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

 


Good times with a near record Fonterra payout, good forecast

28 May 2014

Good times with a near record Fonterra payout and a good forecast

Confirmation that the inflation adjusted milkprice payout for 2013/14 will be the second highest ever, at $8.40 per kilogram of Milk Solids (kg/MS), will see Fonterra Cooperative Group’s farmer shareholders cracking open the silver top. Meanwhile, a forecast 2014/15 payout of $7 kg/MS, is much higher than Federated Farmers anticipated.

“Yes this represents a haircut of 25 cents kg/MS, but a $8.40 kg/MS payout will be the second highest in Fonterra’s history,” says Willy Leferink, Federated Farmers Dairy chairperson.

“With a dividend of 10 cents kg/MS on top for this season, it takes the total payout when adjusted for inflation for a fully shared up farmer-shareholder to just one cent below the all time high, recorded in 2007/8.

“This 25 cent kg/MS haircut for the current season isn’t a surprise when GlobalDairyTrade auction prices have slid 22.6 percent since the early February peak.

“I bet if New Zealand’s major export were iPhones instead, there’d be commentators gnashing teeth over market share or whatever Samsung was up to. We need to be more mature that prices will fluctuate but you need to look at the wider picture.

“Right now, the world needs one and a half times what we produce every year just to stand still.

“In the year to April, the value of dairy exports surged 33 percent to be up an amazing $3.8 billion on the same point last year. Not only that but exports of caseins and caseinates have nudged aluminium out to become New Zealand’s number ten export.

“No where in the world are there ‘butter mountains’ like in the past. The global population is going up but global dairy production isn’t keeping pace. We will have bumper years like this one and pretty good years, like what’s forecast, so the trend line is positive.

“Next season’s (2014/15) milk price forecast of $7 kg/MS is actually much higher than Federated Farmers anticipated. It is a pleasant surprise you could say.

“If it sticks, it would rank as the fourth highest payout in Fonterra’s history. The upshot is that we are going from a near record payout to a pretty good forecast. Where’s the bad news in that? This payout and next season’s forecast is an economic bonanza.

“If there are two dark clouds one is a possible El Nino drought on our radar for later in the year, but then again, that would whack not just us, but Californian production too.

“This El Nino risk points to a second dark cloud and that’s the politicisation of water storage. It seems nuts that rainwater storage, so beneficial to the primary industries, regional economic development and even those in Grey Lynn, is being painted as a bad thing.

“What seems equally nuts, are proposed nitrate levels for Hawke's Bay’s Ruataniwha scheme, which are 14 times more stringent than the international standards for drinking water.

“If that goes wider afield then you are talking Farmergeddon for not just dairy, but horticulture, viticulture, sheep, beef and goats too. All industries bar apiculture, fishing and forestry.

“Look, we dairy farmers are trying our best to use payouts to become better employers, improve health and safety and invest in our farm environment. Good work takes time and from Lake Rotorua to Otago’s Shag River, we are now seeing real signs of improvement.

“It’s why we are upbeat on the payout and the forecast but far less upbeat about where policy and politicians maybe taking us,” Mr Leferink concluded.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Budget Policy Statement: Spending Wins Over Tax Cuts; Big Ticket Items Get Boost

Income tax cuts are on hold as the government says “responding to the earthquakes and reducing debt are currently of higher priority”, although election year tax sweeteners remain possible. More>>

ALSO:

Fishy: Is Whitebaiting Sustainable?

The whitebait fry - considered a delicacy by many - are the juveniles of five species of galaxiid, four of which are considered threatened or declining. The SMC asked freshwater experts for their views on the sustainability of the whitebait fishery and whether we're doing enough to monitor the five species of galaxiid that make up whitebait. More>>

ALSO:

Crown Accounts: Smaller-Than-Expected Four-Month Deficit

The New Zealand government's accounts recorded a smaller-than-forecast deficit in the first four months of the fiscal year on a higher-than-expected inflow of corporate and goods and services tax. More>>

ALSO:

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news