Rural round-up

November 1, 2018

The sun must never set on New Zealand’s agriculture – Keith Woodford:

 These are increasingly troubled times for New Zealand agriculture. A significant proportion of the population has turned against farmers for environmental reasons relating to nutrient leaching and water quality. There is also a loud political narrative about methane from ruminant animals and the need to reduce livestock numbers.

There is also a group of agricultural doomsayers who state that new plant-based foods and even totally artificial foods can mimic meat, and that they will do so at much cheaper cost than the real thing. And finally, there is an increasing group of consumers who are committed to vegan diets for perceived health reasons or relating to personal ethical perspectives. . . 

On the home straight to CPTPPP benefits:

It’s been a long and sometimes bumpy road to achieving a Pacific Rim trade deal but New Zealand producers and our economy will soon reap the benefits, Federated Farmers President Katie Milne says.

“We’re on the home straight. The required six nations have now ratified the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the countdown has started towards the first round of tariff cuts early next year. . . 

CPTPP move momentous for NZ:

ExportNZ says today’s CPTPP ratification by Australia is a momentous day for New Zealand.

Australia’s ratification today of the Comprehensive and Progressive Trans-Pacific Partnership has now delivered the quorum required to start the process leading to the CPTPP taking force.

ExportNZ Executive Director Catherine Beard says the CPTPP deal, a tantalising prospect for years, will now become a reality by the end of this year. . .

Bee Keepers Can Now Check Seasonal Weather Outlooks Against High Resolution Land Cover:

Summer likely to lack widespread monthly extremes in temperature and precipitation

The rapidly growing honey industry in New Zealand has had some weather challenges over the last few years. As Karin Kos noted regarding the 2017 season ‘very dry and windy weather was not conducive to honey and due to the nature of the industry unfortunately it is weather dependent’. Bees also find different land covers to exploit depending on the weather with pastures, indigenous forest and manuka/kanuka forests if made available being just a few examples of how bees can change their diet when weather vagaries occur
. . .

Guy Trafford summarises the debate around how we should deal with methane emissions, and introduces you to the global regulation of SLCPs:

The issue around methane is not going to go away. In the last couple of days two respectable and well known identities have commented.

Phil Journeax, currently with AgFirst and previously with MPI as an economist, and Rod Oram a well-known commentator particularly on things rural. They have both tackled the issue around methane, and climate change from different angles.

Largely both correct but could be talking about two totally different things. Confused? It’s likely to get a lot worse before it gets better.

Cars or lisevstock which contribute more to climate change? – Anne Mottet and Henning Steinfeld:

The pitfalls of simplification when looking at greenhouse gas emissions from livestock What we choose to eat, how we move around and how these activities contribute to climate change is receiving a lot of media attention. In this context, greenhouse gas emissions from livestock and transport are often compared, but in a flawed way. The comparison measures direct emissions from transport against both direct and indirect emissions from livestock. The Intergovernmental Panel on Climate Change (IPCC) identifies and monitors human activities responsible for climate change and reports direct emissions by sectors. The IPCC estimates that direct emissions from transport (road, air, rail and maritime) account for 6.9 gigatons per year, about 14% of all emissions from human activities. These emissions mainly consist of carbon dioxide and nitrous oxide from fuel combustion. By comparison, direct emissions from livestock account for 2.3 gigatons of CO2 equivalent, or 5% of the total. They consist of methane and nitrous oxide from rumen digestion and manure management. Contrary to transport, agriculture is based on a large variety of natural processes that emit (or leak) methane, nitrous oxide and carbon dioxide from multiple sources. While it is possible to “de-carbonize” transport, emissions from land use and agriculture are much more difficult to measure and control. . . 


Rural round-up

October 13, 2018

Grabbing life by the horns:

October 8th- 14th marks Mental Health Awareness Week. Co-op farmer Wayne Langford knows what it’s like to suffer from mental illness. He’s the man behind the YOLO (You Only Live Once) farmer blog. He shares his story about owning up to his illness and how the YOLO project helped him cope with depression.

I was pretty down in the dumps – I referred to it as a rough patch, my wife called it what it really was – depression. We were lying in bed one morning and she said, “well, what are we going to do? Because we can’t go on like this.”

Most people who knew Wayne Langford knew this about him. He was 34, married to his wife Tyler and the father of three boys. He was a 6th generation dairy farmer who owned and ran his Golden Bay farm. He was a proud Fonterra supplier and was the Federated Farmers Dairy Vice Chairman. . .

