Fonterra forecast signals dairy industry revival

Fonterra forecast signals dairy industry revival

The revival in fortunes of dairy farmers has been highlighted today by Fonterra’s announcement that they are increasing the milk price for the current season-lifting its payout from $6.00 to $6.15/kg milksolids for the year ending 30 May 2017.

Fonterra’s favourable forecast wasn’t unexpected and reflects the recent trend of increasing global dairy prices, which has fostered more confidence amongst the markets.

"Many dairy farmers throughout the country will be enjoying their lunch today. This is great news and comes after a turbulent few years where the industry has been under the pump," says Andrew Hoggard, Federated Farmers Dairy Industry Chair.

Based on Fonterra’s forecast and current production cycles, around $280 million dollars is expected to flow through the New Zealand dairy sector and wider provincial communities this season.

"If you take on board the amount of milk we are producing at present this means the average dairy farm in the country will be around $23,000 dollars better off".

"This will enable farmers to invest in their business and farm infrastructure, which has perhaps not been priority in the past two years in what has been a challenging time just trying to survive.

"We’ll also have more money to continue investing in our environmental goals, which has been the focus for many farmers in spite of modest returns from their businesses."

The New Zealand dairy sector employs over 40,000 workers and is widely acknowledged as a significant contributor to the country’s regional economic development.

"The regional economies and service centres will also be boosted with farmers prepared to spend again, now that they have more certainty about their businesses".

While next year is also promising with Fonterra predicting a payout at around $6.50/kg MS, and a potential injection of a further $650 million into provincial economies, dairy farmers will be mindful of the recent downturn and the unstable nature of the markets where prices fluctuate at short notice.

ENDS

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