Lift in milk payout to record $8.65 – thanks China

Fonterra Co-operative Group Limited has lifted its forecast Farmgate Milk Price for the 2013/14 season by 35 cents to a record level of $8.65 per kilo of milk solids.

The increase – along with a previously announced estimated dividend of 10 cents per share –amounts to a forecast Cash Payout of $8.75.

Chairman John Wilson said the higher forecast was good news for farmers, and for New Zealand.

“The increase reflects continuing strong demand for milk powders globally.

“Last December, the Board approved a forecast Farmgate Milk Price that was 70 cents per kgMS below the Farmgate Milk Price that had been calculated in accordance with the Milk Price Manual.

“We are maintaining this position, with today’s forecast being 70 cents lower than the $9.35 Milk Price derived under the Milk Price Manual.

“The Board has the discretion to pay a lower Farmgate Milk Price than that specified under the Manual, if it is in the best interests of the Co-operative,” said Mr Wilson.

The Board has also approved an increase in the Advance Rate schedule of monthly payments to farmer shareholders.  Payments from March through to June will be 25 cents per kgMS higher than the previously published schedule. . .

The increase will inject another half billion dollars into the economy but next season’s price is expected to be lower:

. . . Westpac senior economist Anne Boniface said they maintained their view that increasing global milk production, particularly in the Northern Hemisphere, would weigh on dairy prices from mid-2014.

”Consequently our forecast is for the milk price to fall next season to $7.10/kg MS.”

The payout along with what is expected to be new record highs in production, would provide a big boost to incomes in the rural sector, and would be a key pillar of stronger growth in the New Zealand economy in 2014.

For the average Fonterra shareholder nationwide with a herd of 402 cows milking 346kg milk solids per cow, it was an additional $48,682 in income, according to DairyNZ data for the 2012-13 season. . . .

The increase is due to continuing demand from China which is now our biggest export market.

In January 2014, goods exports were worth $4.1 billion, with $1.2 billion going to China and $556 million to Australia, Statistics New Zealand said today.

The rise in exports to China, up $590 million, was due to milk powder, butter, and cheese exports, up $469 million. The fall in exports to Australia, down $80 million, was due to unwrought gold and silver, and crude oil.

“A record 30 percent of our total exports headed to China in January 2014,” industry and labour statistics manager Louise Holmes-Oliver said. “These exports were more than double the value of those that went to Australia.” .

The trade balance for January 2014 was a surplus of $306 million (7.5 percent of exports). This is the highest-ever trade surplus for any January month. . .

The free trade deal with China is paying huge dividends.

Increased export income will be welcome at a personal level by farmers and the wise ones will use at least some of the increase to reduce debt.

It will also be welcome at a national level – adding to tax income and helping keep the country on track back to surplus.

 

One Response to Lift in milk payout to record $8.65 – thanks China

  1. Gravedodger says:

    psst dont try telling the half empty brigade, with stick on ears they cant hear.
    As for moi, praise be and happy clappy equals praise thee and happy chappy.

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