-op has raised its forecast payout for the current season to a record level. Nor is the capital structure the only issue triggering worry in the cowshed.
The government’s focus on climate change, particularly methane emissions, is another matter weighing on the industry, exacerbated by outfits like Greenpeace shouting the odds about “industrial farming’’ and “dirty dairying”. Continue reading “Capital restructuring is one big issue for Fonterra farmers – but they must respond to environmental challenges, too”
As New Zealand moves towards reconnecting with the world, 62% of the business leaders surveyed in the NZ Herald’s “Mood of the Boardroom” say they are not satisfied with the government’s plan for reopening the country. International business is being lost due to border difficulties.
So the NZ economy again looks likely to be propped up by the primary sector. On that front, the news is positive. International markets are exhibiting strong demand for our products, with the result that export prices are even more buoyant than seemed likely just three months ago.
Lamb is fetching record prices and dairy, despite some earlier predictions that global production would push down prices, has moved in the other direction, to the extent that Westpac senior agri-economist Nathan Penny this week raised his forecast for Fonterra’s farmgate milk price this season by 75c to $8.50kg/MS. That would surpass the co-operative’s previous record high of $8.40kg/MS paid in the 2013/14 season.
Fonterra’s own forecast is for a payout between $7.25 and $8.75kg/MS, with a mid-point of $8. That’s ahead of its $7.54 last season. Continue reading “Why NZ should get behind Miles Hurrell as he aims to broaden Fonterra’s product range”