Fonterra joins Westland in scything forecast payouts

Tuesday 28 August 2012, 11:39PM

By Fonterra


The downwards payout revision by both Fonterra Cooperative Group and Westland Milk Products for 2012/13, are harbingers of harder economic and farming times.

“Be under no illusion, Fonterra’s downwards revision today of 30 cents per kilogram of milksolids (kg/MS) will hurt,” says Willy Leferink, Federated Farmers Dairy chairperson.

“This follows on from Westland Milk Products earlier 70 cent kg/MS scythe to its season forecast.  Westland is now forecasting $5.00-$5.40 kg/MS for 2012/13, while Fonterra is between $5.65 and $5.75 kg/MS.

“And the production season has effectively only just begun.  When you consider farm working expenses before interest and tax are around $4.20 kg/MS, Fonterra’s key milk price forecast of $5.25 kg/MS leaves little or no freeboard.

“Fonterra’s news wasn’t completely unexpected given the slide in international prices and Westland’s move earlier in the month.  It doesn’t make confirmation any easier.

“Most farmers would have prepared two budgets based on a mid and low five dollar payout.  Farmers should now realign their lower end budgets down to five dollars. I really hate to say it, but I’d dust off those emergency budgets from 2008/9 for added pointers.

“It has been a hell of wet season and with calving still underway, farmers are under immense pressure. 

“Farmers under financial stress also need to be completely open with their bank manager.

“That’s why we need to get the message out to farmers; put your hand up if you need help.  If you feel yourself overwhelmed don’t be stoic.  Talk to your family, your neighbours and to us at Federated Farmers.

“We don’t want to see things bottled up and nor must we allow animal welfare to slide either.  Neighbours shouldn’t hang back as I’d rather be damned for doing than damned for don’t.

“I also think each MP and each councillor needs to print off and the read the media releases from Westland and Fonterra.  There is an unlimited policy expectation built on a finite resource with no regard to the cold hard reality we exporters face.

“It is time for policymakers to pull their collective horns in.  If these revisions aren’t a warning then what is?

“Things globally are bleak and we can’t hang our hat on poor growing conditions in the United States or Europe.

“After all, who knows what our spring and summer will bring,” Mr Leferink concluded.