NEW ZEALAND – ‘Significant volatility’ has been blamed for a further 20 cents drop in Fonterra’s forecast farmgate milk price, which now stands at $4.50 per kilo.
This means the overall forecast cash payout is $4.70-$4.80 for the current season, factoring in share dividends.
The cuts come against a backdrop of unrest in Russia, Libya and the Middle East, which are all impacting world dairy demand, according to Fonterra Chief Executive, Theo Spierings.
He said: “Remote as they are, events such as the flow of refugees from Libya to Europe come together with factors like lower oil prices to soften dairy demand.”
Cooperative Chairman, John Wilson, acknowledged the increasing pressure on farm budgets but reassured stakeholders of the confidence Fonterra has in the long-term picture.
“Our farmers are already managing very tight cashflows,” said Mr Wilson. “Although this reduction is not the news that anyone wants, it is important we keep our farmers updated given the significant market uncertainty.”
He added that volatility in dairy commodities had been caused by over-supply in the market.
TheCattleSite News Desk
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