Farm produce holds up trade deal:

New Zealand trade negotiators are trying to get their European counterparts to recognise Kiwi agricultural exports are small-fry in comparison to the regional bloc’s farming sector.

The second round of free-trade negotiations between NZ and the European Union is under way in Wellington with 31 European officials in the capital to discuss a deal politicians say they’re keen to fast-track. . . 

Kaitiakitanga and technology benefiting farmers, environment:

An innovative approach to monitoring farm effluent runoff is reaping financial rewards for farmers with bonuses for farming excellence.

Miraka, a Taupo-based milk processor with more than 100 suppliers, is offering bonuses to farmers who meet the five criteria set out in its Te Ara Miraka Farming Excellence programme – people, the environment, animal welfare, milk quality and prosperity
. . .

Farmers build rapport amid Mycoplasma bovis heartache – Tracy Neal:

Despite the fact they are not out of the woods yet, cattle farmers are starting to consider life after Mycoplasma bovis.

Finding that pathway will be helped by a special Beyond Bovis seminar in Hamilton later this month – held in conjunction with the Waikato A&P Show.

The government is working to eradicate M bovis and so far more than 43,000 cows have been culled. . .

High country station to host agricultural workshops – Yvonne O’Hara:

There is a shortage of young people wishing to work in the agriculture sectors, and industry consultant John Bates, of Alexandra, is developing a programme to help address the problem.

Lincoln University owns Mt Grand, a 2127ha high country station near Lake Hawea.

Profits from the farm help fund postgraduate and graduate scholarships.

It is also a teaching facility for university students studying environmental and ecological degrees. . . 

 

PGG Wrightson expects FY19 operating earnings to match prior year’s record – Rebecca Howard:

(BusinessDesk) – PGG Wrightson expects full-year operating earnings to be on par with last year’s record, including earnings from the seed and grain business that it is selling to Danish cooperative DLF Seeds.

The company said it expects its operating earnings before interest, tax, depreciation and amortisation to June 30, will be approximately $70 million. In August, it said its operating ebitda was a record $70.2 million in the year ended June. . . 

Virgin beefing up for transtasman battle

Weeks out from its breakup with Air New Zealand, Virgin Australia says it ready to roll out its “full armoury” in what is shaping up as a three-way battle over the Tasman.

The Australian airline is also trying to establish more of a market presence here after being quiet for much of the alliance with Air New Zealand that stretched more than six years but will end on October 28 after the Kiwi carrier opted to quit the partnership.

Virgin has since upped its marketing and following a search for a New Zealand beef supplier the airline today announced Hinterland Foods from Moawhango in the Rangitikei District had won the “Got Beef” campaign and would supply its meat to the airline for in-flight meals. . . 


Rural round-up

October 11, 2018

Fonterra is in a fix but farmers should beware of what happens when the Govt steps in … – Point of Order:

“Govt won’t fix Fonterra’s problems” – so ran  the  strapline  on  the  NZ Herald’s  weekly  “The Business”  last  Friday.

And  thousands   of  Fonterra’s  farmer-suppliers,  reading  the  article which quoted Agriculture Minister Damien  O’Connor,  almost  certainly would have sighed  with relief.

Who  would want   this   government  to  “fix”  their  industry?  Look what happened to  the   oil and  gas  exploration industry  after  Energy Resources  Minister   Megan Woods  applied  her  “fix”  to  it. . . 

NZ plays down threat to European agri interests in FTA talks – Paul McBeth:

(BusinessDesk) – New Zealand trade negotiators are trying to get their European counterparts to recognise that the nation’s agricultural exports are small-fry in comparison to the regional bloc’s farming sector.

The second round of free trade negotiations between New Zealand and the EU is underway in Wellington, with 31 European officials in the capital to make progress in a deal politicians say they’re keen to fast-track. In a 90-minute public forum, the chief negotiators – Peter Berz for the EU and Martin Harvey of the Ministry of Foreign Affairs and Trade – said there was a lot of commonality between the parties, but that agriculture is a sticking point.  . .

Breakthrough technology could save dairy industry millions:

A new device that detects processing losses in dairy plants could save the industry millions of dollars a year and help prevent pollutants from entering waterways.

Lincoln University-owned research and development company, Lincoln Agritech Ltd, developed the breakthrough technology and it was then commercialised by Christchurch-based start-up company, CertusBio.

