Fonterra revised forecast
“While farmers will be disappointed at the revised forecast of six dollars per kilogram of milksolids, it was not
unexpected,” said Willy Leferink, vice-chairman of Federated Farmers Dairy.
“The world economic situation is so unusual and so debilitating to trade, that Fonterra’s latest announcement at least
gives some certainty.
“World commodities have literally found a big hole and jumped into it and dairy is not immune. Oil has plunged more than
60% since July and Wheat is down 56% since March. It puts into perspective the 24% decline in international dairy
commodity prices over the past eight weeks. It is one of the toughest international trading conditions in memory.
“The one message dairy farmers have from this announcement is to tighten our belts and not look for any immediate
rebound. That’s sensible given the continuing turmoil on world markets. The shame is that urea and fertiliser costs here
in New Zealand remain stubbornly high.
“A critical challenge for the new government is to control compliance costs at both central and local government levels.
On-farm inflation has been running rampant over recent years driven largely by compliance. The new government must reign
this in, and quickly.
“The Reserve Bank too has to look at this revised payout and factor it into the 4 December OCR announcement.
“I wish to point out that the long term fundamentals for dairy are solid. Adjusted for inflation this still represents
one of the better payout indicators since the early 1970s, if it can be maintained. If being a small word with a very
large meaning.
“New Zealand farmers provide the staples of life. While people can forego a new car they cannot forego food. That means
we are still bullish in the medium to long term but the economic taps are being
ENDS