23 June
2000
PR 57/2000
AN ENVIABLE DILEMMA
Commenting on end-of-season payouts and next years projections, Chairman of Dairy Farmers of New Zealand Charlie
Pedersen said that "The spectre of some of the best returns the dairy industry has ever enjoyed poses interesting
questions on and off farm".
"On-farm, without doubt farmers will welcome the boost in their incomes after a couple of challenging seasons that have
seen escalation of deferred maintenance on most farms." Mr Pedersen added that " the additional returns however are
significant and pose serious options. Does one contemplate expansion or intensification or should a farmer reduce debt
and increase equity to use in that inevitable period of poorer returns that will follow these days as sure as dogs chase
milk tankers. ?"
"Off farm these good returns pose much the same question," said Mr Pedersen " The industry is already pursuing the
growth strategy and has recently announced proposals to invest in Bonlac in Australia and in Dairy Farmers of America in
the USA"
"These and any further expansion and investments will be funded by retentions from farmer payout. Industry may be
tempted to retain quite hefty chunks of cash from this and next year's earnings. Mr Pedersen cautioned however that
farmers will want and need to be consulted on such retentions " especially bearing in mind that their share values are
set at what amounts to a fraction of their real value and they wont necessarily increase despite heavy investment in
them by farmers."
"It is a marvellous time of opportunity for our industry with multiple options that farmers need to consider and decide
on" concluded Mr Pedersen''
ENDS
For further information: Charlie Pedersen 06 329 9896 or 025 463 480 Kevin Petersen
04 473 7269