The result is a robust, automated biosensor capable of continuous monitoring in commercial operating conditions. Known as Milk-Guard, the device uses a lactose-specific enzyme to measure the percentage of dairy products present in waste streams and processing lines
.. .

12 lessons from the Future of Farming Dialogue – Jamie Mackay:

What’s in store for the rural sector? Host of The Country radio show Jamie Mackay got a glimpse at the Bayer Future of Farming Dialogue conference in Düsseldorf and Amsterdam. Here’s what he discovered:

1)

Even though it was very much tempered by sitting much closer to the front than the back, 17 hours is a hell of a long time to be stuck on a plane.

The Auckland-Dubai direct flight is the third-longest commercial flight on the planet, behind Auckland-Doha and Perth-London.

2)

The world faces a food crisis. How to feed a potential population of 10 billion people by 2050? In 1960 we had more than one acre (0.4 ha) of arable land for every person on the planet. Today that number is less than half that. Many of our most productive soils now grow only houses. . . 

 

Multi-pronged approach critical to successful environment strategy – Allan Barber:

Since announcing its environment strategy in May, the Beef + Lamb New Zealand team responsible for developing the plans, processes and tools to help farmers achieve the ambitious goals of being carbon neutral by 2050 and every farm having an active farm plan by 2021 has been working flat out to get the right farm planning systems in place. The strategy identifies four areas of focus – cleaner water, carbon neutrality, thriving biodiversity and healthy productive soils – with their own specific goals and a detailed implementation plan, supported by a series of what are termed ‘foundations’.

Initially there are two foundations which explicitly rely on the participation of individual farmers. The first is helping farmers navigate the myriad of farm environment plans out there so they can identify the one that complies with local regulations and is best suited to help them document their individual on farm environment plan; the second foundation will encourage the establishment and facilitation of catchment communities which are relevant to the farmers’ local areas.  . . 

CP Wool announces exclusive partnership to distribute NZ wool carpets in US:

Premium New Zealand wool carpets and rugs will soon be available to thousands more US consumers under a new distribution partnership between Carrfields Primary Wool (CP Wool) and J Mish Mills.

Under the agreement, leading carpet business J Mish will design and manufacture carpets and rugs from yarn grown and spun in New Zealand. The products will then be distributed throughout the US via J Mish’s large network of dealer and designer relationships. . . 

Feral sheep’s wool could set world record

A feral ewe captured on a remote bluff will have her first brush with the shears this weekend and organisers say she could have the longest wool in the world.

The crossbred sheep was caught in the Mapiu district, south of Te Kuiti, by Amie Ritchie and Carla Clark.

Named Suzy by her captors, the ewe is not believed to have been shorn before.  However, that will change at The Wool Shed, the national museum of sheep and shearing, in Masterton on Sunday. . . 

Why we need a real forestry strategy – Rod Oram:

We’re an odd country when it comes to trees. We have a lot of them but no overarching long-term policy for them. Consequently, our short-term forestry decisions deliver some adverse outcomes, both economic and environmental.

And on our current course it’s going to get worse. We’re racing to plant one billion trees in a decade to help us meet our climate commitments (as last week’s column discussed), develop regional economies, reduce soil erosion, improve water quality, and enhance biodiversity such as helping to save native birds from extinction.

Trees could do all of that for us. But only if they can flourish in healthy ecosystems. To do so, they need all the help we can give them over three or four human generations. Instead, we’re working in silos over just a decade or two, the longest time most commercial enterprises can wait for an investment to pay off. . .

Major investors back medicinal cannabis with stake in Helius:

Cannabis-focused biotechnology company, Helius Therapeutics, announced today it has completed its $15m capital raise and is now backed by a small group of New Zealand investors, led by tech entrepreneur, Guy Haddleton.

Haddleton says “Helius Therapeutics has all the features we seek in a high-potential investment. The company has a clear and large vision, extraordinary talent and deep go-to-market experience. More importantly, Helius will improve significantly the quality of life for hundreds of thousands of New Zealanders”. . .


Fonterra drops forecast payout

October 10, 2018

Fonterra has dropped its forecast farmgate milk payout for the current season:

Fonterra Co-operative Group Limited today revised its 2018/19 forecast Farmgate Milk Price from $6.75 per kgMS to a range of $6.25-$6.50 per kgMS and increased its forecast New Zealand milk collection volumes by 1.3 per cent to 1,550 million kgMS.

