25 Sep 2008

Milk and cheese prices tipped to drop - but not by much

10:15 pm on 25 September 2008

A Northland farming leader says New Zealand consumers should be able to look forward to cheaper prices for milk and cheese in the near future. But he predicts the drop will not be big.

Farmers of New Zealand president Ian Walker says dairy commodity prices are falling as global production catches up with demand.

However, production costs have also up. Mr Walker says costs have risen by $1 per kg of milk solids in the last year and processing costs - especially energy - have also risen sharply.

Fonterra on Wednesday announced it will keep its forecast milk payout for this season at $7.90 per kg of milk solids. But the payout is forecast to drop to $6.60/kg for the 2008-2009 season.