Global Co: Peak Notes Flawed

MEDIA RELEASE
By Farmers for a Better Dairy Deal

14 June 2001

Global Co: Peak Notes Flawed

Farmers for a Better Dairy Deal have revealed that the “Peak Notes” regime contained in the Global Dairy Co proposal is fundamentally flawed.

“Peak notes” (formerly known as “capacity notes”) have been proposed as part of GDC to help fund milk processing capacity.

Spokesman Mark Masters says that, contrary to the intent of the “peak note” concept, the formula released by Global Co penalises farmers producing milk with a higher milksolids percentage relative to farmers producing the same total amount of milksolids but with a lower milksolids percentage.

“In simple terms farmers sending milk with more water in it are better off.

“What confidence can we have in the planning for GDC when basic elements like this have been botched?

“Further, the whole concept of “peak notes” shifts costs from the factories back on to the farm.

“We have not seen any analysis showing that farmers, as owners of the business as well as their farms, will be better off overall.

“The “peak notes” mechanisms appears flawed like the rest of Global Co”, concluded Mr Masters.

“Even more worrying is that many Global Co directors don’t seem to understand how they work. Many of our directors have certainly struggled to explain them to farmers.”

Further information: Mark Masters 06 765 7544

Note:

NZ’s farm milk output peaks in late October / early November based on the timing of calving and spring grass growth. Sufficient milk processing capacity is required to cope with this short-lived peak.

The rationale behind “peak notes” is that farmers with lower peak production profiles should have to contribute less capital to fund milk processing capacity than farmers with high peak production profiles.

ENDS

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