While no-one will be celebrating this, it’s not unexpected and it’s still not a bad price.

Although it’s very early in the season and it could well change again.

Fonterra Chief Executive, Miles Hurrell, says the change in the forecast Farmgate Milk Price was due to a stronger global milk supply relative to demand at this time.

“I know how hard it is for farmers when the forecast Farmgate Milk Price drops, but it’s important they have the most up to date picture so they can make the best decisions for their farming businesses.

“We are still seeing strong production coming from Europe, US and Argentina. While the hot weather in Europe has slowed down the region’s production growth, it is still tracking ahead of last year. US milk production is up slightly and Argentina’s is up 6.8%.

“Here in New Zealand, the season has got off to a positive start, mainly thanks to good weather and early calving in the South Island. As a result, we have increased our forecast milk collections for the year to 1,550 million kgMS – up from 1,525 million kgMS.”

Mr Hurrell says that global demand is simply not matching current increases in supply.

“At recent Global Dairy Trade (GDT) events, prices for all products that make up the milk price have fallen. Demand for WMP, in particular, continues to grow in China, and it remains strong across South East Asia, but it simply isn’t matching current levels of supply.”

Talking about the new move to provide a range for the forecast Farmgate Milk Price, Mr Hurrell says it was part of the Co-op’s intention to provide the best possible signals.

“We operate in a hugely volatile global market place, so it is very difficult to pinpoint an exact forecast Farmgate Milk Price this early in the season. For example, weather conditions can change suddenly and this can have a significant impact on the global milk supply.

“As a result, we have chosen to give a range of $6.25-$6.50 per kgMS and be clear that the Advance Rate is based on $6.25 per kgMS and the final price could be outside this range as we are still early in the season and up against considerable volatility. We therefore recommend farmers budget with ongoing caution.”

The timing of today’s update is driven by available market information and is not a DIRA requirement. Fonterra is required to give a forecast for DIRA purposes by 15 December 2018.

Supply and demand – the former is higher than the latter which depresses the price.

It’s as simple as that.

 


Good and bad news in Fonterra’s annual report

September 13, 2018

Fonterra’s annual report has both good and bad news:

The good – last season’s payout dropped a cent but is still the third highest the company has achieved.

The bad – a net loss after tax of $196 million.

Federated Farmers Dairy Chairperson Chris Lewis says the company must do better.

“That’s the first full-year loss in their 18-year history. From a $745 million profit last financial year to a $200 million loss – that’s a big drop and they simply must do better. But I’m confident they’ll turn things around.”

Chris says farmers and shareholders will be looking for the new chief executive and chairperson to hit the ground running.

“I hope those two have a new broom for the shop floor. Good communication will be key.” . . .

Highlights:

  • Total Cash Payout for 2017/18 season: $6.79
    • Farmgate Milk Price $6.69 per kgMS
    • Dividend of 10 cents per share
  • New Zealand milk collections: 1,505 million kgMS, down 1%
  • Sales volumes: 22.2 billion Liquid Milk Equivalents (LME), down 3%
  • Normalised sales revenue: $20.4 billion, up 6%
  • Net loss after tax: $196 million
  • Normalised EBIT: $902 million, down 22% 
  • Normalised gross margin: 15.4%, down from 16.9%
  • Return on capital: 6.3%, down from 8.3%
  • Normalised earnings per share: 24 cents
  • Gearing ratio: 48.4%, up from 44.3%
  • FY19 forecast Farmgate Milk Price: $6.75 per kgMS
  • FY19 forecast earnings per share range: 25-35 cents 

It might be easier for a new chair and new, albeit acting, CEO to make the necessary changes to improve performance than it would had the board and management stayed the same.

Director elections are underway and could bring in some fresh talent that will help the process.

The media release continues:

Fonterra CEO Miles Hurrell says the Co-operative’s business performance must improve.

“There’s no two ways about it, these results don’t meet the standards we need to live up to. In FY18, we did not meet the promises we made to farmers and unitholders,” says Mr Hurrell.

“At our interim results, we expected our performance to be weighted to the second half of the year. We needed to deliver an outstanding third and fourth quarter, after an extremely strong second quarter for sales and earnings – but that didn’t happen.”

Mr Hurrell says that in addition to the previously reported $232 million payment to Danone relating to the arbitration, and $439 million write down on Fonterra’s Beingmate investment, there were four main reasons for the Co-operative’s poor earnings performance.

