Fonterra lowers its farmgate milk-price forecast
Fonterra, New Zealand’s largest dairy co-operative, has lowered its expected farmgate milk price for the current season. The revised guidance follows recent declines in Global Dairy Trade auction prices, which the co-operative attributed to weaker buying from major Asian import markets and increased milk availability in competing exporting regions.
The lower forecast affects the cash receipts available to farms across New Zealand’s main milk-producing areas. Agricultural banking specialists and financial advisers have called on producers to update cash-flow budgets using the new midpoint price. They have also advised reviewing expenditure on supplementary feed, fertiliser and machinery servicing, with non-essential outlays potentially deferred where this can be done without affecting long-term pasture performance.
Advisers have identified debt payments and working capital as particular areas of pressure for highly leveraged farms. They recommend that farmers contact rural lenders early to discuss repayment arrangements, including the possible use of interest-only structures. Communication with suppliers, accountants and banks is also being encouraged to help maintain access to operating credit during periods of lower milk returns.
Feed use and herd productivity are other areas highlighted in the guidance to producers. Increasing the share of farm-grown pasture in cattle diets can reduce dependence on more costly purchased feed. Removing cows with low production or high somatic-cell counts can improve the efficiency of feed use and provide farm businesses with immediate livestock-sale income.
The source said New Zealand’s pasture-based farming systems can adjust input levels when commodity prices weaken. It also identified control of spending, management of borrowing and greater use of pasture as measures available to dairy businesses while seasonal milk production moves towards its spring peak.
Fonterra’s revision follows a period in which international dairy-trade prices have softened amid subdued demand and higher supply from exporting regions. The source did not provide the previous or revised farmgate price figures, nor a specific date for the updated forecast.
