Farmers start new dairy season on an encouraging note as Fonterra signals another record milk price

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”

Wool growers, too, have something to cheer about as dairy leads the charge in brightening farmers’ prospects

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”

Capital restructuring is one big issue for Fonterra farmers – but they must respond to environmental challenges, too

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”

Why NZ should get behind Miles Hurrell as he aims to broaden Fonterra’s product range

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”