26 May 2021

Farmers cautiously optimistic about Fonterra's record opening milk price forecast

3:28 pm on 26 May 2021

The record-high opening milk price forecast announced by Fonterra today has farmers feeling cautiously optimistic.

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Photo: 123RF

The diary company's forecast range for the new season, which officially kicks off next month, has a mid point of $8 per kilogram of milk solids.

Meanwhile, for the season just ending Fonterra narrowed its forecast range, leaving the mid point 5 cents lower at $7.55.

Southland dairy farmer Bart Luijten said the opening forecast was a great figure, but with over a year to go before that price was finalised, farmers would not want to get ahead of themselves.

"We have long memories and I think we started off very high one year and came down to $4.40 by the end of it, but nothing like that's on the cards at the moment.

"It's such a long time away so I think we're still a bit cautious around what the actual end figure will be, but yeah, definitely positive."

Federated Farmers dairy chair Wayne Langford said a strong payout in the dairy season just ending and the one ahead would help farmers pay down debt and give more options around capital expenditure.

He said $7.55 forecast mid point for the 2020/21 season was positive, especially considering the uncertainty created by the Covid-19 pandemic.

"This time last year... coming out of lockdown, I don't think we would've ever predicted that we'd be in this position, so I think farmers across the board will be pretty happy."

Westland Milk dairy farmers also upbeat

China's Yili Group took over the dairy company Westland Milk in 2019, after shareholders voted to sell-up following years of poor payouts and mounting debt.

As part of the deal, Yili guaranteed farmer suppliers it would match or better Fonterra's milk price for the next 10 years.

Westland Milk farmer supplier Katie Milne said getting back to a competitive milk price was great for farmers on the West Coast.

"It's a big, big thing for farmers on the coast, we had a few years in a row where we were well behind the other dairy companies, Fonterra especially, so it's really giving a little bit of an ability to catch up."

Milne, who was a Westland Milk board member when it was a co-operative, said that like the Fonterra farmers, Westland Milk suppliers were feeling both happy and nervous about the $8 opening forecast.

"It's pretty exciting, but we've been here before and the market collapsed... It's always a long time between the prediction and getting the end of season payout in the bank, 14 months-ish, so a lot can happen in that time," she said.

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