“First, forecasting is never easy but ours proved to be too optimistic. Second, butter prices didn’t come down as we anticipated, which impacted our sales volumes and margins. Third, the increase in the forecast Farmgate Milk Price late in the season, while good for farmers, put pressure on our margins. And fourth, operating expenses were up in some parts of the business and, while this was planned, it was also based on delivering higher earnings than we achieved.

“Even allowing for the payment to Danone and the write down on Beingmate, which collectively account for 3.2% of the increase in the gearing ratio, our performance is still down on last year.”

Mr Hurrell says when looking at the underlying performance of the business, which you can see in the normalised EBIT of $902 million, progress has been made in moving more milk into higher value products.

“While sales volumes were down 3% in FY18, a larger proportion of milk was sold through Consumer and Foodservice and Advanced Ingredients. In fact, 45% of our sales volumes were through these businesses and this is up from 42% in FY17, despite the higher input-price environment.

“Our Consumer and Foodservice business grew in all regions, except Oceania, with our strongest growth in Greater China. Of particular note, our Consumer business in China broke even this year, two years ahead of schedule. A big contributor to this success is the popularity of Anchor, which is now the number one brand of imported UHT milk in both online and offline sales in China.

“Despite this progress, performance across the Co-operative was below our expectations. Based on this, the Board has decided to limit our dividend to just the 10 cents paid in April and has confirmed the final Farmgate Milk Price for the 2017/18 season at $6.69 per kgMS,” added Mr Hurrell.

Plan for the future:

Mr Hurrell says these results are not just numbers – they’re the livelihoods of the Co-operative’s farmers and their families and the investment of unitholders.

“There are people depending on us – farmers, unitholders and employees who want to be part of a successful Co-operative. We are putting in place a clear plan for how we are going to lift Fonterra’s performance. It relies on us doing a number of things differently.

Fonterra’s Board and Management has outlined a plan based on three immediate actions:

  1. Taking stock of the business Fonterra will re-evaluate all investments, major assets and partnerships to ensure they still meet the Co-operative’s needs today. This will involve a thorough analysis of whether they directly support the strategy, are hitting their target return on capital and whether it can scale them up and grow more value over the next two-three years. This will start with a strategic review of the Co-operative’s investment in Beingmate.
  2. Getting the basics right – Fonterra has already begun taking action and fixing the businesses that are not performing. The level of financial discipline will be lifted throughout the Co-operative so debt can be reduced and return on capital improved.
  3. Ensuring more accurate forecasting – the business will be run on more realistic forecasts with a clear line of sight on potential opportunities as well as the risks. It will also be clear on its assumptions, so farmers and unitholders know exactly where they stand and can make the decisions that are right for them and their businesses.

And the outlook for the coming season:

The forecast Farmgate Milk Price for the 2018/19 season is held at the $6.75 per kgMS Fonterra announced at the end of August and the Co-operative’s forecast earnings per share range for FY19 is 25-35 cents.

At $6.75 per kgMS the forecast Farmgate Milk Price for the 2018/19 season is the third consecutive year of strong milk prices. That’s good for farmers and for rural economies where farmers spend 46 cents of every dollar they earn.

Chairman John Monaghan says the Co-operative is being clear with farmers and unitholders on what it will take for the Co-operative to achieve the forecast earnings guidance.

“For the first time we are sharing some business unit specific forecasts. Among others, these see the Ingredients and Consumer and Foodservice businesses achieving an EBIT of between $850 million and $950 million, and between $540 million and $590 million, respectively.”

“FY19 is about lifting the performance of our Co-operative.

“We are taking a close look at the Co-operative’s current portfolio and direction to see where change is needed to do things faster, reduce costs and deliver higher returns on our capital investments.

“This includes an assessment of all of the Co-operative’s investments, major assets and partnerships against our strategy and target return on capital. You can expect to see strict discipline around cost control and respect for farmers’ and unitholders’ invested capital. That’s our priority.”

The results are here.

 


Rural round-up

September 9, 2018

Make jobs attractive to youth – Neal Wallace:

Farmers need to change their approach to employment conditions to encourage more people to work for them, Federated Farmers employment spokesman Chris Lewis says.

Low regional unemployment is making staff recruitment more challenging but there are already fewer people choosing agricultural careers.

To be competitive farmers need to consider more than just pay but also rosters, hours of work, housing, the workplace environment, pressure of the job and ensure they meet their legal payroll and time-recording obligations. . .

