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

 


Fonterra Offers Guaranteed Milk Price Option After Pilot

1 April 2014
Fonterra Offers Guaranteed Milk Price Option After Successful Pilot
Fonterra farmers will be offered two opportunities to lock in the price paid for a percentage of their milk in the 2014/15 season.

A Guaranteed Milk Price (GMP) will be offered on 60 million kgMS in two tranches. Applications to supply 40 million kgMS will open in June, offering a 12 month GMP. In December, applications will open to supply 20 million kgMS with a six month GMP offered on production from December 1. Further details will be provided in May, including the process to set the GMP price and allocate volumes to farmers applying.

The Guaranteed Milk Price for the 2014/15 season follows a successful pilot involving 328 farmers who supplied 15 million kgMS for a guaranteed price of $7 per kgMS this season. The $7 price was based on the opening forecast for the season. The pilot attracted such a high level of support that applications were received to supply 37 million kgMS. Participants were scaled back to 40 per cent of their original application.

Chief Financial Officer Lukas Paravicini says the positive feedback from the pilot shows the GMP is seen as a useful tool for farmers to manage price volatility and secure income certainty. Having an opportunity to apply for the GMP in December meant farmers could follow the Farmgate Milk Price trend for the first half of the financial year before deciding on whether to lock down the price for some of their production in the second half.

“GMP has given them certainty around a proportion of their income for this season. Having certainty means they have been able to confidently make decisions around servicing debt or making capital investments on farm especially when prices are volatile and this certainty comes regardless of the final Milk Price. It is a useful risk management tool for farmers who want to take advantage of it. Some may want to use it every year, others when they want financial certainty to undertake major projects or negotiate debt.

“From the Co-operative’s perspective, the GMP also gives us certainty. We can lock in longer-term contracts with customers at a set price and attract a premium knowing there will be no risk with those contracts from price volatility. Having this capability enables us to build long-term and mutually beneficial relationships with our key customers.”

- ENDS -

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Final Frontier: Rocket Lab And NASA Sign Commercial Space Launch Agreement

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Scoop Business: Wheeler Downplays Scope For ‘Large’ Rates Fall

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

ALSO:

Ruataniwha Dam: Consent Conditions Could Mean Reduced Intensity

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health And Safety: Bill Now Sees Rules Relaxed For Small Businesses

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

ALSO:

Bearing Fruit: Annual Fruit Exports Hit $2 Billion For First Time

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news