Almost every analyst is predicting this season’s farmgate milk price will be closer to $9 than $8, a price that would beat the record of $8.40 set in the 2013/14 season. The payout is looking so good that some in the media have even questioned whether Fonterra can afford to pay it, a question that the cooperative’s chief financial officer, Marc Rivers, answered with an emphatic yes.

Every farmer that banked a milk cheque from the 2013/14 season with a broad smile on their face will be acutely aware of the severe financial pain that followed over the next two seasons. The farmgate milk price plunged to $4.40 in the 2014/15 season and dipped further still to $3.90 the year after that.

It was a crash in price that fuelled gleeful speculation both online and in the mainstream media that dairy farming in New Zealand was done for. The common theory was that dairy farmers had been let down by processors not focusing exclusively on value-added products and had therefore been caught out by the inevitable collapse of the low-value commodity market.

Source

Back to Latest