Annual results will put Fonterra under microscope – Sally Rae:

Scrutiny from farmers is expected next week when new chairman John Monaghan and recently appointed interim chief executive Miles Hurrell front Fonterra’s 2017-18 annual results presentation.

While commodity price fluctuations were “part and parcel” of the reality of being a dairy farmer, grumblings about Fonterra’s corporate performance have been growing, Westpac senior economist Anne Boniface said.

From an historical perspective, prices remained at relatively robust levels and, at $6.50, most farmers would be in positive cashflow territory. . . 

FENZ urges caution on controlled burns – John Gibb:

Large, controlled burn fires at Northburn Station, near Cromwell, produced huge smoke clouds on several days this week, but burned without any problems, Fire and Emergency New Zealand said.

Otago principal chief rural fire officer Graeme Still, of Dunedin, said permitted fires at Northburn had produced large clouds of smoke on Monday, Wednesday and yesterday, but finished without incident.

Fire conditions were suitable at Northburn, partly because remaining snowpack restricted any potential fire spread, he said yesterday. . . 

Wool recovery continues – Alan Williams:

Wool prices made another step forward at Thursday’s Napier sale, building on the gains of a fortnight earlier.

After a disappointing start to the season prices have lifted in the last few weeks and strong wools in the 35-37 microns range were up by another 4% to 5%, PGG Wrightson’s North Island auctioneer Steven Fussell said.

Second-shear wools were mostly up by similar margins on a fortnight earlier with good style 2 to 3 inch fibre length ahead about 7%. . .

On the farm: our guide to what’s been happening rurally:

What’s happening on farms and orchards around New Zealand? Each week Country Life reporters talk to people in rural areas across the country to find out.

North Island-Te Ika-a-Māui

The week finished off much better than it started in Northland. Mid-week the Far North town of Kaitaia had its second 13 degree day of winter – that’s chilly for them. A cold southerly is blasting through and apparently farmers are “right up against it” for pasture. Any strongly kikuyu dominant sward is very slow growing; rye grass is going okay but patches of it are few and far between on most farms. . . 

Fruit exports boost wholesale trade in June quarter:

Fruit exports drove wholesale trade sales up in the June 2018 quarter, Stats NZ said today.

The seasonally adjusted total sales value for wholesale trade rose 2.6 percent in the June 2018 quarter, following a modest 0.3 percent rise in the March 2018 quarter.

Five of the six wholesaling industries had sales rises in the June 2018 quarter. The largest industry increase was in grocery, liquor, and tobacco wholesaling, which was up 3.0 percent ($236 million). . . 

Deer milk hits the spot as finalist in NZ Food Awards:

Pāmu’s deer milk is on the awards stage again with today’s announcement that it is a finalist in two categories in this year’s New Zealand Food Awards.

The NZ Food Awards have been a highlight of the food sector for over 30 years and aim to demonstrate innovation, creativity and excellence in the food industry in New Zealand. . .

z


Fonterra forecast drops 25c

August 31, 2018

Fonterra has dropped its forecast payout for the current season by 25 cents.

Fonterra Co-operative Group Limited today revised its 2018/19 forecast Farmgate Milk Price from $7.00 per kgMS to $6.75 per kgMS.

Fonterra Chairman, John Monaghan, said the change was in response to stronger milk supply signals coming from some of the world’s key dairy producing regions.

“Over the past quarter, we have seen increased milk supply out of markets including Europe, the US and Argentina. These regions have a big influence on the supply and demand balance and therefore global prices. For example, the one per cent increase in US milk production represents just under 100 million litres of extra milk.

“At the same time, demand for whole milk powder and dairy fats is showing signs of slowing in some parts of Asia, Africa and the Middle East,” added Monaghan.

Fonterra CEO, Miles Hurrell, said the weakening NZD/USD exchange rate had only partially offset the decline in global dairy prices, and it was important to give farmers a realistic assessment of the market.

“It’s still very early in the season and a lot can change over the coming months. A drop in the new season Milk Price forecast will be frustrating to our farmers, but it’s important we give them the facts so they can make informed decisions in their farming businesses,” said Hurrell.

The timing of today’s update is in line with DIRA requirements for Fonterra to review the Milk Price every three months. The Co-operative last considered the Milk Price in May.

This isn’t unexpected and $6.75 is still a reasonable amount, though no-one should bank on that not being revised down again.


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