Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Launch of online calculator looking at milk price components

31 August 2011

Launch of an online calculator looking at milk price components

Hard facts relating to the cost components for processing dairy products and their impact on the domestic prices are virtually non-existent. This makes submissions to the Select Committee inquiry into milk prices based on analytical evidence problematic at best.

With this in mind, The ValueAdd Company searched for information to form a basis of informed analysis. To our surprise, many of the most important facts were found on Fonterra’s website (www.fonterra.com ) and online auction site (www.GlobalDairyTrade.info). These facts related to auction prices, energy usage and indirect costs (from the Annual Report to 30 June 2010).

With this information we developed a user-definable online calculator starting with some default assumptions but with the ability to re-define all assumptions if more accurate figures are known by the user. [See the calculator at http://dairy.nzh1.com from where there are hyperlinks to base information sources.]

Because it is continually being used to justify domestic dairy product prices, the starting point in developing the calculator was to ascertain a “global market price” for the mix of (mainly powdered) dairy products. The GDT website has a spreadsheet file containing all the online auction sales information since it commenced in August 2008 so this proved to be an excellent resource from which to start.

We built up other information from the referenced sources and our calculations came to the somewhat surprising conclusion that for the year ended 30 June 2011, a forecast payment to suppliers for milk of $8.00 per kg of milk solids (not yet finalised) would be $2.73 or 51.7% greater than the figure required to produce a break-even net margin on exported commodity products. [The calculations are all set out in the calculator.]

Exports account for around 95% of Fonterra’s estimated 15 billion litres of raw milk processed each year translating to around 1.3 billion kg of milk solids. This would mean that around 750 million litres of liquid milk equivalent is consumed in the domestic market.

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

$7.5 Billion Surplus: Government Accounts "Show Strong Economy"

“The surplus and low levels of debt show the economy is in good shape. This allows the Government to spend more on infrastructure and make record investments in health and education,” Grant Robertson says. More>>

ALSO:

New OIO Application Trumps Judicial Review: OceanaGold Cleared To Buy Land For Waihi Tailings Expansion

In a surprise turnaround, the government has given OceanaGold a greenlight to buy land to expand its Waihi mine after the application was previously turned down by Land Information Minister Eugenie Sage. More>>

ALSO:

Christchurch Rebuild: Fletcher Sued For $7.5m Over Justice Precinct

Fletcher Building is being sued for $7.5 million by utilities contractor Electrix, one of the subcontractors on the Christchurch Justice and Emergency Services Precinct. More>>

Three New Drugs: PHARMAC Signs Bundle Deal For More Cancer Medicines

420 New Zealanders with lung cancer, breast cancer, multiple sclerosis and respiratory disease will benefit each year from a bundle deal PHARMAC has finalised with a medicine supplier. More>>

ALSO:

"Levels Playing Field": Government Responds To Electricity Price Review

The changes announced today include: • Supporting new and independent retailers by requiring the big power companies to sell into the wholesale market at affordable rates. • Extending discount rates to all customers • A pilot scheme to help customers who have not switched power providers before to shop around for better deals... More>>

ALSO: