Fonterra interim result in a ‘season of two halves’

27 March 2013

Fonterra interim result in a ‘season of two halves’

Farmer supplier-shareholders of Fonterra Cooperative Group will cheer its Net Profit After Tax increasing 33 percent. While the cooperative is increasing its forecast milk price to farmers by 30 cents per kilogram of milk solids (kg/MS), Federated Farmers cautions it will not be enough to make up for the effects of the drought in the North Island especially.

“Drought has made this a season of two halves,” says Andrew Hoggard, Federated Farmers Dairy Vice-Chairperson.

“We were having a good season up until February when the effects of drought really started hitting home.

“At my farm I was ahead of last season by five percent but by the end this season I now expect to be ten percent down. Extend that to other farmers in the North Island and you can see that things are far from flash.

“We must give full marks to Fonterra for increasing the milk price forecast from $5.50 to $5.80 kg/MS. With the dividend on top it will make a bad end to the season slightly more bearable.

“I need to caution of course that this is a forecast.

“The $100,000 on average Fonterra says supplier-shareholders will get due to the faster advance rate paid and the forecast payout increase has already been spent. This money and more will need to be ploughed back into our farms so it makes for a subdued provincial economy.

“It would also be wrong to say the uplift in the forecast will get us out of the woods. If I use my farm as an example, I would need an increase of 50 cents kg/MS just to offset the drought.

“As you can see I will be way down this season and that is why Federated Farmers is working nationally and locally to keep rates, fees and price increases in check.

“If the increase in the forecast sticks and we hope it will, it could help many farmers facing massive costs associated with lost production, added feed costs and not to mention the need to repair pasture.

“There are rightly no public hand-outs for drought affected farmers but there is a heck of a lot of advice. Federated Farmers encourages farmers to get advice with winter approaching.

“I know a big focus for farmers will be animal health so keeping our animals in good condition is perhaps the biggest priority. It means we can start the 2013/14 season in the best possible position.

“I also want consumers to know that the increase in the forecast milk payout translates into only a few cents per litre out of the 12.9 billion litres we have produced during this result period,” Mr Hoggard concluded.

ENDS

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